Obama’s power play
By: Stephanie Simon
January 31, 2014 05:05 AM EST
Part of a POLITICO Pro Special Report series on the Obama administration’s executive action and regulatory agenda.
In an FDA office building in suburban Maryland, the bureaucrats gather over coffee to draft rules meant to squeeze the trans fat out of snack foods.
Four blocks from the White House, in an EPA conference room: more bureaucrats, more meetings, more drafting of rules, these aimed at forcing industrialists to spend billions cutting carbon to fend off global warming.
Congress? Who needs Congress?
Americans heard President Barack Obama declare this week that he intends to bypass the gridlocked Hill to get things done on his own. What they didn’t hear: just how far he’s actually pushing his executive authority.
An in-depth examination of the administration’s actions and plans, agency by agency, regulation by regulation, reveals an executive power play that’s broad and bold — and intensely ambitious. Far more than he let on in the State of the Union, the president has marshaled the tools of his office to advance policies, many unabashedly liberal, that push deep into everyday life for tens of millions of Americans.
He wants to change how power plants operate. And what we buy for lunch. How we travel to work. And how our kids learn math. How our gasoline is formulated. How we light our aquariums.
Already, the president’s team has enacted 300 economically significant regulations, far more than Bill Clinton, George W. Bush or Ronald Reagan did in comparable periods. Some of those rules are driven by the Affordable Care Act and Dodd-Frank banking reform, the two big laws Obama pushed through Congress early in his first term, when he had Democratic majorities in both houses. But there is far more.
When Congress wouldn’t support a climate change bill, the administration moved on its own to push the energy industry away from coal and toward green alternatives. The executive branch found a way to drive tremendous change in public schools, too — though education is typically under local control — by holding tight to billions in much-needed funding, and doling it out only to states that pledged to follow the administration’s prescriptions for reform. A tweak to a transportation grant formula even gave the administration influence over local urban planning; streetcars, all of a sudden, are popping up everywhere.
And it’s not Congress, but the executive branch, that’s on the verge of making Hershey’s reformulate its Reese’s Pieces. (Out, out, trans fat!)
As he tees up for his final three years, Obama is pushing to take his executive power further still, with the most ambitious regulatory agenda in decades. Executive actions now underway could shut down for-profit colleges that don’t meet the administration’s definition of success — even if they’re popular with students. They could raise the price of products ranging from trucks to furnace fans to manufactured housing to aquarium lights, by requiring them to be made more energy-efficient. The executive agenda even reaches the fires of the family hearth, with the Environmental Protection Agency planning strict new requirements for home wood stoves.
Whether American guns can be sold abroad. How smokeless tobacco can be marketed. Which nonprofits can stage get-out-the-vote drives. What constitutes a single serving of potato chips.
And, perhaps, just how salty those chips should be.
All this, and much more, will depend in large part on the behind-the-scenes churning of the federal bureaucracy — managed, or by many accounts micro-managed, by the White House.
Obama has pushed back on complaints from business leaders that he is overstepping and overregulating. His staff notes that Obama has issued fewer executive orders than previous presidents and describes his approach to regulation as pragmatic. “The president does not believe that we have to choose between protecting the health, welfare and safety of Americans and promoting economic growth, job creation, competitiveness and innovation,” White House spokesman Jay Carney said. “We can do both and we are doing both.” Allies agree, saying with Congress mired in gridlock, executive action is vital. “We face a lengthy to-do list of public health and safety priorities,” said Gynnie Robnett, of the Center for Effective Government. Opponents, however, blast Obama for arrogant overreach.
Americans got a glimpse of executive power in action when Obama announced at the State of the Union that he would hike the minimum wage for federal contractors, to $10.10 an hour. Often, though, the exercise of power is far less visible. Consider: Just last fall, with little fanfare, Obama’s Labor Department finalized a regulation imposing an expanded affirmative action mandate on those same federal contractors. They must now aim to ensure that at least 7 percent of their workforce consists of employees with disabilities.
Or consider a technical document the Energy Department put out last year regarding a regulation to improve the efficiency of microwave ovens. On page 409 of Appendix 16A, the administration slipped in wording noting that it had tweaked a wonky formula for estimating the deleterious effects of carbon buildup in the atmosphere.
That small change had huge effects; by raising what’s referred to as the “social cost of carbon,” the administration made it far easier to justify sweeping environmental regulations by arguing that their benefits to the public at large outweigh their cost to specific industries.
It’s not clear how much Obama personally gets involved in such details, but officials at several agencies — and outsiders who follow the work closely — say the White House is extremely hands-on when it comes to initiatives with major economic or political implications. White House officials insert comments into regulatory drafts. They receive briefings from agency officials. In private conversations, they request edits or, if the timing doesn’t feel right, urge delays. They’re careful not to put much into email.
“Everyone I talk to at the federal agencies says, ‘We can’t budge. … The White House is micromanaging everything,” said Marion Nestle, a consumer advocate and food policy professor at New York University.
Internal documents posted online last spring open a window into the process. The White House Office of Management and Budget made numerous changes, visible on the document in red, to an FDA food safety regulation. The most significant edits watered down provisions that industry opposed, including a requirement that food companies monitor their processing plants for environmental pathogens. (The regulation in question was not initiated by the administration; it was required under the Food Safety Modernization Act, which passed Congress in 2010, with Obama’s support.)
Not all the Obama initiatives will make it through the bureaucratic hoops built into the regulatory process. Many will be challenged in court; some may well be overturned. Those that survive could be overturned by future administrations, though in practice, experts say it’s difficult to reverse many policies once they’re embedded in daily life.
It’s important to note, too, that not all the mandates draw industry ire; in some cases, they’re drawn up collaboratively.
The administration “is willing to gather the facts and listen to disparate views to arrive at responsible solutions that benefit the common good,” said Sean McBride, executive vice president for the Grocery Manufacturers Association.
There is, also, this caveat: On many issues, such as gun control, Obama can’t go nearly as far alone as he could with Congress.
To Republicans, however, he’s gone quite far enough.
They’ve called the president’s tactics abusive and arrogant, a brazen end run around the checks and balances built into the Constitution.
“This president’s use of executive power in areas where he has failed to build a necessary consensus for legislative action has been unprecedented,” said Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee. “This disregard for the rule of law and lack of transparency sets a dangerous precedent.”
Sen. Mitch McConnell (R-Ky.) talks of a “mountain of new regulatory burdens that have hurt ordinary people,” including new environmental restrictions on power plants, cement kilns and industrial boilers.
“When the president is faced with bipartisan opposition to things like his desire for a national energy tax, he simply avoids the elected legislature to make sweeping regulatory changes,” McConnell said.
White House spokesman Josh Earnest said the president stands willing to work with Congress, but is also determined to use the power of his office when faced with gridlock. “As we’ve said many times, executive action is not a substitute for robust legislation action, but the president won’t just wait for Congress,” he said.
Liberals urge Obama to be even more forceful. For all he has accomplished, he has also disappointed them on some fronts. In 2011, the White House killed a tough air-quality standard aimed at diminishing smog, so angering the EPA chief that she almost quit. The administration also backed off voluntary guidelines to limit the marketing of junk food to children, under heavy industry pressure.
And scores of potentially far-reaching regulations have been hung up for months — even years — in a White House review process that critics say moves far too slowly and far too cautiously.
“The president should not be in a position where he in any way apologizes or buys into the business community’s drumbeat that regulations are obstacles,” said Celia Wexler, a senior staff member at the Union of Concerned Scientists. The regulations, she noted, stem from congressional mandates to protect the environment, preserve public health, keep workers safe and stabilize the financial system.
“We aren’t regulating for the fun of it,” Wexler said. “It’s important.”
How aggressive has Obama been?
In his first term, his administration enacted 246 regulations classified as “economically significant,” meaning they carry an economic impact of more than $100 million. That’s considerably more than either George W. Bush or Bill Clinton enacted in either of their terms. The Obama administration has added another 54 economically significant regulations so far in his second term. Many are connected to the health care law or Dodd-Frank.
The Heritage Foundation slices the data another way. It looks at how many regulations are “prescriptive,” meaning they impose mandates on the private sector. Its tally: 131 “prescriptive” rules issued during Obama’s first term — and 31 added last year. By comparison, Bush issued 52 prescriptive rules during his first term, said Diane Katz, a research fellow at the foundation.
“This is the most regulatory administration in history,” said Douglas Holtz-Eakin, a former director of the Congressional Budget Office who now runs the conservative American Action Forum. “That’s indisputable.”
The administration’s most recent regulatory agenda, issued in November, laid out 129 major rules in the works, from both Cabinet departments and independent agencies.
They hit a great many hot-button issues.
High on the list: income inequality.
Obama announced this week that he would use his executive powers to create special retirement savings accounts for working-class families. His administration is weighing more aggressive steps, too.
The Education Department is mulling how to push states to distribute effective teachers more equitably, so poor students don’t end up so often with the rookies or the rejects. And the administration is working on rating colleges by metrics such as how many low-income students they serve and how much debt their alumni carry —with the goal of directing more financial aid to the institutions that boost more graduates to success. (That last would require congressional approval.)
Then there’s global warming. With Congress stalled, the White House has seized the reins there, too, in what amounts to a massive show of executive force.
The EPA is writing highly controversial rules to rein in greenhouse gas emissions. The new mandates will add huge expense to existing power plants — and critics say they could make it impossible to open any more coal-fired plants in the future. Up next: a crackdown on pollutants coming from oil refineries. New rules limiting the sulfur content of gasoline. And new fuel-efficiency standards for trucks.
The executive branch is also directing tax dollars to further its green agenda, for instance by financing giant solar farms in the Mojave Desert.
The Energy Department, meanwhile, is working on a slew of new efficiency standards for an array of products; just this week, it published a final regulation on metal halide lamp fixtures, often used in aquariums. As with other efficiency regulations, the standards for lamp fixtures were mandated by energy laws that predate Obama’s administration. But he has put a greater emphasis on them.
Even the Transportation Department has gotten into the act, revising a grant program so more federal money flows to developments with a high “livability” ranking, meaning the homes or shops can easily be reached by public transport. That one tweak has launched urban streetcar projects across the nation, changing how people get around in Seattle, Tucson, Cincinnati and elsewhere.
Other liberal priorities are also moving through the pipeline.
The Food and Drug Administration is working on banning trans fats from processed foods, which would force manufacturers to reformulate scores of popular products, such as Pillsbury cinnamon rolls and microwave popcorn.
The FDA is also finalizing a rule, required under the health care law, that mandates calorie counts be posted on vending machines and in many restaurants, so you think twice before ordering that second slice of pizza. It’s revamping the familiar Nutrition Facts label. And it’s looking to reduce sodium in processed food, though that will likely be introduced as a guideline, not a mandate.
The White House is forging ahead without Congress on gun control, too, drafting regulations meant to broaden the database used in background checks and keep guns out of the hands of the mentally ill.
In higher education, a regulation expected out later this year could force for-profit and community colleges to shut down hundreds of degree programs — in fields like culinary arts and air-conditioning repair — that don’t meet the administration’s quality standards because graduates don’t tend to earn enough to pay off their student loans.
On tax oversight, the Internal Revenue Service is gearing up to monitor political advocacy groups with rules limiting how much “candidate-related political activity” — including get-out-the-vote efforts — advocacy groups organized as 501(c)(4) nonprofits can undertake. That could sharply curtail the activity of groups like Karl Rove’s conservative American Crossroads.
And regulations stemming from the Dodd-Frank act could put significant curbs on the activity of big banks.
Even cannabis, it turns out, falls under the executive umbrella. The Justice Department is writing official guidance to encourage banks to help marijuana salesmen process their piles of cash. (This isn’t meant for street dealers, but for vendors operating legally in states with permissive pot laws, such as Colorado.)
All this rulemaking can be quite opaque. A few agencies, like the Education Department, let the public sit in on negotiating sessions, passing bowls of candy and live-tweeting the debate. Most don’t.
All must, however, invite public comment on draft regulations. On big rules, comments pour in by the hundreds of thousands, or even the millions — so many that some agencies hire outside contractors to sift through them.
Then the rewrites begin. FDA staffers meet in their Maryland headquarters, debating arcane policy points with such intensity that one former official recalls opposing factions facing off with “an almost gang-like mentality.” EPA rulemakers shuffle drafts between lawyers, policy writers and program officers before presenting their work to politically appointed higher-ups in the Bullet Room, the conference room in the administrator’s suite at 1200 Pennsylvania Avenue.
Often, no one outside the administration knows precisely how new mandates will be imposed — much less when they’ll appear — until the rule is published in the cramped pages of the Federal Register. “If you have a Magic 8 ball, shake it up,” Greg Ferrara, a vice president at the National Grocers Association, said last month of the tense wait for new FDA rules.
Obama didn’t start out aiming to expand the federal regulatory machine.
Indeed, when he appointed Harvard law professor Cass Sunstein, a close friend, to head the Office of Information and Regulatory Affairs in his first term, some liberals were furious. They worried that Sunstein, who had written extensively about the need to balance costs and benefits, would make it difficult to get major regulations enacted.
Obama followed that provocative appointment by going on a deregulation kick, or at least promising to do so.
In his 2011 State of the Union, he demanded that all agencies review their regulations with an eye to streamlining. He held up for particular ridicule an archaic rule that treated milk as a hazardous product and required dairy farmers to develop spill-management plans.
Obama’s review got rid of the milk rule and unsnarled other red tape. The Transportation Department, for example, is moving to scrap a rule that requires truck drivers to spend millions of hours a year filing reports on every trip they make. Eliminating that mandate will cut the department’s paperwork by 15 percent and save the industry $1.7 billion a year, the agency says.
Overall, however, savings from eliminating useless regulations have been offset many times over by the cost of new ones.
Last year alone, Obama-era regulations added 158 million hours of paperwork for individuals and business owners, according to the administration’s own estimates, said Sam Batkins, director of regulatory policy at the American Action Forum. He pegs the total cost of Obama regulations over the past five years at nearly $500 billion — about the size of Sweden’s gross domestic product.
Supporters of the president say that’s not the proper way to look at it; big regulations are vetted with a cost-benefit analysis, and if they pass muster, it’s because they’re truly important.
The president and all federal agencies share a common mission, “to protect the public,” said Katie Greenhaw, a regulatory policy analyst with the Center for Effective Government. No one’s aiming to put cement plants out of business out of a vendetta against the industry; the goal is to protect the environment and public health. “These rules are based on years of research and study,” Greenhaw said. “They’re very carefully crafted.”
Carney, the White House spokesman, pegs the net benefit of regulations finalized during past four fiscal years at $159 billion — almost four times the net benefits of regulations promulgated in the first four years of the Bush administration, he said. “We just simply don’t agree with assertions that you need to sacrifice the quality of the water our kids drink, or the air they breathe, in order to achieve [economic growth],” he said.
But that doesn’t stop Republicans from growling about Obama’s executive power play.
Or as Rep. Tim Huelskamp (R-Kan.) declared on Twitter the morning after the State of the Union: “#Irony is: Obama delivering a speech before a body he deems unnecessary.”