Regulatory: President Obama's Regulatory Review

On Jan. 18, President Obama ordered the heads of all executive agencies to review existing federal regulations to determine if they restrict economic growth and job creation and, if so, to amend or replace them.

This strategy cannot possibly succeed because senior federal executives have different skills and lack the training and experience necessary to determine what steps would create private sector jobs. If the president is serious about increasing economic efficiency, he has a more effective tool available - creation of an advisory committee of non-governmental executives to study and report on unnecessary regulatory and statutory barriers to economic development.

Senior federal civil servants are an impressive cohort of managers, skilled in solving complex organizational and policy problems with few resources and under intense public scrutiny. They possess a unique skill - the ability to solve 536 simultaneous quadratic equations and convert broad, often inconsistent, statutes into workable programs.

Nothing in a federal executive's experience prepares her for the demanding mission the president has assigned - to figure out what conditions are necessary for a private sector enterprise to generate jobs in the face of competition; and then determine what federal regulations can be revised, consistent with the governing statutes, to allow companies to grow. Agency managers also cannot afford to divert resources from current crises to refight old battles. They therefore would be forced to work from wish lists prepared by interest groups seeking to promote an agenda.

Congress has, on occasion, been realistic about the capacities of senior federal executives. In 1980, it adopted the Bayh-Dole Act, which allowed universities to obtain title to patented inventions they developed with federal research grants. Previously, the government had reflexively taken title, but thousands of patents - especially medical research breakthroughs - sat dormant on its shelves because agency managers did not have the technical skills to identify technologies that could be commercialized or raise the venture capital necessary for development. To remove this obstacle, Congress allowed the research organizations to obtain title to technology developed with government funding, producing what The Economist called "possibly the most inspired piece of legislation to be enacted in America in the past half-century."

If the president wants to pursue a considered program to remove regulatory barriers to growth, he should establish an advisory committee of senior private sector executives to identify obstacles to growth and recommend possible changes in regulations and statutes that should be undertaken. In chartering the committee, the president should require that for every change they recommend, the members also address the steps that would be necessary to protect the public health and safety if the rules are revised.

The work of this type of advisory committee would be highly controversial. The fate of the Grace Commission (1981-1984), appointed by President Reagan, assures that opponents of each and every recommendation would accuse the members of selling out the public interest to enrich vested interests. Nonetheless, a system-wide view of obstacles to growth could provide could prove indispensable in helping the political branches of government find a coherent path forward to promote economic development.

In sum, if President Obama wishes to attack the problem of sclerotic regulatory barriers, he should use his authority as Chief Executive to create a review and recommendation process that is better tailored for this purpose then assigning this retrospective task to over-tasked front-line federal managers.

John F. Cooney is a partner in the Washington, D.C., office of Venable.

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John Cooney

John F. Cooney is a partner in the Washington, D.C., office of Venable.

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