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On Regs, Obama Thinking Out of the Box

Cass Sunstein, the Obama Administration's choice to head a powerful White House office overseeing all federal regulations, hasn't been confirmed yet, but he's already making his presence felt. His fingerprints are all over two recent presidential directives that lay the groundwork for the most far-reaching revision of regulatory policy in 15 years.

One document, a "presidential memorandum" that was published in the Federal Register yesterday, orders the White House Office of Management and Budget (OMB) to come up with new guidelines for reviewing all proposed government regulations, which cover everything from air-pollution rules to exposure limits on toxic materials in the workplace. The new policy, if approved, would replace an executive order that has been in effect since the early days of the Clinton Administration.

In his memorandum, President Barack Obama called on OMB to "offer suggestions on the role of cost-benefit analysis" and to "identify the best tools for achieving public goals through the regulatory process." He listed some of those newfangled tools: warnings, disclosure requirements, public education, and economic incentives.

It's hardly a coincidence that this is exactly what Sunstein recommends in his latest book, Nudge: Improving Decisions About Health, Wealth, and Happiness, which he co-authored with University of Chicago economist Richard Thaler.

In a second decision, published in the Federal Register today, Obama revoked a controversial Bush-era directive, Executive Order 13422, that was widely seen as imposing greater White House control over regulatory decisions.  

Michael Livermore, an expert on regulatory policy at New York University's School of Law, says revoking that executive order carried an important symbolic message: "Whatever you thought you knew about regulatory policy—things are going to be different."