Morphing into Clinton; Obama’s Executive Order Shows Attempt at “Triangulation”

Since the “shellacking” the Democrats took in November, President Obama has given signs that he got the message. His decision to maintain current tax rates, to reach across the aisle for bi-partisan solutions, to appoint William Daley chief of staff, and to issue today’s executive order reinforce the view that he is moving to the political middle. (Click here to read the executive order and here to read the accompanying memo.)

Many forget that President Clinton began his tenure in office with a very aggressive and liberal agenda. He proposed a BTU tax, a major overhaul of our health care system, overly stringent climate policies, and individual tax increases. After losing a number of early battles and, in 1994, the House of Representatives, President Clinton engaged in what has become known as “triangulation” in order to avoid also losing re-election.

Now it is President Obama’s turn.

The nation will be fortunate if he learned from November that America is governed best from the middle. Policies pushed from either political extreme are not sustainable and often produce serious unintended consequences.

The challenge facing President Obama does not stop with issuing an Executive Order that may be inconsistent with his political philosophy; it also involves getting the bureaucracy to faithfully implement it. The last two years have tainted the U.S. with an anti-business, anti-investment climate. Until investors, entrepreneurs, and other business leaders have reason to believe that has changed, progress in undoing the economic damage of the last two years will languish.

As a first step, the President could direct the Department of Interior to expedite issuance of permits for drilling in the Gulf of Mexico and to remove the recently issued ban on offshore drilling off of the East Coast. That action would have a big impact on unemployment in Gulf coast states and would send a signal that the U.S. plans to exercise more control over its energy future. Although the White House is a big proponent of “green” energy, it needs to acknowledge that since these fuels are a long way from being commercially viable, fossil energy will continue to provide the main source of power for our economy for decades to come.

While all agencies need to do a better job of avoiding regulatory overkill, EPA currently threatens to have the biggest impact on our economic recovery and job creation. Its proposed rules on boilers, stationary sources, and ambient air quality standards offer compelling evidence that it is out of control and pursuing an ideological agenda without regard to economic consequences. Those proposals are already having a chilling effect on investments. President Obama  should direct EPA to suspend all pending actions to regulate greenhouse gas emissions, including plans to issue another set of CAFE regulations to mandate a fleet average of 45-62 miles per gallon.

None of this suggests that the Obama administration should adopt the Republican agenda. It means that there needs to be a greater awareness of the trade-offs and unintended consequences of regulatory actions. Agencies must conduct reasonable and realistic economic and risk analyses of proposed regulations. Moreover, there needs to be greater transparency in those analyses as well as compliance with the data quality act.

Within OMB, the Office of Information and Regulatory Affairs (OIRA) is charged with reviewing and approving all new regulations. The President needs to make clear that he expects OIRA to make sure the goals of his Executive Order are achieved.

If President Obama demonstrates the same skill as President Clinton did in governing more moderately, his chances for re-election in 2010 will greatly improve. That may not be good news for Republicans, but it bodes well for our nation’s well being.