The Wonk Room would like to congratulate Robert Gordon, who will serve in the White House Office of Management and Budget. The Obama transition team announced today that Robert will be Associate Director for Education, Income Maintenance and Labor at the OMB.

Robert was an original and frequent blogging contributor here at The Wonk Room, and his posts helped establish us as a leading policy rapid-response blog. You can read all of his blog posts here.

We wish Robert the best of luck and thank him for his contributions.

Our guest blogger is Chris Mooney, contributing editor to Science Progress and author of several books, including The Republican War on Science and the forthcoming Unscientific America: How Scientific Illiteracy Threatens Our Future, co-authored by Sheril Kirshenbaum.

Working out precisely how to feel about the president-elect’s proposed head of the Office of Information and Regulatory Affairs in the White House Office of Management and Budget, or OIRA is a bit tricky. Harvard law professor Cass Sunstein is a prolific scholar, but a central focus of his research has been on ways of making the government regulatory process more efficient and effective — and this has included the embrace of so-called “cost benefit analysis,” which many environmental advocates accuse of being a rigged methodology that always seems to favor doing less for public health and the environment.

For a long time, OIRA has been seen as the place where regulations go to die, and cost-benefit analysis — in combination with improper second-guessing of scientific research produced by expert agencies — as the chief executioner. Bush’s controversial first OIRA director, John Graham, was a strong cost-benefit proponent, and at least for some, Sunstein sounds uncomfortably close to him in outlook. Rena Steinzor, the president of the Center for Progressive Reform, warned about Sunstein’s selection:

The appointment means that those of us expecting a revival of the protector agencies — EPA, FDA, OSHA, CPSC, and NHTSA — have reason to worry that “yes, we can” will become “no, we won’t.”

Balanced against such concerns, however, is the fact that Sunstein believes cost-benefit analysis is a flawed but nevertheless useful methodology, leading to a better chance, over all, of making the wisest decisions in a context that always requires some balancing of competing values.

Still, in Sunstein’s writings there’s a troubling sense of what might be called, for lack of a better word, elitism. For example, Sunstein wrote in Risk and Reason, “when ordinary people disagree with experts, it is often because ordinary people are confused.” Sunstein even admits in the book that his approach is “highly technocratic.”

The problem is we also have very strong reasons to be very skeptical of so-called “experts” on science and risk. Anyone who has peered into these sorts of debates closely — over, say, the herbicide atrazine or arsenic in drinking water — knows not only that the issues are exceedingly complex but also that there is a lot of distortion of science by “experts” who are really ideological allies of special interests. If the choice is between such experts and the public, I’ll take the public every time.

Perhaps, then, the issue is not cost-benefit analysis itself, but what form of it you practice. One cost-benefit proponent, OSH whistleblower Adam Finkel, has himself written that Sunstein has “managed to sketch out a brand of QRA [quantitative risk analysis] that may actually be less scientific, and more divisive, than no analysis at all.” Finkel’s take on Sunstein is worth quoting at length, because it captures not only the complexity of the issues involved but also the great divergence of “experts” on risk assessment itself, and where Sunstein stands on the spectrum:

I actually do understand Sunstein’s frustration with the center of gravity of public opinion in some of these areas. Having worked on health hazards in the general environment and in the nation’s workplaces, I devoutly wish that more laypeople (and more experts) could muster more concern about parts per thousand in the latter arena than parts per billion of the same substances in the former. But I worry that condescension is at best a poor strategy to begin a dialogue about risk management, and hope that expertise would aspire to more than proclaiming the “right” perspective and badgering people into accepting it. Instead, emphasizing the variations in expertise and orientation among experts could actually advance Sunstein’s stated goal of promoting a “cost-benefit state,” as it would force those who denounce all risk and cost-benefit analysis to focus their sweeping indictments where they belong.

Let’s hope we hear at Sunstein’s confirmation hearing that he rejects the idea that his office should be in the business of questioning the scientific determinations made by expert agencies like the EPA; that he plans to use cost-benefit analysis to improve regulation, not stifle it; and that he’ll show some serious skepticism towards many of the “experts” who tout “science” in these areas, and not just towards the allegedly irrational public.

Read more at Science Progress.

Our guest blogger is Sabina Dewan, Associate Director for International Economic Policy at the Center for American Progress Action Fund.

In an Op-Ed in the New York Times yesterday, Nicholas Kristof condoned labor exploitation in the form of sweatshops as a route out of poverty:

Mr. Obama and the Democrats who favor labor standards in trade agreements mean well, for they intend to fight back at oppressive sweatshops abroad. But while it shocks Americans to hear it, the central challenge in the poorest countries is not that sweatshops exploit too many people, but that they don’t exploit enough. Talk to these families in the dump, and a job in a sweatshop is a cherished dream, an escalator out of poverty.

The notion that taking advantage of a person’s desperation for economic gain is somehow morally defensible is preposterous. There is no doubt that much remains to be done to alleviate global poverty, but in case Kristof is not aware, there are many alternative strategies that can help with this cause. The International Labor Organization’s Decent Work Agenda — which focuses on the creation of decent employment, alongside social dialogue, social protection and fundamental principles and rights at work — is but one example.

The observation that those working in factories are “better-off” as compared to those in the informal sector, undertaking menial jobs simply to survive, is well taken. But, those favoring labor standards in trade agreements reflect a much more nuanced understanding of the real problem than Kristof does.

First, they do not mistake the call for improved labor standards to be a poverty reduction strategy. Second, they understand that the higher production costs associated with better labor standards can be offset by the concomitant rises in productivity and economic performance. As the ILO noted:

Higher wage and working time standards and respect for equality can translate into better and more satisfied workers and lower turnover of staff…Safety standards can reduce costly accidents and health care fees….Freedom of association and collective bargaining can lead to better labour-management consultation and cooperation, thereby reducing the number of costly labour conflicts and enhancing social stability.

Better labor standards also help level the playing field for producers internationally, and they increase the size of potential export markets for the U.S. Finally, the inclusion of labor standards in trade agreements must be supported by additional progressive institutions such as universal education, healthcare and other social safety nets to ensure better distribution of the gains from trade.

So I would like say to 13 year old Neuo Chanthou — whose heartbreaking story Kristof used to argue his point — that rather than aspiring to work in a sweatshop, she should be in school, and when she gets home, her healthy mother and father will be able to provide for her and her disabled sister from their ‘living wage’ earned at a ‘decent job’.

Today, Reuters highlighted some sobering government poverty data that shows the extreme reach of the current economic downturn:

About 37.3 million Americans were living in poverty in 2007, or about 12.5 percent of the population, according to the government…Figures due out in August will show that rose by about half a percentage point last year, analysts estimate, and more and more [middle class people] will slip into poverty this year as the recession takes hold.

Currently, unemployment is at 7.2 percent, and reaches 13.5 percent when the underemployed (those who want to work full time, but can only find part time jobs) are factored in. Some economists estimate that unemployment will hit 10 percent by the end of this year. If that occurs, “7.5 to 10.3 million more people could fall below the federal poverty line,” which is an annual income of $21,203 or less for a family of four.

This is why measures aimed at alleviating the sting of unemployment and poverty need to be included in the economic stimulus package being crafted in Congress. As Nobel Prize-winning economist Joseph Stiglitz explained, this type of stimulus spending “serves multiple ends“:

Increased unemployment benefits have the largest multiplier effects – cash-strapped families spend every cent given – and meet vital social needs. It is imperative to provide health insurance to the unemployed: without that, a single serious incident can push a family into bankruptcy. Helping the unemployed meet house payments reduces foreclosures, addressing one of the underlying causes of the crisis.

As the Center on Budget and Policy Priorities laid out, these measures also “have a further indirect effect on job creation that unfolds over time, as workers and firms who benefit spend their increased income on a broad variety of goods and services throughout the economy, which in turn preserves or creates jobs and leads to additional spending.”

The proposed stimulus circulating on Capitol Hill includes $43 billion to extend unemployment benefits through 2009, $39 billion to help those who lose their jobs pay the cost of keeping their employer-provided health care, a 13 percent increase in food stamps, and $200 million for local emergency food and shelter programs. This is an excellent start, but addressing poverty can’t stop when the stimulus is gone.

The Center for American Progress has calculated that a $90 billion yearly investment would cut poverty in half, and that the money could be raised primarily “by bringing better balance to the federal tax system and recouping part of what has been lost by the excessive tax cuts of recent years.”

This investment would move to end the “lost potential of children raised in poor households, the lower productivity and earnings of poor adults, the poor health, increased crime, and broken neighborhoods [that] all hurt our nation,” thus making the overall economy more productive.

Out guest blogger is Center for American Progress senior fellow Van Jones, CEO of Green For All, who testified yesterday before the first hearing of the House Select Committee on Energy Independence and Global Warming. This is his testimony.

Mr. Chairman, other committee members, I’m just happy to be here and I appreciate the opportunity to talk. I was here in 2007 when the term “green collar job” was very rarely heard anywhere. This may have been the first place it was heard in Congress.

And now it is everywhere, and that reflects something. It reflects a hunger and desire on the part of the American people to solve the two biggest crises possibly ever to face this country: an economic catastrophe and a climate crisis, both of which could undermine our nation’s security, our economy, not just now but for decades into the future.

You, unlike the rest of us — next week, we’re going to be celebrating — you’ll celebrate for about ten minutes and then you’re going to go back to sweating. Sweating over the details of this recovery, sweating over the details of how it is that we can actually beat the recession and global warming at the same time.

The 111th Congress will be in the history books. A hundred years from now, students will study this Congress, and they will ask one question: “Were you able to solve the problem? Were you able to able to deal with this twin crisis? How did you do it?”

And you’re going to get a grade from our great-grandchildren: Yes or no. Pass or fail.

The reason that green jobs are so important is because they are the most secure way to ensure success for this Congress. And the whole country now is looking for a change. You have the opportunity now to turn this breakdown into a breakthrough. And you can if you honor three principles. Read more

Today, House conservatives held a hearing to discuss proposals for an economic stimulus package, with testimony from former governor and CEO Mitt Romney, among others. While most of the hearing focused on how to best cut taxes for corporations, Romney used some time during his opening statement to take a swipe at the Employee Free Choice Act:

And there is one very bad idea that is being promoted by a special interest group. It is an idea that would have devastating impact on the economy—short term and long term. It would lead investors to send their funds elsewhere, businesses to expand elsewhere and jobs to relocate elsewhere. It is the plan to virtually impose unions on all small, medium and large businesses by removing the right of workers to vote by secret ballot. Card check is a very bad idea under any circumstances. In these circumstances, it would be calamitous.

As Michael Whitney laid out at the SEIU blog, “Business leaders and CEOs are developing a new strategy to combat the Employee Free Choice Act: threaten to take jobs overseas and divest from America.” Romney’s comment certainly falls into that category.

Fearmongering rhetoric aside, the Employee Free Choice Act would actually make the economy work for everyone, instead of only those at the top. According to estimates by the Economic Policy Institute, if 5 million service workers join unions:

- 5 million workers would get a 22 percent raise on average, or an additional $7,000 a year.

- $34 billion in total new wages would flow into the economy.

- 900,000 jobs would be lifted above the poverty wage for a family of four.

- Between 1.8 million and 3 million dependent children would share in these benefits.

But Employee Free Choice is not only about workers receiving better wages and benefits. Stronger unions and a more secure workforce lead to a more productive economy. For example, one-third of all American workers joined unions between 1947 and the early 1970s, and in those years, “median family income more than doubled, productivity grew 2.9 percent a year, [and] America’s economic output nearly tripled.”

If Romney considers livable wages, higher productivity, and more economic output “devastating,” then maybe some devastation is in order.

As the LA Times reported today, conservative support in Congress for President-elect Barack Obama’s proposed economic stimulus plan is “peeling off” in favor of “alternative ideas that rely even more heavily on tax reductions.” Leading this charge, the Republican Study Committee (RSC) released its preferred stimulus outline yesterday, which Matthew Yglesias noted is a “barrel full” of permanent tax cuts.

Today, Rep. Eric Cantor (R-VA) convened a hearing to further discuss the ideas that the RSC laid out, with testimony provided by former Gov. Mitt Romney (R-MA), former Ebay CEO Meg Whitman, and Grover Norquist, president of Americans for Tax Reform. During the hearing, all the witnesses continued to beat the drum for permanent tax cuts, especially for corporations:

ROMNEY: The best medicine for a sick economy is permanent tax relief…[Corporate tax cuts] would remove fear and replace it with confidence and prosperity.

WHITMAN: The number one thing that I would look at for this group is: can we lower business taxes?…I would argue that permanency and clarity are what to look for.

NORQUIST: I would argue for permanent tax cuts…That would create real and permanent stimulus.

Cutting corporate taxes is a tired conservative solution to just about everything. Remember, it was a centerpiece of Sen. John McCain’s (R-AZ) presidential campaign, even before the economic crisis hit. But as the Center for American Progress’ Will Straw wrote, permanent corporate tax cuts simply fail to provide stimulus:

The track record for such steps is poor in general, but they are particularly ill-suited for a recessionary period. After all, the reason that businesses and individuals are not investing at the moment has little to do with the taxes they may pay in the future and everything to do with a fear of losing money because there is no demand in the economy, asset prices are highly volatile, and credit is hard to come by.

Citizens for Tax Justice noted that “every dollar lost from cutting the corporate income tax would increase real GDP by just 30 cents.” That’s hardly the sort of stimulative effect that would justify slashing the corporate rate.

Setting foot on the trail blazed by the Chamber of Commerce, the Heritage Foundation and the Club for Growth, the Republican Study Committee (RSC) released its economic stimulus plan today. Dubbed The Economic Recovery and Middle-Class Tax Relief Act of 2009, the plan includes:

- Making the 15 percent capital gains tax rate permanent.

- Cutting the top corporate tax rate from 35 percent to 25 percent.

- A 5 percent across the board income tax cut for individuals.

- Indexing the capital gains tax for inflation.

The RSC also proposes “a 1 percent reduction in discretionary spending in the fiscal 2009 budget,” proudly touting the fact that “this legislation does not contain one penny of new spending, and rejects the idea that massive new government spending will lead to an economic recovery.”

As stimulus outlines go, this is spectacularly bad. It couples the ineffective tax cuts of previous proposals with a completely destructive spending reduction that would only exacerbate the economic crisis.

As Paul Krugman noted, “with both consumer spending and business investment plunging, a huge gap is opening up between what the U.S. economy can produce and what it’s able to sell.” The whole point of a stimulus package is to fill this gap by boosting demand and consumer spending, which will get dollars to flow through the economy again. This is accomplished through targeted tax cuts to low- and middle-income families, infrastructure investment, and by providing aid to state governments.

As Matthew Yglesias wrote, “Not only is this barrel full of tax cuts proposed by the [RSC] pretty bad stimulus, but to even call a package of permanent tax cuts an ‘alternative stimulus’ is a serious abuse of the term”:

The idea of a stimulus measure is that you increase the budget deficit over the short-term to try to get the economy back to something like a full employment of available resources. But a permanent increase in the deficit extends, by definition, into non-recessionary periods in which such deficits operate as a drag on growth.

Indeed, permanently cutting taxes for the wealthy and corporations — who are less apt to immediately spend any tax break they receive — while forcing the federal government, in Neo-Hoover fashion, to cut its budget is a counterintuitive response that is not really a stimulus at all. What the economy needs is a boost, not a permanent break for businesses and the rich.

According to the New York Times, the proposed $800 billion economic recovery plan is taking shape in Congress and is “on track for passage by mid-February.” Yesterday, The Wonk Room noted that education has surfaced as a “favorite channel” for stimulus dollars.

Today, another specific channel emerged: aid to state and local governments. The Wall Street Journal reported that under the proposed stimulus plan, “state and local governments would benefit from more than $160 billion in federal aid.” This aid would come in the form of about $80 billion for a new “education stabilization fund” and an additional $87 billion that would be directed toward bolstering Medicaid.

Providing states with funds to shore up their crippled budgets is one of the most important avenues down which stimulus aid could go. At least 44 states are facing budget shortfalls, which are already forcing them to make wide cuts in health care and education. For instance:

- South Carolina has cut treatment for low-income women under 40 with breast or cervical cancer and stopped providing nutritional supplements for people with kidney failure.

- The Los Angeles school board voted yesterday to lay off 2,300 teachers if no remedy to the budget crisis is found.

- In Nevada, cancer patients without health coverage no longer have a place to get chemotherapy after the state’s largest public hospital stopped providing services.

School boards in Memphis and Dallas have also announced mid-term teacher layoffs, while Utah is “looking at cutting public health programs and eliminating coverage for about 20,000 low-income people who rely on the state-funded Utah Primary Care Network.”

Beyond the human angle of wanting to preserve our public education and health care systems, there are good economic reasons for sending aid to states. Cuts in public programs and payrolls means fewer dollars moving through the economy, and more people collecting unemployment benefits who would otherwise be spending their own money. As Mark Zandi of Moody’s Economy.com wrote, allowing the states’ respective budget shortfalls to remain unchanged is “sure to become a substantial drag on the economy” through 2009:

Additional federal aid to state governments will fund existing payrolls and programs; thus it will also provide a relatively quick economic boost. States that receive a check from the federal government will quickly pass on the money to workers, vendors, and program beneficiaries.

Another key here is “quickly.” An effective stimulus provides a short-term boost with money that moves into the economy immediately. Since states are already making severe cuts, they literally have no alternative to turning the money right back around and spending it, simultaneously providing the necessary economic kickstart and ensuring that critical human services continue.

Last week, President-elect Barack Obama announced his intention to invest stimulus dollars in repairing and modernizing America’s schools. As The Wonk Room noted, this would be a good investment in immediate stimulus and longer-term human capital.

Today, the Politico reported further that “federal aid for education could grow as much as $140 billion under a two-year economic stimulus bill now taking shape in Congress,” in the form of a block grant for states and a $15 billion expansion of annual Pell grants to low-income college students:

[L]ike Medicaid, education has clearly emerged as a favorite channel through which Washington will pump massive amounts of aid to states struggling with huge budget deficits aggravated by the economic downturn.

Sen. Charles Schumer (D-NY) and Gov. David A. Paterson (D-NY) explained that the block grants for state education would go towards preventing “teacher layoffs, suspension of academic programs and substantial increases in school property taxes.” Furthermore, as the Center for American Progress’ Will Straw and Michael Ettlinger wrote, providing college funding to low-income students “would provide a boost to the economy and improve the workforce skills needed when businesses begin to hire again as the economy improves.”

Indeed, investments such as these would be a wise use of stimulus dollars. They would not only prevent states from making potentially debilitating budget cuts, but will also aid America in restoring its competitive academic edge. America’s lead in educational attainment has slipped in recent years, which increased federal aid could help address.

But these investments do more than simply bolster America’s human capital. The purely fiscal benefits of education investment “aren’t abstract or aspirational“: better educated people are more productive, healthier, less likely to require public assistance, commit fewer crimes, make more money, and therefore pay more taxes.

It’s an absolute necessity that the stimulus package finance economic recovery and growth simultaneously. These investments in education would be an excellent step toward achieving that goal.

During an event at the Center for American Progress last week, CAP Senior Fellow Matt Miller warned President-elect Barack Obama against passing the Employee Free Choice Act, because it could “poison the well” between business and labor:

I think the flashpoint might be the card check thing…Going for things like the Employee Free Choice Act could poison the well for universal health coverage because it will just lead to a decimating fight on both sides.

Miller forgot that the well has already been poisoned by the Bush administration, which for the last eight years has catered to big business, at the expense of American workers. It’s time to construct a new well.

A good place to start would be the Employee Free Choice Act, which Bush threatened to veto after it passed the House last year. The bill is opposed by big businesses and the Chamber of Commerce, but solidly supported by the public. In fact, an AFL-CIO poll released last week showed that 73 percent of adults support the provisions laid out in the legislation.

While Miller seems stuck in Bush’s era, progressives are looking for change by creating an atmosphere in which businesses don’t get to dictate the terms and conditions of every debate all the time. According to Roll Call, Obama’s transition team has introduced business lobbyists to a “shocking new reality“:

Top business officials accustomed to red-carpet treatment in the Bush White House say they must stand in line in the cold outside [Obama] transition headquarters along with people they don’t recognize, waiting to be cleared to meet with Obama staffers they don’t know.

This is a symbolic move, but represents a wider shift toward restoring the balance for workers by the President-elect. Consider:

- Today, Obama announced that he dropped a business tax credit that was “ripe for abuse” from his economic stimulus proposal.

- Obama plans to retain the estate tax, arguing that a large tax break “shouldn’t go into force halfway through Mr. Obama’s proposed economic-recovery package.”

- Obama’s transition team announced wide restrictions on corporate lobbyists that the Washington Independent called a “180-degree reversal of the policies of President George W. Bush.”

- Obama supported striking workers at the Chicago-based factory Republic Windows and Doors, saying, “The workers who are asking for the benefits and payments that they have earned, I think they’re absolutely right.”

On the campaign trail, Obama criticized his opponent for “putting corporations ahead of workers.” The Employee Free Choice Act is a strong step toward putting corporations and workers on more equal footing.

Last week, the Heritage Foundation released its proposed economic stimulus plan. It contained two parts: extend the Bush tax cuts as far into the future as possible and cut taxes across the board for individuals, businesses and corporations through 2013.

These measures — like those proposed by other conservative organizations like the Club for Growth — are woefully ineffective at offering immediate and substantial stimulus when compared with other, progressive alternatives. A new analysis by the Center for American Progress Action Fund finds that the Heritage Foundation’s conservative proposals have far less job creating potential than progressive proposals of the same magnitude.

As Matt Yglesias wrote of the Heritage proposal, “this plan would deliver nothing to those in the greatest need and would stimulate demand in the least-efficient way possible. All in pursuit of the right-wing’s never-ending goal of further enriching the richest.”

Every $10 billion in taxpayer money that goes towards extending the Bush tax cuts would create or save just 10,000 jobs versus nearly 60,000 jobs which could be created or saved by extending unemployment benefits and food stamps (stimulating demand for goods and services) or investing directly in energy, transportation and education infrastructure.

As has been extensively documented, the most effective way to close the GDP gap and lay a foundation for long run growth is by getting money into the hands of people who are most likely to spend it (struggling families), helping to shore up state budgets to prevent service cuts and property tax hikes, and through direct investment by the federal government. What we don’t need is simply more tax cuts for corporations and the wealthy.

Methodology notes after the jump. Read more

Today, President George Bush held his final press conference, during which “he became passionate in defense of some of his policies.” When the topic turned to the economy, Bush vigorously defended his 2001 and 2003 tax cuts, adding that he “will defend them after my presidency as the right course of action”:

There’s a fundamental philosophical debate about tax cuts. Who best can spend your money, the government or you? And I’ve always sided with the people on that issue.

Watch it:

We’re not going to quibble with the notion that Bush didn’t know how to spend taxpayer money. However, he decided he knew how to best spend China and Japan’s money, which he borrowed in order to finance his tax cuts for the wealthy and the war in Iraq, driving the federal debt to historic heights.

As the Washington Post noted today, Bush “has presided over the weakest eight-year span for the U.S. economy in decades”; the federal government “had a modest budget surplus when Bush took office,” but his administration ran up deficits “even as the economy was growing at a healthy pace.”

It is worth remembering that when Bush took office, it was projected that the federal government would run a $710 billion budget surplus in 2009, and that the Center on Budget and Policy Priorities calculated that Bush’s tax cuts accounted for 42 percent of the fiscal deterioration between 2001 and 2008. If Bush was indeed siding “with the people,” he had an awfully funny way of going about it.

Our guest blogger is Frank O’Donnell, president of Clean Air Watch.

Cass Sunstein

How would progressives respond if President Bush nominated as “regulatory czar” a person who:

– Once called for changing the Clean Air Act to require a balancing of costs and benefits in setting national clean air standards – a fundamental weakening long sought by big polluters who believe it would help them resist cleanup;

– Urged the federal government to devalue senior citizens in calculating the benefits of federal regulations because “A program that saves young people produces more welfare than one that saves old people.” This is a concept dubbed the “senior death discount,” and that environmentalists forced EPA Administrator Christie Todd Whitman to renounce in 2003;

– Argued that it “might be better” to help future generations deal with global warming by “including approaches that make posterity richer and better able to adapt” than by “reducing emissions.”

– Even raised questions about the value of cleaning up Love Canal, reducing arsenic in drinking water and using child restraints in automobiles?

Progressives would’ve screamed, of course. But what will they do now that President-elect Obama appears poised to nominate Harvard Law School Professor Cass Sunstein to head the White House Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA)? For it’s actually Sunstein who has articulated the views noted above regarding clean air and the other issues involving costs, benefits and risk.

When President Bush nominated someone with similar anti-regulatory views, John Graham, to head OIRA, progressives and environmentalists strongly opposed his nomination.

Thirty-seven progressives, led by Senator Dick Durbin (D-IL) and including Harry Reid (D-NV), unsuccessfully opposed the nomination of Graham, who was also opposed by the League of Conservation Voters because Graham “has a perspective on the use of risk assessment and cost-benefit analysis that would greatly jeopardize the future of regulatory policies meant to protect average Americans. He advocates an analytical framework that systematically reinforces the worst tendencies of cost-benefit analysis to understate benefits and overstate costs.”

LCV even deemed the vote on the Graham nomination one of the eight most critical environmental votes of 2001.

The OMB position is obscure to people outside the Beltway, but it wields enormous power. The office oversees regulations throughout the government, from the Environmental Protection Agency to the Occupational Safety and Health Administration. Draft rules must be approved by OIRA before promulgation. Under Bush, OIRA often used its power to reduce the size and scope of the safeguards to reduce compliance costs to companies causing the health or safety threat. And the Sunstein choice is raising some eyebrows among those wonks who closely scrutinize federal regulatory policy. Robert Shull, former director of regulatory policy at OMB Watch, told E&E News:

It’s difficult to square the choice of an anti-regulatory scholar for the chief regulatory officer with Obama’s many, many promises for a new direction and moving forward from eight years of anti-regulatory, deregulatory misbehavior.

It’s unfair, of course, to paint the 54-year-old Sunstein as a complete clone of Graham and the other Bush anti-regulatory zealots. Indeed, Sunstein has earned a reputation as a genuine progressive on some issues, arguing in 2004 for the implementation of a “Second Bill of Rights” promoted in January 1944 by Franklin D. Roosevelt, to guarantee the “right of every American to a job, a home, and medical care.”

But as co-chair of the American Enterprise Institute Center for Regulatory and Market Studies advisory board, Sunstein works for one of the nation’s most influential right-wing corporate anti-regulatory think tanks. In an interview last year with the Wall Street Journal, Sunstein said of Obama, “He’s a University of Chicago Democrat, so he’s very attuned to the virtue of free markets and the risks of free-market regulation. He’s not an old-style Democrat who’s excited about regulations for their own sake.”

Sunstein will likely be confirmed by the Senate. After all, he is a long-time friend of the President-elect from their faculty days at the University of Chicago law school. Even so, it would seem vital for senators to quiz Sunstein closely at upcoming confirmation hearings and meetings. Does he still hold those views on pollution and risk? (And could he become part of a White House faction — along with Larry Summers, incoming director of the National Economic Council, and incoming national security adviser James Jones — opposing aggressive action on global warming?)

He shouldn’t get a pass just because he was nominated by Obama.

Yesterday, Treasury Secretary Henry Paulson sat down for an interview with Bloomberg, to discuss the effectiveness and future of the Troubled Assets Relief Program (TARP). Paulson has faced significant criticism for refusing to use any TARP money to address the housing crisis. When asked why he hasn’t used the TARP this way, Paulson said he was “reluctant to move ahead with a foreclosure plan” because it would not give “maximum bang for the buck.” Watch it:

Addressing foreclosures is key to combating the economic crisis, but evidently Paulson believes that more “bang for the buck” comes from throwing money at banks and letting them do with it what they will. According to a new report from the TARP’s congressional oversight panel, Treasury “still does not know what the banks are doing with taxpayer money”:

The recent refusal of certain private financial institutions to provide any accounting of how they are using taxpayer money undermines public confidence. For Treasury to advance funds to these institutions without requiring more transparency further erodes the very confidence Treasury seeks to restore.

Last month an Associated Press report revealed that no bank receiving taxpayer funds is willing to report what it has done with the money, even though, as the oversight panel noted, “it is within Treasury’s authority to make such reports a condition of receiving funding.” Reportedly, banks are simply hoarding the money, eliminating any “bang” it might have had.

To counter this, Rep. Barney Frank (D-MA) has proposed legislation “to tighten the rules of the government’s $700-billion financial bailout program and channel a large portion of it to home foreclosure prevention.” His plan includes a version of the foreclosure modification program proposed by FDIC Chairman Sheila Bair (which would cost just $24 billion), and requirements that banks “tell Congress how money received from the government is being used.”

Congress is also working on a “rewrite of bankruptcy law” that would “let bankruptcy court judges cut mortgage debts to help bankrupt homeowners.” These moves could significantly lower the number of foreclosures occurring, giving homeowners plenty of “bang for the buck,” while also repairing the tattered economic system.

Today, Labor Secretary nominee Rep. Hilda Solis (D-CA) appeared before the Health, Education, Labor, and Pension (HELP) committee for her confirmation hearing. During the hearing, Sen. Orrin Hatch (R-UT) questioned the need for the Employee Free Choice Act — which Solis co-sponsored in Congress last year — because, according to the National Labor Relations Board, unions win 60 percent of contested union elections:

The National Labor Relations Board data indicates that in 2007 unions won over 60 percent of contested elections held. Further, based on recently released data on elections held during the first half of 2008, unions have been winning 66.8 percent of elections. Now, if employer interference is so prevalent, how can unions win such a high percentage of elections?

Watch it:

Bear in mind that Hatch has said he “can’t think of a more insidious bill in my time in Congress” than the Employee Free Choice Act. And while his statistic of choice is correct, it tells very little about the plight of workers looking to organize.

For starters, if unionizing is so easy, why is only 7.5 percent of the American workforce unionized, when 60 million American workers say they would join a union if they could? Employer interference has something to do with it, as 92 percent of employers facing a union drive force employees to attend closed-door meetings with supervisors, while 75 percent hire outside consultants to run anti-union campaigns “often based on mass psychology and distorting the law.” All of this occurs before a vote ever takes place.

But that’s not the whole story either. Another huge hurdle is getting an employer to simply allow a vote. 40 percent of the time unionization drives end without workers ever getting a chance to vote. As Mary Beth Maxwell, Executive Director of American Rights at Work, explained during an interview with C-Span:

We literally have cases where workers have been trying to form a union and, because of delays and delays and appeals and appeals on the part of the employer to try and prevent that from happening, it takes two years, five years, seven years.

Workers at Smithfield Packing in Tar Heel, NC spent 15 years trying to organize, but in the end had a successful vote. By Hatch’s logic, that’s fair enough. But even if workers who want a union deal with employer interference, actually vote, and successfully unionize, they still are not out of the woods. One-third of the time, “employers do not negotiate a contract,” even after a union has been formed.

But none of this seems to matter to Hatch, who is content with his 60 percent figure. Incidentally, if the Employee Free Choice Act were to pass, it’s estimated that 10,689 more workers in Hatch’s state of Utah would have access to health insurance and 8,255 would have access to a pension.

The Wonk Room has been following the developing saga regarding tax cuts that President-elect Barack Obama is looking to include in an economic recovery plan. Today, the Senate Finance committee held a closed door meeting to discuss the plan, and some Democratic Senators emerged skeptical of the cuts, saying they “wouldn’t do much to stimulate the economy or create jobs.”

Lawmakers were reportedly “especially critical of a proposed $3,000 tax credit for companies that hire or retrain workers”:

- Sen. Kent Conrad (D-ND): If I’m a business person, it’s unlikely if you give me a several-thousand-dollar credit that I’m going to hire people if I can’t sell the products they’re producing…That to me is just misdirected.

- Sen. John Kerry (D-MA): I’m not that excited about it…The creation of a tax credit for hiring isn’t going to make up for the lack of goods being sold.

Also criticized was a plan to distribute tax cuts incrementally through workers’ paychecks:

- Sen. Ron Wyden (D-OR): In tough times, people don’t respond that well to marginal changes, such as a small amount of money added per paycheck.

Kerry said he’d “rather spend the money on the infrastructure, on direct investment, on energy conversion, on other kinds of things that much more directly, much more rapidly and much more certainly create a real job.”

Indeed, significantly more stimulus “bang for the buck” comes from direct investment in infrastructure than from any type of tax cut. One dollar invested in infrastructure has a return of $1.59 in GDP growth; the most effective tax cut, a payroll tax holiday, only returns $1.29, while most tax cuts don’t even return 50 cents.

However, in order for the stimulus to be large enough to make a difference, it is going to have to include some tax cuts, as there is only so much infrastructure spending that can be implemented quickly. But as Matthew Yglesias wrote, to be an effective stimulus the cuts need to “put money in the hands of individuals with a high propensity to spend.” This means lower- and middle-income families, not corporations or millionaires. To his credit, Obama has proposed some cuts of this kind.

The tax rebate passed last year by Congress was ineffective because it was poorly targeted. Economists have calculated that taxpayers spent just 12 percent of the rebate and put the rest of it into savings accounts or toward old debts. The current economic crisis is too dire for another misfired effort.

Today, President-elect Barack Obama delivered a major address at George Mason University to introduce his American Recovery and Reinvestment Plan, an economic stimulus package that could amount to $775 billion in federal spending and tax cuts. During the speech, Obama emphasized that part of the plan will be an investment in updating and modernizing American schools:

To give our children the chance to live out their dreams in a word that’s never been more competitive, we will equip tens of thousands of schools, community colleges and public universities with 21st century classrooms, labs and libraries. We’ll provide new computers, new technology and new training for teachers so that students in Chicago and Boston can compete with children in Beijing for the high-tech, high-wage jobs of the future.

Watch it:

This would be a wise use of stimulus dollars, as America is not only in the midst of an economic crisis, but is headed toward a human capital crisis. The College Board notes that there has been an “alarming decline of U.S. educational attainment among 25- to 34-year-olds,” and that “a torrent of American talent and human potential entering the educational pipeline is reduced to a trickle 16 years later as it moves through the K-16 system.” The stimulus package can help to reverse this decline, while at the same time providing an immediate boost to the economy by creating jobs and supporting material providers.

Currently, “close to a third of schools have one or more temporary buildings, housing an average of 160 students each”; more than half the schools in California, Florida, Hawaii, Louisiana, New Mexico, North Carolina, Texas, Utah, and Washington have temporary buildings. The Center for American Progress has found that, with about a $20 billion investment in school modernization and repair, the federal government can generate “250,000 skilled maintenance and repair jobs and supply $6 billion of materials and supplies,” while correcting these abysmal numbers.

As Jim Goodnight and Keith Krueger wrote in Business Week, a “carefully constructed” education investment “can meet the short-term stimulus requirements,” while the “greatest impact is that our children would receive an education that reflects the wider world, and would emerge from schooling ‘future ready.‘” Indeed, there is no reason for stimulus dollars to be wasted on roads to nowhere or corporate handouts, when a strong investment can be made in America’s present and future.