Trump’s Small Business Advocacy Office Commissions Fake Study to Attack Regulation

Small Business Administration Awards Contract to Pair of Disgraced, Fake Experts Whose Study It Previously Recanted

Oct. 30, 2017

Contact: David Rosen, drosen@citizen.org, (202) 588-7742
Amit Narang, anarang@citizen.org, (202) 454-5116

WASHINGTON, D.C. – The Coalition for Sensible Safeguards (CSS) is condemning the Trump administration today for using taxpayer funds to commission fake news to advance its dangerous assault on regulatory safeguards. Bloomberg BNA reported today that the U.S. Small Business Administration’s (SBA) Office of Advocacy awarded a federal research contract to a notorious pair of “hired gun economists” whose prior research commissioned by the agency was so thoroughly discredited and so embarrassing to the agency’s reputation that the SBA was forced to publicly walk it back in 2013.

The contract for “Research on the Burden of Regulations” was awarded in August to Interaction Analytics LLC, which is registered to W. Mark Crain and Nicole Crain, a pair of discredited economists who produced bogus anti-regulatory research for the SBA’s Office of Advocacy in 2010 – research that the agency was forced to disavow. Crain and Crain even acknowledged that their study was “not meant to be a decision-making tool for lawmakers or federal regulatory agencies to use in choosing the ‘right’ level of regulation.” Nonetheless, this administration and Republican lawmakers still routinely cite Crain and Crain’s conclusions to justify their attacks on commonsense safeguards.

In 2011, the Center for Progressive Reform published a report (PDF) thoroughly debunking Crain and Crain’s 2010 study, which was riddled with erroneous data, nonsensical assumptions and flawed methods in calculating the costs of regulation, and which made no effort to calculate the benefits. Soon after, the nonpartisan Congressional Research Service made its own assessment (PDF), which was no less withering in its criticism. And in 2014, the Government Accountability Office published a scathing audit (PDF) of the SBA Office of Advocacy, singling out its research program for special condemnation and pointing to the Crain and Crain study as the epitome of malpractice.

“In the regulatory space, Crain and Crain are synonymous with fake news and phony research,” said Robert Weissman, president of Public Citizen and CSS chair. “It’s telling that to justify their dangerous and unpopular deregulatory agenda, administration officials turned to fake experts whose previous work humiliated the agency. Past performance is one of three criteria the SBA must use in awarding contracts, and by any conceivable standard, rehiring Crain and Crain is a serious and embarrassing breach of protocol. The minimum the SBA now must do to restore any semblance of its credibility is withdraw the contract, cancel plans to conduct the study and disclose how and why it chose to award a research contract to the Crains.”

“Just in time for Halloween, the SBA’s Office of Advocacy is tapping the masters of fictional scary numbers, Nicole and Mark Crain, to help the office contribute to the Trump administration’s assault on our safeguards,” said Sid Shapiro, vice president of the board of the Center for Progressive Reform. “This is not the Office of Advocacy’s first dalliance with the Crains, and the last time around, their research was outrageous enough to land the office in hot water with the Government Accountability Office. It is nothing short of scandalous that the Office of Advocacy is set to stick taxpayers with the bill for a sequel to that discredited study, which deregulatory propagandists continue to trot out when they try to roll back our health, safety and environmental protections.”

“The Office of Advocacy is once again wasting taxpayer money and generating bad data that will enable them to claim false impacts to small business as an excuse for helping large corporations,” said Christine Blackburn, policy director at the American Sustainable Business Council, which has previously criticized the office. “In 2010, the Office of Advocacy funded what was almost universally called a ‘garbage in, garbage out’ report by the same Crain and Crain research team. By funding this team again, the Office of Advocacy is advocating for disinformation instead of the interests of America’s small businesses.”

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