Regulators See Big Funding Boost

By ELIZABETH WILLIAMSON and MELANIE TROTTMAN

WASHINGTON -- The Obama administration's budget blueprint is sending a strong message to business: Regulation is back in style.

President Barack Obama's budget outline last week spends more on the agencies that enforce environmental and workplace-safety rules, more for food and drug regulators and more on consumer protection. The budget plan's figures are accompanied by policy statements backing various moves to put industry under closer government monitoring.

Some business interests are expressing concern that a deep recession isn't the time to demand that employers spend more time and money complying with federal regulatory demands.

The budget blueprint "is the first step in a long process," said John Engler, president and chief executive of the National Association of Manufacturers. If the plan were enacted, he said, "The manufacturing economy and our 12 million-plus workers and their families have much to lose." Mr. Obama's budget outline is just a starting point for lengthy congressional debates where business interests have opportunities to influence the final outcome.

But the Obama administration's plans reflect the views of many consumer, environmental and labor groups, as well as many members of Congress, that deregulation went too far during the Bush administration.

The Food and Drug Administration, for example, has been struggling during the past several years to keep pace with a barrage of food- and drug-safety scares. In 2007, the Health and Human Services budget was cut by $4 billion, despite a wave of food-safety crises plaguing the FDA. Mr. Obama's budget would give the FDA $1 billion more than the estimated fiscal 2009 budget for stepped up enforcement of safety rules.

In a move that promises a major fight with drug makers, the plan backs development of an FDA plan enabling Americans to buy less expensive medicines abroad, an effort drug makers have protested for years.

The Pharmaceutical Manufacturers of America, an industry lobbying group, declined to comment.

The budget suggests a sea change at the Department of Labor, where Mr. Obama is proposing a 4.7% increase in funding to reverse "years of erosion in funding for labor law enforcement agencies," the proposed budget says. One of the funding highlights: a plan to establish automatic workplace retirement accounts in a country where roughly half of workers lack employer-based retirement plans. The mandate would require employers that don't offer a retirement plan to enroll their employees in a direct-deposit Individual Retirement Account that is compatible with existing direct-deposit payroll systems. The Obama administration says experts estimate this will increase the savings participation rate for low- and middle-income workers to about 80% from 15%.

The president seeks more money for the department's Occupational Safety and Health Administration, to allow it to "vigorously enforce" workplace safety laws and oversight. He is likewise proposing more resources for the Wage and Hour Division to ensure workers get the pay that is due them. Increased funding is also slated for the Office of Federal Contract Compliance Programs, which is charged with pursuing a fair and diverse federal contract work force.

The Environmental Protection Agency's budget would rise by 34%, to $10.5 billion, money that would empower the agency to crack down on industrial polluters. Included is $3.9 billion -- the most money ever -- for the EPA's operating budget, "which is at the heart of EPA's environmental protection function and includes funds for research, regulation and enforcement," the proposed budget says.

The EPA's own regulatory money is on top of a big slug of cash for rules and efforts to protect endangered species and public lands. More than $420 million would go to the Department of Interior's Land and Water Conservation Fund. An additional $130 million would pay for studying and protecting wildlife from climate change.

At the Department of Housing and Urban Development, part of a $7.4 billion increase is destined for enforcement of fair housing laws and better disclosure of mortgage terms.

The Department of Commerce would get more money to implement regulations aimed at eliminating ocean overfishing by 2011.

The National Aeronautics and Space Administration also gets more money, for research and rules on aviation safety, performance and noise reduction.

Write to Elizabeth Williamson at elizabeth.williamson@wsj.com and Melanie Trottman at melanie.trottman@wsj.com