Getting An Earful from Manufacturers About Over-Regulation, WH Chief of Staff Daley Says “Sometimes You Can’t Defend the Indefensible”

White House chief of staff Bill Daley walked into the lion’s den Thursday, meeting with 400 manufacturers from across the country who in many cases take issue with the Obama administration’s attitude towards regulation, tax reform, and trade.

Daley, a former executive with JP Morgan Chase and Secretary of Commerce for President Bill Clinton, is considered friendly to the business community and his appointment was seen as a way for President Obama to reach out to the business world. The meeting took place at the National Association of Manufacturers’ 2011 Manufacturing Summit.

“Not too many criticisms,” Daley jokingly requested when he opened to floor to questions.

Doug Starrett, president and CEO of The L. S. Starrett Company in Massachusetts, told a story about a struggle his company has had with the government that he sees as just one example of “government throwing sand into the gears of progress.”

Starrett has been trying to rehabilitate a hydroelectric generating facility — the Crescent Street Dam Project – on the Millers River in Athol, Mass.

The facility, Starrett told Daley, reduces the local carbon footprint, will save energy, and create jobs.

But in March 2009, the U.S. Fish and Wildlife Service intervened, worried that the installation of higher capacity machinery would hurt migratory fish, and in May 2009 the Federal Energy Regulatory Commission stepped in, saying the dam falls within its jurisdiction. To protect the fish, the US Fish & Wildlife Service suggested that Starrett install up to $180,000 in additional equipment. Starrett has spent more than $100,000 fighting the government.

On Wednesday night, Starrett’s celebration of the Bruins’ victory was ruined by a 1^stCircuit Court of Appeals ruling for FERC, though the judge wrote that he did so “with great reluctance,” and only because the law “requires the result reached here, not that the result makes economic or realistic sense.”

“You can’t continue to fund federal agencies that are not spending money wisely.” Starrett told Daley. “With all due respect, actions speak louder than words.”

Daley said he couldn’t get into detail about the individual case which he said sounded like the “typical sort of bureaucratic stuff that’s hard to defend. Sometimes you can’t defend the indefensible.” The chief of staff said he would look into the case to “see if there is any way to bring some reason into it.”

Another questioner – Amber Garwood, an executive from NewPage of Miamisburg, Ohio, the largest coated paper manufacturer in North America– took issue with “very aggressive regulations that are coming out from the EPA.” She said the regulations and rules are forcing company closures.

Daley said that “the number of regulations and rules that come out of agencies is just overwhelming,” though he suggested the EPA in many cases had to issue the rules because of litigation and legislation. “We’re trying to bring some rationality to them, especially at a time of economic crisis.”

Al Bernard, of the Manitowoc Company, Inc., frustrated with the political blame games surrounding the delays of the Panama, Colombia and South Korea trade agreements being signed, asked when the finger-pointing would stop.

“Finger-pointing will never stop, not in this town,” Daley said. “But those trade agreements will get done.”

Daley argued that the political coalitions that helped pass previous free trade agreements – he and then-White House staffer Rahm Emanuel led the fight for NAFTA – were not there anymore and the politics were just not there for the pro-trade side.

“No politician loses an election because they voted against trade,” Daley said. He said if one to look just at the raw politics, voting against trade agreements is a “no-brainer.”

The White House has been pushing for the trade agreements to include funding for worker re-training programs, and Daley tried to make the case – though he did so obliquely, without explaining GOP opposition. “It is not a win-win situation,” Daley said. “There are people who do lose as a result of these trade agreements, no doubt about it.” Thus, he continued, “when there’s impacts of these deals we’ve got to be there to help temporarily to help people.”

The meeting was first reported by the Washington Post’s Peter Wallsten and Jia Lynn Yang.  

Daley said that the economy is improving. “You can’t sound Pollyannaish, although personally I’m an optimist. I believe this economy of ours is better than the perception right now. We seem to react to negative news much quicker than we react to positive news. For whatever reason – we could all psychoanalyze ourselves.”

Asked today what Daley was referring to when he said “sometimes you can’t defend the indefensible” – the quote has been bandied about without context — White House press secretary Jay Carney today said that Daley “went there very much looking forward to hearing from the folks at NAM and wanting to get their input, their criticism, their ideas.  And he heard some specific stories about regulations that the people telling those stories felt were over-burdensome.  And you have to understand that he went in there with no prior knowledge about the cases that were put before him, but obviously the ones that sounded bad he thought sounded bad.  And he said so.”

-Jake Tapper