Regulatory Reform | Publications | Competitive Enterprise Instittue

Horses In the Dining Room?

Nicole Ciandella — Fri, 18 May 2012 20:21:59 +0000

From Rep. Jason Chaffetz' op-ed in The Daily Herald:

Some 1.65 million lawsuits are filed each year over enforcement of federal regulations according to Berkeley law professor Sean Farhang, author of The Litigation State. Estimates by the Competitive Enterprise Institute suggest that regulation cost the economy $1.75 trillion in 2008. That's Trillion with a T. If you were to spend $1 million a day every day, it would take you nearly 3,000 years just to get to $1 trillion.

CEI Staff

Thu, 2012-05-17

Citation Source:

The Daily Herald

http://www.heraldextra.com/news/opinion/horses-in-the-dining-room/article_f7ec243e-845d-5e7c-b9f6-5735ca9bd9dd.html

Light Bulb Battle Pits Tea Party Against Manufacturers

Myron Ebell — Wed, 16 May 2012 16:48:49 +0000

From Ari Natter's article in Bloomberg:

“I think that many people feel it is a personal intrusion into their lives by government,” said Myron Ebell, director of Freedom Action. His grass-roots political group supports the tea party goals of smaller government and less regulation and is associated with the Competitive Enterprise Institute free-market think tank.

Myron Ebell

Wed, 2012-05-16

Citation Source:

Bloomberg

http://www.bloomberg.com/news/2012-05-16/light-bulb-battle-pits-tea-party-against-manufacturers.html

Ten Thousand Commandments 2012

Clyde Wayne Crews — Mon, 14 May 2012 20:31:10 +0000

Full Document Available in PDF

The scope of federal government spending and deficits is sobering. Yet the government’s reach extends well beyond the taxes Washington collects and its deficit spending and borrowing. Federal environmental, safety and health, and economic regulations cost hundreds of billions—perhaps trillions—of dollars every year over and above the costs of the official federal outlays that dominate the policy debate.

Economics 101 on tax incidence explains how and why firms generally pass along to consumers the costs of some taxes. Likewise, some regulatory compliance costs that businesses face will find their way into the prices consumers pay and into wages earned. Precise regulatory costs can never be fully known because, unlike taxes, they are unbudgeted and often indirect—even unmeasurable as such. But scattered government and private data exist on scores of regulations and on the agencies that issue them, as well as estimates of regulatory costs and benefits. Compiling some of that information can make the regulatory state somewhat more comprehensible. That is one purpose of the annual Ten Thousand Commandments report.

Highlights of the Report:

• Estimated regulatory costs, while "off budget," are equivalent to over 48% the level of federal spending itself.

• The 2011 Federal Register finished at 81,247 pages, just shy of 2010’s all-time record-high 81,405 pages.

• Regulatory compliance costs dwarf corporate income taxes of $198 billion, and exceed individual income taxes and even pre-tax corporate profits.

• Agencies issued 3,807 final rules in 2011, a 6.5 percent increase over 3,573 in 2010.

• Of the 4,128 regulations in the works at year-end 2011, 212 were “economically significant,” meaning they generally wield at least $100 million in economic impact.

• 822 of those 4,128 regulations in the works would affect small businesses.

• The total number of economically significant rules finalized in 2011 was 79, down slightly from 2010 but up 92.7 percent over five years, and 108 percent over 10 years.

• Recent costly federal agency initiatives include the Environmental Protection Agency’s Mercury and Air Toxics Standards Rule and the Department of Transportation’s Fuel Economy Standards.

Clyde Wayne Crews

Tue, 2012-05-15

Sub Title:

An Annual Snapshot of the Federal Regulatory State

Expanded 2012 Edition of Ten Thousand Commandments Now Available

Nicole Ciandella — Tue, 15 May 2012 12:19:05 +0000

Washington, D.C., May 15, 2012 – Today, the Competitive Enterprise Institute (CEI) released the expanded 2012 edition of Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State. CEI Vice President for Policy Wayne Crews authors the report every year to draw attention to the “hidden tax” of regulations---a cost often imposed not by legislators, but by unelected federal bureaucrats.

When lawmakers and government officials spend public funds on new initiatives, they properly expose themselves to taxpayers’ approval or criticism. But, Crews explains, when federal agencies advance government goals by regulating the private sector, the costs of their activity are hidden from public view. Crews writes, “Rather than pay directly and book expenses for new initiatives, the federal government can require the private sector, as well as state and local governments, to pay for federal initiatives through compliance costs.”

While the exact cost of federal regulations can never be known, the Small Business Administration has estimated annual complaince costs of well over $1 trillion since the mid-2000s. The most recent evaluation, a controversial one based on data and information available in 2008, was $1.7 trillion.

Meanwhile, numbers of rules, pages in the Federal Register, and economically significant rules are rising under President Obama.

Below are highlights from the 2012 edition of Ten Thousand Commandments:

• Estimated regulatory costs, while "off budget," are equivalent to over 48% the level of federal spending itself.

• The 2011 Federal Register finished at 81,247 pages, just shy of 2010’s all-time record-high 81,405 pages.

• Regulatory compliance costs dwarf corporate income taxes of $198 billion, and exceed individual income taxes and even pre-tax corporate profits.

• Agencies issued 3,807 final rules in 2011, a 6.5 percent increase over 3,573 in 2010.

• Of the 4,128 regulations in the works at year-end 2011, 212 were “economically significant,” meaning they generally wield at least $100 million in economic impact.

• 822 of those 4,128 regulations in the works would affect small businesses.

• The total number of economically significant rules finalized in 2011 was 79, down slightly from 2010 but up 92.7 percent over five years, and 108 percent over 10 years.

• Recent costly federal agency initiatives include the Environmental Protection Agency’s Mercury and Air Toxics Standards Rule and the Department of Transportation’s Fuel Economy Standards.

The report includes a spotlight feature on the Federal Communications Commission, further analysis of trends in the numbers of regulations, and an appendix of historical tables. Crews also proposes reforms that would improve regulatory transparency and restore accountability to Congress, who, Crews argues, should bear “direct responsibility for every dollar of new regulatory costs.”

>> Read the full 2012 report: Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State.

>> Browse archives of past reports.

>> Visit http://www.tenthousandcommandments.com for regular updates and data.

Nicole Ciandella

Tue, 2012-05-15

Sub Title:

Annual Report on Regulatory Costs Seeks to Hold Congress Accountable; Shows Federal Register Pages and "Economically Significant" Rules on the Rise

Testimony on Reauthorization of Water Desalination Act of 2011

Clyde Wayne Crews — Mon, 16 Apr 2012 17:21:13 +0000

Full Document Available in PDF

Separation of State and Water

Water availability is a core infrastructure concern; today, that specific legislative concern is over what a federal role in water desalination should be. CEI’s view is that policymakers should strive to increasingly subject water policy decisions and investment to the pressures of the marketplace.

Unneeded Spending

The bill at issue, H.R. 2664, to reauthorize the Water Desalination Act of 1996,1 would reauthorize $2 million annually through 2016 for water desalination projects at the Department of the Interior.

Specifically:

The Secretary of the Interior hall operate, manage and maintain facilities to carry out research, development, and demonstration activities to develop technologies and methods that promote brackish groundwater desalination as a viable method to increase water supply in a cost-effective manner.

Granted, it’s not a lot of money. But America’s economy is faced not with just scarcity of water, but scarcity of funds. Perhaps even more importantly, federal spending’s effects reverberate beyond the dollars.

Clyde Wayne Crews

Tue, 2012-04-17

When Will We Learn Lessons of Big Government?

Nicole Ciandella — Thu, 12 Apr 2012 19:23:05 +0000

From Lawrence Reed's article in The Times-Herald:

The Obama administration is jamming new regulations down the throats of businesses big and small at a record pace. The Competitive Enterprise Institute estimated that regulations cost Americans a record $1.8 trillion last year. That compares to $3.6 trillion in spending. That means the U.S. government is imposing a 50 percent hidden tax on top of all of its spending, an amount 10 times the total collected from corporate taxes.

CEI Staff

Wed, 2012-04-11

Citation Source:

The Times-Herald

http://www.times-herald.com/opinion/op-ed/reed/201290411Lawrence-Reed-Wed-MOS

Free-Market Environmentalism? It'll Never Fly, Orville!

Clyde Wayne Crews — Mon, 09 Apr 2012 21:41:02 +0000

The week before Easter I gave a brief speech at the Association for Private Enterprise Education, a foundation dedicated to assembling scholars, professors and students devoted to defending and extending the bounds of free enterprise. On the way back to D.C. I picked up the Hemispheres magazine in the seat pocket of United Airlines flight 360.

With APEE on my mind, the feature article “Plan G” (as in “Green”), on how technologies might contribute to a cleaner environment, caught my attention.

Much has been written over the role of increased wealth in advancing environmental health: think sanitation, reduced waste, streamlined manure-free transportation; even the green-ness of cities compared to their reputation.

Still, the presumption remains that free market capitalism pollutes and destroys; that “sustainable development” is something other than what markets can do of their own accord.

A problem with this impression is that most areas where environmental destruction is rampant are those where property rights are absent or confused, and a “tragedy of the commons” prevails: Airsheds, watersheds, public lands, endangered species come to mind.

I’m among those who contend that markets are inherently pro-environment, that any framework rejecting them is not something that can call itself environmentalism.

The problem, if you will, isn’t capitalism, but its absence. You can’t pollute what’s owned without having to compensate in rights-based free markets, one of many notions in references like Ecology, Liberty and Property (which was compiled by my former colleague and now Case Western law professor Jonathan H. Adler).

Fred L. Smith Jr., the president of the Competitive Enterprise Institute, writing about “The Progressive Era’s Derailment of Classical Liberal Evolution,” noted that a consequence of the Progressive Era’s exaltation of “planned order” was the removal of vast areas of endeavor, like the environment, from true discipline — from the wealth enhancing “fencing” capability of emergent voluntary enterprise. The process of civilization itself is partly defined by the unleashing of and cultivation of such protective institutions. They’re not automatic or knowable in advance.

I can’t say it better than Fred:

Classical liberals do not see the market as failing; rather, they see inadequate resources making it difficult for individuals to express their preferences. That tension creates the opportunity for institutional entrepreneurs to advance reforms that might better allow those preferences to be expressed. In the classical-liberal view, we are not charged with protecting the environment or anything else. There is no social utility function. Rather, individuals gain the right to own newly valued resources and to determine individually what sacrifices—what tradeoffs—they find worthwhile to protect those resources.

A healthy environment is itself a form of wealth–that which capitalism likes to maximize. In “mundane” industrial production processes themselves, markets direct human intelligence into reducing waste streams to generate profit; if A doesn’t, competitor B will.

But more broadly, our ongoing–truly neverending–challenge is to bring environmental amenities into that wealth-enhancing ambit rather than cave in to the default approach: locking them up into constraining, depleting commons, or relegating them to the status of hyper-regulated “public goods.” A wonderful book partly featuring some of the clash between the private conservation vs. commons/planned approach is John McPhee’s Encounters with the Archdruid.

Certain east coast natural wonders are often highlighted by a leading founder of “Free Market Environmentalism,” my colleague Robert J. Smith who headed the Center for Private Conservation. Natural Bridge in Virginia? It’s not managed by the Interior Department, it’s owned privately. Thomas Jefferson once owned it. The Shanandoah Valley’s Luray Caverns have remained privately owned since discovery. North Carolina’s Grandfather Mountain is held by a private stewardship foundation, while the state owns surrounding acreage. That state’s beautiful Chimney Rock was privately owned for 100 years before the state took over in 2007.

R.J. was CEI‘s 2011 Julian Simon Award winner, and he happens to turn 75 this week. Happy birthday R.J.!.

Too often, projects become grandiose, taking on too much of the character of national public works, rather than being guided by market imperatives to cut waste from input-output processes, to do more with less energy to make more profit. The natural energy efficiency of fossil fuel gets no respect at all; I needn’t mention Solyndra and compulsory green energy projects that do get that respect instead.

Starting on a normal human scale is sometimes helpful. As for electric vehicles, electric motorcycles are kind of exciting but still have problems, as this new Wired article indicates; no major manufacturers have entered the industry.

Yet these same absent manufacturers arguably put the cart before the horse with electric automobiles, fueled more by subsidy than by markets. I say this without chauvanism as the driver of a Honda Civic hybrid, a first-year 2003 early adopter, no less. Pure plug-in electric vehicles are and will be powered by coal, but rarely does anyone say so.

Other items in the Hemispheres article were interesting, although their true merits as genuine breakthroughs are yet to be seen (for example, converting the kinetic energy of footfalls on sidewalks into energy for lighting may be a bit too try-hard).

While we’re a long way from establishing needed oceanic property rights, Hemispheres pointed to the simplicity of weaker hooks to save giant bluefin tuna now snagged on hooks meant for lighter fare; As for fragile coral, the artificial seeding of more durable corals complementary to natural ones may work. Artificial reefs have important roles to play.

The Endangered Species Act is destructive, denying landowner rights and gutting incentives to protect. While the importance of harnessing property rights to protect our few remaining giants like elephants cannot be ignored, Hemispheres ponders enlisting social networks to track animals.

Not every idea will fly like Hemispheres, but one takeaway is we don’t always have to resort to Interior Department or Environmental Protection Agency edicts. In certain key respects, true environmental protection will always fundamentally elude planners, and will require free market environmentalism and private conservation approaches.

Clyde Wayne Crews

Mon, 2012-04-09

Citation Source:

Forbes

http://www.forbes.com/sites/waynecrews/2012/04/09/free-market-environmentalism-itll-never-fly-orville/print/

Ma Bell's Long Legacy of Unsustainable Pensions Is Alive and Well

Ivan Osorio — Wed, 28 Mar 2012 15:06:21 +0000

“Communism,” comedian Lenny Bruce once quipped, “is like one big phone company.” This dated joke refers to the monolithic phone company known as “Ma Bell,” which enjoyed a government-granted monopoly over America’s communications sector until being broken up in 1984. But while Ma Bell is long dead, its legacy of unsustainable pensions remains alive and well.

Now, one of Ma Bell’s successors, AT&T, is seeking to renegotiate its pension plan with the Communications Workers of America (CWA), the union representing a large segment of its workforce.

Why now? Because the Pension Benefit Guaranty Corporation (PBGC), a federal agency tasked with insuring private pension plans, has long encouraged large companies to delay needed changes to their retirement plans in order to bring labor costs under control.

For decades, AT&T has offered its unionized employees defined benefit pensions, which guarantee a fixed payout to retirees. As a result, payout obligations invariably grow—even when a pension plan’s funding declines.

Why would any company agree to such a scheme? For years, it was the least costly option. Before today’s competitive and vibrant communications market, Ma Bell and unions thrived in an environment of regulated monopoly. When CWA first signed contracts with AT&T’s predecessor over 60 years ago, it was the phone company. For Ma Bell, acceding to union demands was less costly than enduring crippling strikes. Higher labor costs could simply be passed on to consumers, who lacked the ability to go elsewhere.

Ma Bell is long gone, and so are most oligopolies with high barriers to entry. Many of the large firms that have unloaded their pensions onto the PGBC—airlines, steelmakers, and automakers—once operated in an environment of little competition. During organized labor’s apogee, in the years following World War II, U.S. automakers and steelmakers dominated the market, as Europe and Japan worked to rebuild their industrial infrastructure. The Big Three Detroit automakers all had near-identical agreements with the United Auto Workers. And strict federal regulations determined airline routes and fares into the 1970s.

Today, defined benefit pensions rarely exist outside of government agencies. In the private sector, they have managed to survive in some large unionized industries—for now. This is in part the byproduct of unions’ aggressive efforts to preserve generous pensions. Another key factor is the PBGC, which has allowed some large firms to delay restructuring their employee retirement plans by allowing them to offload their pensions onto it.

The PBGC is funded through premiums paid by insured companies. But these premiums are set by Congress, in a highly politicized process, with insured companies lobbying to keep premiums low.

Unions also have an incentive to lobby for lower premiums. The more cash their employers have, the more money they can spend on current pay and benefits, while making defined benefit pensions more attractive for employers. For unions, the latter is crucial, since a stable and secure retirement is a major selling point to attract members.

Artificially low premiums inevitably lead to deficits. Indeed, the PBGC’s current deficit stands at $26 billion. Raising premiums is long overdue. But how high should they go? A 2005 Congressional Budget Office report concluded that, “raising rates so that … the present value of expected future losses would equal the present value of premium income would require both the fixed and variable portions of the annual premium to be increased by a factor of 6.5.”

Together, the PBGC backstop and dirt-cheap premiums are a recipe for moral hazard that can only lead to trouble, while discouraging employers from making needed changes. So can defined benefit pensions thrive in a competitive market? Their history suggests that their prospects aren’t promising, but we’ll only know if and when they are allowed to function without a huge insurance subsidy.

Ivan Osorio

Tue, 2012-03-27

Citation Source:

Forbes

http://www.forbes.com/sites/realspin/2012/03/27/ma-bells-long-legacy-of-unsustainable-pensions-is-alive-and-well/

Why Regulations Aren't Good--Again

Clyde Wayne Crews — Thu, 22 Mar 2012 20:57:40 +0000

The first week of Spring is also “hooray, regulation” week at the White House.

Regulatory policy chief Cass Sunstein, one of the most accomplished and cited legal scholars of all time, has been busy. He penned a Chicago Tribune oped called “Why Regulations are Good — Again“; issued guidance to Federal agencies on “Cumulative Effects of Regulations; appeared on an hour-long Politico breakfast-time panel with Mike Allen, and testified as lead witness in a House Judiciary Committee hearing on regulatory policy.

An explicit cumulative or redundancy burden assessment of regulation is welcome. We do, as Sunstein argues “need to ensure that regulations are based not on intuitions and anecdotes, but on careful analysis of the likely consequences.”

Net Benefits?

Sunstein invoked Reagan on “maximizing net benefits” (benefits minus costs). But twice in the Tribune oped, Sunstein’s phrasing noted that regulatory benefits must “justify costs.” That’s different from exceed, and derives from former president Clinton’s Executive Order 12866.

It was President Reagan’s prior Executive Order 12291 that emphasized strict OMB-overseen net benefits, while the newer order returned rulemaking primacy to the agencies and reduced OMB’s oversight authority.

Still, the over-emphasis on potentially self-serving, agency-assessed net benefits rather than costs underscores yet again the reality that improving regulatory outcomes (minimal costs, maximum benefits) fundamentally requires Congress to answer for rule impacts via expedited approval of “economically significant” or “major” ($100-million-plus) rulemakings, such as the REINS Act.

As I noted yesterday upon learning of Sunstein’s directive, there’s a clash of visions that undermines the net-benefit premise:

What would actual net-beneficial cybersecurity regulation entail? A sweeping liberalization of infrastructure industries that’s not even on the table; What would net-beneficial Internet access “regulation” have been? It would have banned net neutrality rather than mandate it; What might a Transportation Safety Administration have done to secure air travel? Perhaps use biometric identification on pilots rather than grope the public at large; What would expanded health access have entailed? Increasing market supply of services, relaxed licensing, and a spanking for the FDA’s drug delays; What will net-beneficial privacy regulation entail? Ensuring that privacy and anonymity remain competitive, not dictated, features; What does sound environmental “regulation” require? Bringing environmental amenities into the wealth-enhancing voluntary sector rather than government mis-management of contrived scarcity.

Agencies should focus on minimizing costs within some defensible “regulatory budget” constraint bounded by potential benefits, as determined by Congress within the scope of the Entire Regulatory Enterprise, not just an agency alone.

I can write a rule requiring NASCAR-style safety features in automobiles and make benefits “justify” costs. I can show the benefits of requiring elevators in multi-story homes.

Also, entire classes of costs are ignored by agencies’ focus on isolated rules’ net benefits, such as job impacts of rules at large, the damage of restricting access to energy, and antitrust regulatory adventurism. Sunstein pointed to “lives saved” from fuel economy standards; but statistical lives lost by automobile downsizing doesn’t rate as a cost.

Such omissions are why claims like this one are dubious: “Over the Obama administration’s first three years, the net benefits of regulations reviewed by OIRA and issued by executive agencies exceeded $91 billion — 25 times the corresponding number in the Bush administration and more than eight times the corresponding number in the Clinton administration.”

The actual number of rules reviewed is a few hundred out of thousands, and note the use of the phrase “executive agencies.” Independent agencies like the Federal Trade Commission, the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Federal Communications commission don’t get reviewed. Sunstein’s figures also include only rules for which both costs and benefits were available, further narrowing the universe of clarity. OMB’s annual Report to Congress on the Benefits and Costs of Federal Regulations presents quantitative data on at most a few dozen rules.

Costs:

Costs rarely get the measurement they need, so making sweeping net-benefit assessments has always been somewhat illusory anyway; of 4,128 completed, active and long-term rules in the recent Unified Agenda pipeline, 212 were “economically significant” and theoretically subject to analysis, and 418 were subject to small-business Regulatory Impact Analyses of varying quality.

Yet Sunstein claimed, “In the last 10 fiscal years, the highest costs were imposed in 2007. The last three years of the Bush administration saw higher regulatory costs than the first three years of the Obama administration.”

I agree that President Bush was happy to regulate. But the high costs of 2007 primarily were due to a Clean Air particulate matter rule that this administration surely favors. In any event, according to the OMB data I compiled in this chart, Obama’s first two years alone cost more than Bush’s first four years. Again, these comparisons are only the few rules for which both benefits and costs exist, omit independent agency rules, and cannot serve as the basis for claims made in the Tribune oped. The truth is nobody knows anything about the overall benefits and costs of the regulatory enterprise.

Cost estimates also require, but do not, account for how regulation undermines emergence of superior non-governmental institutions and disciplines (insurance, liability) that serve the public better. If the market is muscled out, that is a cost and a dilution of real regulatory discipline.

Counts:

Sunstein claimed “there has been a decrease, not an increase, in federal rulemaking during this administration. During the first three years of the Obama administration, the number of final rules reviewed by OIRA and issued by executive agencies was actually lower than during the first three years of the Bush administration.” President Obama made this same claim during the State of the Union Address.

As for total rules finalized during their first three years, including independent agencies, Obama did indeed finalize fewer by my count (see Historical Tables: Part B here in Ten Thousand Commandments)— an average of 3,603 yearly (2009-11) compared with Bush’s 4,196 three-year (2001-03) average.

On the other hand, Bush started from Clinton-era heights of an average of 4,671 during that president’s eight years, and Bush reduced that to 3,830 during 2008. His overall trend was down in that regard — but Obama’s trend is up — from 3,503 in 2009 to 3,807 in 2011.

Also, Obama had the most rules during his first three years when it comes to “economically significant” rules in the Unified Agenda Pipeline: Bush had fewer: 149, 136 and 127 compared to Obama’s 184, 224 and 212.

Obama’s economically significant rules in the “active” and “completed” categories shown here are significantly above Bush’s. As for the “Long-term” rules of both presidents, they are about the same; but guess what? Sunstein told agencies on March 12: ”In recent years, a large number of Unified Agenda entries have been for regulatory actions for which no real activity is expected within the coming year. Many of these entries are listed as ‘Long-Term.’ Please consider terminating the listing of such entries until some action is likely to occur.”

That doesn’t bode well for advance warning to anticipate “cumulative effect of regulation.”

Finally, Obama’s rules impacting small business, those requiring a Regulatory Flexibility Analysis, are becoming more numerous. For Bush’s first three years the counts were 388, 362 and 370. For Obama, 372, 428 and 418.

Sunstein advocated “using low-cost ‘nudges’” to get the government’s bidding done. I prefer to nudge, maybe even shove, the bureaucracies instead. I don’t say any of these measures are perfect; I employ them instead to cite the need for an official regulatory report card on transparency.

Something big has to happen to make this new OMB guidance more tractable.

Clyde Wayne Crews

Wed, 2012-03-21

Citation Source:

Forbes

http://www.forbes.com/sites/waynecrews/2012/03/21/why-regulations-arent-good-again/

OMB Guidance on Cost of Federal Regulation "Inadequate"

Nicole Ciandella — Tue, 20 Mar 2012 15:59:49 +0000

Washington, D.C., March 20, 2012—Today, the Office of Information and Regulatory Affairs within the White House Office of Management and Budget released guidance to agencies on “Cumulative Effects of Regulations” with an emphasis on enhancing net benefits.

The two-page guidance notes, “Public participation can and should be used to evaluate the cumulative effects of regulations, for example through active engagement with affected stakeholders well before the issuance of notices of proposed rulemaking.”

The following may be attributed to Wayne Crews, CEI vice president for policy and director of technology studies, and author of the annual Ten Thousand Commandments report.

OIRA’s guidance is a worthwhile yet inadequate step. OMB does present an annual Report to Congress on the Benefits and Costs of Federal Regulations with a 10-year lookback, but the last time it assembled a cumulative cost number was 2002. An explicit cumulative or redundancy burden assessment is something new and welcome.

However, the emphasis on potentially self-serving agency-assessed net benefits underscores yet again the reality that improving regulatory outcomes fundamentally requires Congress to answer for rule impacts—such as via expedited votes on “economically significant” ($100-million-plus) regulations (The REINS Act is an example).

Since pursuit of known benefits presumably drove any initial decision to legislate and regulate, agencies should focus on minimizing costs within some defensible “regulatory budget” constraint bounded by those potential benefits, as determined by Congress. Costs rarely get measured, making net-benefit assessments somewhat illusory anyway; of 4,128 rules in the recent Unified Agenda pipeline, 212 were “economically significant” and theoretically subject to some analysis, and 418 were subject to small-business Regulatory Impact Analyses of varying quality.

Rules also need segregating into economic, and health and safety categories. And “budget rules” that impact government programs need separate treatment. Otherwise, assessments are incoherent.

Cost estimates of regulation also must take into account the manner in which regulation undermines superior non-governmental institutions and disciplines (insurance, liability, cooperatives) that can serve the public better than top-down rules.

Even now, agencies engage in benefit-free, non-measurable distortions of entire industry structures via limiting access to energy, antitrust regulatory abuse, “net neutrality” rules in telecommunications and government stimulus with regulatory strings attached.

There’s a clash of visions that undermines OIRA’s premise. What would actual net-beneficial cybersecurity regulation entail? A sweeping liberalization of infrastructure industries that’s not even on the table; What would net-beneficial Internet access “regulation” have been? It would have banned net neutrality rather than mandate it; What might a Transportation Safety Administration have done to secure air travel? Perhaps use biometric identification on pilots rather than grope the public at large; What would expanded health access have entailed? Increasing market supply of services, relaxed licensing, and a spanking for the FDA’s drug delays; What will net-beneficial privacy regulation entail? Ensuring that privacy and anonymity remain competitive, not dictated, features; What does sound environmental “regulation” require? Bringing environmental amenities into the wealth-enhancing voluntary sector rather than government mis-management of contrived scarcity.

The irreconcilable worldviews of the pro-central-regulation camp and those favoring harnessing competitive discipline make the OIRA project somewhat futile. To the latter, benefits require liberalization and competitive discipline, and regulators who don’t confuse data with knowledge.

Needed more urgently, then, is more rapid harnessing of regulation at large, such as via a bipartisan Regulatory Reduction Commission that lessens the scope of future cumulative OIRA analyses. Something big has to happen to make this guidance more tractable.

Also vital is an annual regulatory transparency scorecard (with historical tables), somewhat like that depicted here:

• Tallies of “economically significant” rules and minor rules by department, agency, and commission.

• Numbers and percentages of rules impacting small business.

• Depictions of how regulations accumulate as a small business grows.

• Numbers and percentages of regulations that contain numerical cost estimates.

• Tallies of existing cost estimates, including subtotals by agency and grand total.

• Numbers and percentages lacking cost estimates.

• Federal Register analysis, including number of pages and proposed and final rule breakdowns by agency.

• Number of major rules reported on by the GAO in its database of reports on regulations.

• Ranking of most active rule-making agencies in economic, heath and safety, and budget rule categories.

• Separate categorization of rules that are deregulatory rather than regulatory.

• Numbers and percentages of rules facing statutory or judicial deadlines that limit executive branch ability to restrain them.

• Rules for which weighing costs and benefits is statutorily prohibited.

• Analysis of numbers and percentages of rules reviewed by OMB and action taken.

> For more data on regulation, visit www.tenthousandcommandments.com.

Nicole Ciandella

Tue, 2012-03-20

Sub Title:

Fails to Propose Meaningful, Rapid Relief