When Uncle Sam knocks at the door saying he's here to help, watch out. He has hired an army of bureaucrats to devise thick stacks of papers and studies that claim federal intervention is just what the marketplace needs. As a Mercatus Institute study released Tuesday argues, that's not the case.
This is critical because regulations that carry the force of law are adopted based on the evidence provided by such reports. Take the Environmental Protection Agency's (EPA) "good neighbor" rule, which was shot down by the U.S. Court of Appeals for the D.C. Circuit on Tuesday. This rule would have imposed massive new costs on coal-fired power plants in the name of providing a slight reduction in the emission of certain pollutants. The EPA estimated the cost of implementation at $6.5 billion, with expected benefits of $100 billion to $270 billion. That is an extraordinarily wide range. The benefits were supposed to result from the prevention of 14,000 to 36,000 deaths, avoiding 23,000 non-fatal heart attacks, eliminating 26,000 hospital and emergency-department visits and escaping 240,000 episodes of aggravated asthma due to a decrease in ultra-fine particles in the air, including sulphur dioxide and nitrogen oxide.
The flaw with these estimates is that, as the Mercatus study points out, a large share of the estimated benefit, especially the reduction in deaths, comes from a reduction in particles below the threshold where we find evidence that they cause human harm. The EPA's position is that there is no safe level for inhalation of these substances, but this is without scientific support. The result is benefits that are grossly overstated relative to costs. A more reasonable, scientifically-sound risk assessment could reverse the cost-benefit calculus.
The problem is magnified by the trend of agencies choosing not to comply with a Clinton-era executive order requiring regulatory-impact analyses for rules that cost the economy $100 million or more. There were 189 major rules enacted in the period from 2005 through 2008, but only 45 were accompanied by such an analysis. In the three years from 2009 to 2011, the pace of major rule-making picked up, with 232 of these rules passed. Only 47 provided an analysis.
Rational analysis is in short supply because the federal government has moved from regulations designed to protect people from external costs, like pollution, to nanny-like rules supposed to protect people from making "bad" choices, such as using incandescent light bulbs or top-loading washing machines. These Big Brother interventions push cheaper alternatives out of the market, which affects the poor disproportionately. Feel-good red tape -- that reaches beyond the legitimate scope of government and is based on fuzzy numbers which overestimate benefits and underestimate costs -- are a drag on the economy. America needs to jettison all this uneconomic red tape so the U.S. economy can have a chance to recover and prosper.
Nita Ghei is a contributing Opinion writer for The Washington Times.
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