- The Washington Times - Wednesday, July 24, 2002

Every year, Congress goes through an elaborate process of appropriating money to run federal agencies and to finance many of their programs. In each chamber, there is a full appropriations committee and 13 separate subcommittees, the chairmen of which are referred to as "the College of Cardinals." Representatives fight with each other to get one of the 65 seats on the committee. Subcommittees fight with each other to get bigger shares of the appropriations pie.

Congress' approach to regulation is very different. The regulatory agencies' authorization committees occasionally hold hearings, as do a few oversight committees. But Congress' attention to regulation is a shadow of its preoccupation with spending.

This imbalance is curious. The Bush administration forecasts that during fiscal year 2002 federal spending from appropriated accounts will be $688 billion (or about 6.6 percent of gross domestic product). Professor Mark Crain of George Mason University and Dean Thomas Hopkins of the Rochester Institute of Technology estimate that the annual cost of federal regulation will be at least $881 billion in 2002 (or about 8.5 percent of GDP). Thus, the costs the federal government imposes through regulation far exceed the costs it imposes (implicitly) through the appropriations process.

Congress needs to address regulation more explicitly and more comprehensively. We recommend a regulatory appropriations process. It won't be easy to develop or to implement. One problem is lack of information. Although recent legislation requires the Office of Management and Budget to submit a compilation of regulatory costs and benefits, by agency, along with the president's budget, this requirement has yet to be fully met.

Understandably, the agencies and proponents of their programs are reluctant to put a price tag on regulatory efforts, seeing this as a ploy to shut them down. But finding that a regulation is "costly" is no more an indictment than drawing the same conclusion about some health, education or defense expenditure program. The relevant question is whether the regulation or program in question generates benefits greater than costs and whether the benefits might be achieved in a less costly way or whether greater benefits might be achieved at the same cost. This is not ideology. This is common sense.

Of course, it may be more difficult to measure the benefits of regulation than to measure the costs. But that goes for spending programs as well. For example, the costs of a federal job-relocation program may be straightforward, but the benefits may be hard to determine. The problems in measuring, or estimating, the benefits of regulatory programs are little different than measuring, or estimating, the benefits of spending programs. Each time a congressman or senator votes on an appropriation measure or a regulatory initiative they reveal their assessment of benefits as well as costs.

The spending appropriations process is not perfect, but it is familiar and works well as a model. Here is what we propose. First, the congressional leadership would establish a regulatory appropriations committee, comprised of members with interest and expertise in regulatory matters. The committee then would divide itself into several subcommittees perhaps environmental (including EPA), other health and safety (FDA, OSHA, NHTSA, USDA, etc.), and economic (FCC, FTC). The goal would be a logical grouping of regulatory goals and approaches, and covering the whole gamut of federal regulatory efforts.

Each year, along with the spending budget, the administration would send Congress a proposed regulatory budget, detailing the major programs and the costs it proposes the federal government impose for the fiscal year, by agency. Congress then would establish, by concurrent resolution, an overall limit for regulatory costs, and then divide this total among the regulatory appropriations subcommittees. Like their spending counterparts, these subcommittees would approve regulatory appropriations for consideration by the full committee and then by the respective chambers and the president.

If this sounds awkward or otherwise difficult, it makes far more sense than the chaotic regulatory process we have today. Prior to 1921, the federal agencies operated without central budget oversight. They simply took policy leadership from Congress and the president, and spent whatever they thought appropriate from available funds. When total federal spending accounted for less than 7 percent of GDP, perhaps having such lack of control and lack of accountability didn't matter very much. But only a fool would argue that we return to such a scheme. Yet, that is precisely what we have in the regulatory process today.


James C. Miller III, a former director of the Office of Management and Budget, is chairman of the CapAnalysis Group of Howrey Simon Arnold & White. Rep. Doug Ose, California Republican, is chairman of the House subcommittee on Energy Policy, Natural Resources and Regulatory Affairs.

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