- - Wednesday, February 12, 2020

It’s easy to get lost in the bedlam of the fevered impeachment battles in Washington, D.C., but behind the scenes, a covert battle is being waged that affects every American’s pocketbook. This war is taking place in the corridors of academia, at nonprofits, the halls of Congress and offices of lobbyists. Its purpose is to influence the direction of the massive and growing fourth branch of government: The federal bureaucracies that now manage most federal policy. It’s your money, your health and your environment at stake, but if you don’t pay attention, you may be short-changed.

Surprisingly, an obscure annual report issued by the Office of Management and Budget (OMB) has become ground zero in these ongoing clashes. Since 1996, Congress has instructed the OMB to produce a kind of scorecard for federal regulations. The required “Report to Congress on the Benefits and Costs of Federal Regulations” provides the data that each side uses as they engage in an ideological battle over the future of federal regulation.

On one side are those who argue we will lose “valuable protections” under policies like President Trump’s insistence on erasing two regulations for every new one added. They note that each year, without fail, the OMB report shows the benefits of regulation wildly exceeding the costs — alleged proof that the administrative state is one of society’s crowning achievements and that more regulations should be welcomed.

On the other side are those who point out that excessive expenditures on regulations slow economic growth and hurt the people they intend to help by raising prices and reducing consumer choice. They argue that, despite the appearance of some excellent returns on paper, a closer look at the OMB reports reveal a more nuanced situation.

Who’s correct? Well, consider that even the report’s producers now caveat it so heavily that claims about the regulatory state’s efficacy ring embarrassingly hollow. The latest notes that benefit and cost estimates are often merely “speculative,” “may not be complete,” and that “insufficient empirical information and data is a continuing challenge to agencies.”



Only a handful of regulations even have estimates of benefits and costs in the OMB report. This number was five out of about 3,000 final rules in fiscal 2019. This problem isn’t unique to the Trump administration, either: Previous presidents typically analyzed about one-third of 1 percent of regulations at this level of rigor.

Even for the tiny sliver of regulations with any remotely complete economic analysis, the science and economics quality rules produced by the Environmental Protection Agency, whose analyses resemble a scaffold built on cotton candy. The most prominent regulations featured in the OMB reports are air deficiencies that are well known to regulatory economists.

For example, EPA analysis now finds substantial benefits from reducing fine particulate matter (i.e., dust) below the limits EPA has formally designated as “safe.” Experts have complained for years that many of the EPA’s Clean Air Act benefits are “questionable or implausible.” To this day, the EPA also attaches implausibly large values — often as high as $10 million — to extending the lives of seniors by a few months or even days. Everyone’s life has value, but better analysis could redirect billions toward better solutions that extend more lives for longer durations.

That’s one reason why analysis is about more than just number crunching. Astute Beltway insiders have learned that the way to move the policy needle in their direction is to first move the analytical needle.

As a result, the OMB’s annual report has become a key battleground in the fight over the direction of the regulatory state. It’s also why administrative law experts worry that fights over policy have become inexorably intertwined with fights over analytical assumptions — such as the value of reducing risk — leaving the average American left out of policy debates.

It’s understandable that Americans frequently tune out the noise radiating from Washington and get overwhelmed by the statistics and jargon that special interests use to shroud their self-interested message in scientific veneer. But when it comes to the federal regulatory system, you should tune in and see whether you’re getting your money’s worth. The annual OMB report is an opportunity to do just that.

• James Broughel is a senior research fellow with the Mercatus Center at George Mason University and an adjunct professor of law at the Antonin Scalia Law School. Richard Williams, senior affiliated scholar with the Mercatus Center, spent 27 years with the FDA and was its director for social sciences at the Center for Food Safety and Applied Nutrition.

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