The Origin of Regulatory Cost-Benefit Analysis

Editor’s Note: The following 1969 landmark article established the intellectual basis for regulatory cost-benefit analysis. It all began here.

Effective Public Policy and the Government Budget: a Uniform Treatment of Public Expenditures and Public Rules

by

Dr. A. Allan Schmid, Visiting Professor to the Office of the Secretary of the Army

 

  • Click here to read “Effective Public Policy and the Government Budget” (pdf 2 MB)

 

Joint Economic Committee, 91st Congress, First Session Analysis and Evaluation of Public Expenditures: PPBS System US Government 1969, “A compendium of papers submitted to the Subcommittee on Economy and Government of the Joint Economic Committee,” Volume I, pages 579-591.

Executive Branch Regulatory Review Policies Set the Analytic Gold Standard for Independent Financial Agencies to Follow

From: The Regulatory Review

Structural Reforms to Improve Cost-Benefit Analyses of Financial Regulation

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Similarly, the SEC’s recent rulemaking problems demonstrate the shortcomings of regulatory analysis at independent agencies. Since the early 1990s, the federal courts have invalidated a slew of SEC rules as a result of the lack of an adequate cost-benefit analysis. Following several judicial rebukes, the SEC decided to update its rulemaking guidance to stave off further such roadblocks to the implementation of its policies. The resulting guidance document borrows very heavily from the White House Office of Management and Budget’s Circular A-4, which instructs executive branch agencies on how to perform cost-benefit analyses. Since adopting protocols that mirror that used in the executive branch, the SEC’s cost-benefit analysis has become, according to the Committee on Capital Markets Regulation, “a candidate for the ‘gold standard’ of cost-benefit analysis in the United States.”

Social Entrepreneurs and the Management of the Regulatory State, The Latent Need to Update Law School Curricula

From: CRE Presentation to the The Southeastern Association of Law Schools | 2017 SEALS Annual Conference Boca Raton, Florida

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Implications for Centralized Regulatory Review

It is the view of CRE that if the federal regulatory process were pro-active in terms of social entrepreneurs providing ingenious solutions to regulatory issues there would be less incentive for politicians to resort to Draconian measures to correct a tilt in the regulatory state. The strong presence of social entrepreneurs would also lead to the formation of a national constituency for OIRA which would shelter it in part from interest group demands for ideological solutions to regulatory issues.

Social Security Numbers: OMB Actions Needed to Strengthen Federal Efforts to Limit Identity Theft Risks by Reducing Collection, Use, and Display

From: US Government Accountability Office | Report to the Chairman; Subcommittee on Social Security Committee on Ways and Means; House of Representatives

Presidential Regulatory Authority: Two Views

Editor’s Note: Despite the definitive U.S. Court of Appeals ruling in Sierra Club v. Costle, the legitimacy of Presidential authority over the review and approval of federal regulations has been a contentious issue since the process was established by then OMB Director George Schultz during the Nixon Administration. The contemporary scholarly debate on centralized regulatory review has been enhanced by the two recent publications, (1) an Administrative Law Review article by Professor Ming H. Chen, “Administrator-In-Chief: President and Executive Action in Immigration Law” available here and (2) CRE’s response, below.

 

Response to Professor Chen on “The Administrator-in-Chief”

Re: Professor Chen article in the Administrative Law Review

An Empirical Analysis of the Establishment of Independent Agencies

From: The Regulatory Review

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In our recent article, The Genesis of Independent Agencies, we ask a core question of administrative law: When are agencies established with features that insulate them from direct presidential control? The leading articles in the legal literature assert that Congress is more likely to establish independent agencies when government is divided—that is, when the U.S. House of Representatives, the U.S. Senate, or both are controlled by a different party than that of the President. Under these circumstances, the academic literature maintains, Congress is less willing to give the President fuller control of a new agency. Only a single political science study—one that suffers from design flaws and that has been misinterpreted in the legal literature—provides empirical evidence for the claim that divided government has an impact on the establishment of independent agencies.

The Case for the Administrative State

Editor’s Note: Please see, Paul Verkuil and the Case for Professional Government, here and here.

From: Real Clear Policy

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Bucking this line of argument, Paul Verkuil of the Center for American Progress makes a positive case for the administrative state. A former law professor and chairman of the Administrative Conference of the United States from 2010–2015, Verkuil is hardly insensitive to the constitutional issues surrounding administrative law or the many problems and inefficiencies that plague our federal bureaucracy. He insists, however, that the administrative state is the solution, not the problem.

Working Smart and Hard? Agency Effort, Judicial Review, and Policy Precision

From: Journal of Theoretical Politics 29(1): 69-96.

Ian R. Turner, Texas A&M University – Department of Political Science

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The Administrative State Has Run Amok

From: The Regulatory Review | A Publication of the Penn Program on Regulation

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In my original essay, I encouraged the use of four regulatory best practices that, among others, could improve the regulatory work product from CPSC and agencies across the federal government. These included:

  1. Requiring honesty from agencies in their regulatory agendas, so that those who are not Washington insiders are not forced to comb through obscure agency documents to know how their tax dollars are being spent.

Regulatory Analysis Requirements Reduce Political Influence

From: Regulation and Governance

Regulatory Analysis Procedures and Political Influence on Bureaucratic Policymaking

Neal D. Woods

Abstract

Well-known theories suggest that administrative procedures may be used as mechanisms of political control of the bureaucracy. This study investigates whether three common regulatory analysis procedures—cost-benefit analysis, risk assessment, and economic impact analysis—lead to greater influence by political officials on bureaucratic policymaking. Multivariate analyses of data from a unique survey of state administrators indicate that regulatory analysis requirements are associated with decreases in the perceived influence of elected political officials on the content of administrative rules. This association is particularly evident in cases where proposed rules are subjected to a cost–benefit test. These findings contradict prominent theories of administrative procedures, but are consistent with recent research on the political power of administrative agencies.