The Regan Administration made a serious effort to require that benefit-cost analysis be used to determine whether all major regulations were economically efficient. Such analyses had long been used for judging the efficiency of Federal water projects, but this was the first time that they were required for analyzing Federal regulations. The purpose was to discourage if not prevent economically inefficient regulations from being approved. Quidelines were approved and used for many years—until the Obama Administration, which was determined to promote climate alarmism and other “green” Federal regulatory interventions in the market. But they also did not want to repeal the Reagan Executive Order Order 12291 and subsequent orders derived from it perhaps because that would have been all too obvious. So they continued to require benefit-cost regulations which should have resulted in disapproval of all their favorite climate alarmist regulations had they been honestly evaluated. After all, that was the very purpose of the order–to keep economically inefficient regulations from being approved. The unfortunate result is that the Obama Administration effectively destroyed the extensive efforts by the Reagan and a number of subsequent administrations to build a framework for implementing an effective and self-regulating check on Federal regulatory activity.
Perhaps recognizing the very extensive damage that EPA had done to the regulatory benefit-cost system EPA appears to be proposing to alter its guidelines, possibly in order to make it harder to do what the Obama Administration felt it needed to do to circumvent the existing benefit-cost regulations and which were not stopped from happening by either the guardians of benefit-cost analysis within EPA or OMB. If done carefully and thoughtfully such changes may help to reduce the many unjustified procedures used by the Obama Administration to justify the unjustifiable. But even if done perfectly it will not solve the problem and do what needs to be done since a future pro-regulatory administration will have little difficulty finding other shady approaches to justify what it wants to do. All it requires is a little creative imagination and an absence of effective enforcement both inside and outside EPA.
I would advocate that EPA and OMB rebuild their existing review capability and authority in this area and restore its clout while a longer term fix is developed and agreed upon. The problem is that it is too easy for the party in power to disregard or capture the extensive cost-benefit review process (known as RIA review). Obviously this has to be tightened up. The longer term problem is that OMB is and should be a political operation to implement the President’s programs across the Federal Government so what is needed is a more independent home for ultimate RIA quality review. Some improvement could be made by strengthening the EPA review function take an active and hard stand on the review process inside EPA or even prepare the RIAs itself, But in the longer run this is not the answer. The office can be wiped out or the Director reassigned much too easily.
What is needed is a more independent group to provide real time review in EPA and OIRA in OMB of each individual proposed RIA. One possibility is to add this function to the duties of the Congressional Budget Office. The benefit-cost system used by the Federal Government has evolved over many decades and is likely to continue doing so. Treating it as a static system leads to the disaster of the Obama Administration, where there were no effective controls on using junk science and economics to prevent the gross misuse of benefit-cost analysis of climate-related regulations to justify the economically unjustifiable. I have written at some length in my book on climate concerning some of the junk science and dubious economic analysis.
So the question is what to do now. I would advocate that OMB rebuild its existing review capability and authority in this area and restore its clout while a longer term fix is developed and agreed upon. The problem is that it is too easy tor the party in power to disregard or capture the extensive cost-benefit review process (known as RIA review). Obviously this has to be tightened up. The longer term problem is that OMB is and should be a political operation to implement the President’s programs across the Federal Government so what is needed is a more independent home for ultimate RIA quality review. Obviously some improvement could be made by having offices other than the program offices, the advocates of new regulations) take an active and hard stand on the review process inside EPA or even prepare the RIAs itself, But in the longer run this is not the answer. Any review office can be wiped out or the Director reassigned much too easily if they do not “cooperate” with the Administration currently in power.
A More Independent Review a Group Is Needed
What is needed is a more independent group to provide review within EPA and in the Office of Information and Regulatory Affairs in OMB. One possibility might be to add this function to the duties of the Congressional Budget Office. After review by the Agency involved and OMB, RIAs would go to the CBO. They could issue a report on the soundness of the economics used in the RIA and the implications of recommended changes. The Agency and OMB could then decide what to do. If the CBO report should be unfavorable, the OMB and agency could disregard what CBO has said and proceed or decide to withdraw the proposed regulation. But the CBO report would remain on the record regardless.
via Carlin Economics and Science
June 22, 2018 at 10:56PM
Iowa Climate Science Education 