Cut Down On Unfunded Mandates, Part II

In my last post, I explained the concept of unfunded mandates, and why we need to find a way to curb Congress’s ability to pass the buck on to businesses and state governments.

This issue is especially important now, as Congress will likely be voting on the Unfunded Mandate Information and Transparency Act (UMITA) sometime next week. This would be a major update and improvement on the Unfunded Mandate Reform Act (UMRA), passed in 1995.

UMRA isn’t bad, it just isn’t that good.

First of all, it only applies to cabinet-level agencies, not independent ones. Of the 59 federal rulemaking agencies, only 17 are cabinet level. UMRA applies to less than 30 percent of federal rulemaking agencies.

Furthermore, UMRA’s reporting requirement is restricted to “expenditures,” but a regulation can have many economic effects that would not fall into this category.

UMRA put the Office of Management and Budget (OMB) is responsible for analyzing the expenditures that regulations will cause. OMB is a big, ponderous, clumsy beast, with 529 employees. It isn’t well-suited to handle this type of analysis. The bill would move that responsibility to the Office of Information and Regulatory Affairs (OIRA), a smaller subsidiary of OMB that specializes in this sort of thing. With only 50 employees, made up mostly of career civil servants with graduate training in economics, policy, stats, and IT, it is a far less politicized body that can more adequately handle unfunded mandate analysis.

One of the biggest problems with UMRA is that it doesn’t apply to rules without a notice of proposed rulemaking (NPRM). Agencies usually begin the regulation process by publishing an NPRM in the Federal Register, but they aren’t required to do so. UMRA gives agencies an incentive to skip the NPRM, as omitting it exempts the regulation from UMRA scrutiny. This is an area where UMRA actually harms transparency, which UMITA proposes to solve. It eliminates NPRM as a criteria for UMRA scrutiny, and thereby mandates cost analysis to all rules.

With the economy in the dumps, we cannot allow Congress to continue to burden others with regulations that they can’t pay for themselves. UMITA, championed by Rep. Virginia Foxx (R-N.C.), could seriously alleviate the regulatory burden that Congress insists on placing on the economy.