This is the second post in a series on how the next president can reduce the scope of government. The first installment laid out the case for why regulatory liberalization is becoming more bipartisan and called for a regulatory moratorium or freeze.
Part 2: Boost Regulatory Review Resources and Free Market Law and Economics Staff at Agencies
If we must take the central, top-down administrative state as a given—and it seems that for the time being the Constitution is not coming to the rescue, therefore we must—more manpower could enhance the Office of Management and Budget’s (or some replacement body’s) executive order review function. That body is called the Office of Information and Regulatory Affairs.
Where political circumstances prevent that, the administration and Congress might shift personnel and dollars to concentrate on key agencies like the Environmental Protection Agency, the Federal Communications Commission, and the assortment of financial regulatory bodies. However, since OIRA already (sometimes) grants special attention to major rules, and since a handful of agencies usually account for most major rules, OIRA probably concentrates its resources for the most part, so this is a limited, even naïve, option. But we don’t really know for sure. Additional analytical help can and does come from economists tasked from federal agencies and departments. The moratorium discussed in the previous installment could help the process of regrouping.
Alternatively, economists and/or divisions at agencies whose job it is to perform benefit and cost assessment and prepare Regulatory Impact Analysis (RIA) could be moved out of less active agencies and into agencies whose rules and guidance are of most concern. The next president (or OIRA chief or Congress) could give these economists “Bureau of No” duties. That is, rather than enable the regulatory turf-building that often characterizes bureaucracy, to act as the one entity that looks for reasons not to enact the regulation being proposed. It should challenge conventional RIAs that somehow always find net benefits rather than net costs, and it could force recognition rather than evasion of the role of competitive discipline and other factors that “regulate” economic efficiency and health and safety apart from (and better than) Washington bureaus. Agency economists, deployed where they are objectively more useful in blocking the unrestrained regulatory flow, could provide greater assurance that more inclusive analyses were being carried out.
It must be reiterated that it is not enough for economists reviewing agency output to focus on Regulatory Impact Analyses. Only a few get prepared. The flow, the rising costs, and the limited deep inquiry that even major rules get indicates that the ignored costs of “minor” rules may actually be very large. Indeed, non-major rules and independent agency rules make up the regulatory bulk. Still a rough “80/20 rule” should apply such that, while costs can be masked behind the number of rules, a relative handful account for the bulk of impending regulatory burdens.
Economists can get better at concentrating efforts with presidential permission, encouragement, bipartisan support, and acknowledgement of their importance.
Also in this series:
This series builds upon recommendations in “One Nation Ungovernable? Confronting the Modern Regulatory State,” in Donald J. Boudreaux, ed., What America’s Decline In Economic Freedom Means for Entrepreneurship and Prosperity, Fraser Institute and Mercatus Center at George Mason University (2015), pp. 117-181.