This is the third post in a series on how the next president can reduce the scope of government. The last installment addressed the role of law and economics staff in reviewing regulations. The first installment laid out the case for why regulatory liberalization is becoming more bipartisan and called for a regulatory moratorium or freeze.
Part 3: Professionalize Review, Revision, Repeal and Sunsetting of Regulations
Short of the moratorium advocated at the top of this series, and in keeping with the spirit of executive orders and retrospective reviews that agencies allegedly conduct already, more aggressive systematic rule review by the Office of Management and Budget (OMB) and agencies would be valuable. Congress occasionally considers regulatory sunsetting; a new initiative of that kind should require agency-generated regulatory requirements and sub-regulatory guidance to expire or sunset within a given period of time unless they are re-proposed with public notice and comment.
This task requires a president who agrees with the observation that regulations sometimes go too far and recognizes that allowing even good rules to mount inappropriately is counterproductive. I noted in Part 1 that the interest in some regulatory liberalization appears to be bipartisan.
While sunsets or rule phase-outs will likely be disregarded without legislative engagement and oversight, reporting on deadlines, extensions and non-extensions, and disclosing ratios of what gets kept and what gets jettisoned will quickly quantify whether streamlining or supervision really happens at the agency and executive branch level. If the answer turns out to be no, we will have automatically generated the record capable of prompting Congress to do so.
Criteria by which agencies might evaluate outstanding rules include:
- Which rules can be eliminated or relaxed without becoming bogged down in scientific disputes over risk assessment? Which rules are just silly? Which are paternalistic? Does the Food and Drug Administration need to regulate serving sizes of breath mints, or treat returned multivitamins as toxic waste, or should they be punished when they do such things like these?
- Are the data that regulated entities are required to report to bureaus being used at all?
- Does the regulation create unfavorable rather than positive health effects (such as health costs of advertising restrictions on some needed multi-use drug)?
Such questions can help isolate the burdensome or counterproductive. A new president could build upon President Obama’s call (in Executive Order 13563) for retrospective review with E. O. 13563’s and agency plans to:
[P]periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency’s regulatory program more effective or less burdensome.
One can’t help but notice that the word “expanded” sneaked in there, though.
In any event, the Office of Management and Budget’s Reports to Congress do make several worthwhile recommendations for regulatory improvement, including:
[F]acilitating public participation and fostering transparency by using plain language; making objective, evidence-based assessment of costs and benefits an integral part of the regulatory decision-making process; using retrospective review to inform decisions about specific rules and, more broadly, about the appropriate interpretation of impact analyses that feature incomplete quantification; and, finally, aligning agency priorities across all levels of internal hierarchy.
These are useful steps. However, besides reviewing the limited implementation of certain parts of E.O. 13563, including “regulatory look back, reducing paperwork burdens, simplifying government communications, and promoting long-run economic growth and job creation via international regulatory cooperation,” little about aggressively reducing existing regulation appears in OMB reports. Agency Regulatory Impact Analyses and the entire executive branch review process should reflect a higher burden of proof regarding rules’ value. Where agency analyses appear not to justify a rule, OMB should be more forthright and say so, and challenge non-major rules as well, since they can also be economically significant in the normal sense of the term.
With the backing of an engaged president, OMB could recommend modifications to entire regulatory programs based on plain common sense, regardless of executive orders in play. OMB might note costs of presumably beneficial regulations, and compare those benefits to superior advantages available elsewhere, and use such findings to inform congressional investigations of regulatory budgeting.
OMB now has the experience and know-how to create a benefit “yardstick” to objectively critique high cost, low benefit rules (this can help inform a “regulatory transparency report card,” which this series will cover in an upcoming installment). The president can continue prodding agencies about rule reductions, and require ranking of regulations to demonstrate that their least effective rules are superior to another agency’s rules. Findings should be published, and examined by scholars outside of government.
Again, a new president’s leadership role, or “pen and phone” if you will, can legitimize the task of eliminating needless, burdensome or counterproductive rules. Part of governing consists of rolling government back from the places it should not be.
Also in this series:
How A New President Can Roll Back Bureaucracy, Part 1: Freeze Regulations Temporarily
How A New President Can Roll Back Bureaucracy, Part 2: Boost Regulatory Review Resources and Free Market Law and Economics Staff at Agencies
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.