The federal government is supposed to put out an annual budget to track its spending. Why doesn’t it do the same thing for regulation? The Article I Regulatory Budget Act (H.R. 261), recently introduced by Rep. Bob Good (R-VA), would fill that transparency gap. Its cosponsors include Reps. Nancy Mace (R-SC), Mary Miller (R-IL), and Barry Moore (R-AL).
Just as spending has surged in the past three years, regulatory output can be expected to the same. The many rapid-fire legislative enactments of the past three years — the CARES Act, the Families First Coronavirus Act, the American Rescue Plan, the Infrastructure Law, the CHIPS and Science Act, the Inflation Act, the recent Omnibus spending bill — not only add more trillions to spending, they are inherently highly regulatory and invasive. …
A regulatory budget would make government’s presence in the economy more explicit by capping what agencies individually and collectively compel the private sector to spend on regulatory compliance, while minimizing indirect losses from intervention.
Regulatory budgeting does have one problem: Nobody knows exactly how much regulations cost. Wayne ballparks it at about $1.9 trillion in his Ten Thousand Commandments report, but points out that number is incomplete.
Agencies do not release all of their data. They have an incentive to fudge numbers. They overstate benefits and downplay costs. It is also difficult to reconcile differences in discount rates for multi-year estimates, and to differentiate one-time expenses from ongoing annual costs for more than 3,000 new regulations each year.
Rep. Good’s regulatory budget bill tasks several offices with dealing with these difficulties, including the Office of Management and Budget, the Congressional Budget Office, the Government Accountability Office, and the Bureau of Economic Analysis. While perfection in these estimates is impossible, they can at least get estimates close enough to set reasonable ceilings for agencies.
Those ceilings are important. It is not enough to simply say how much agencies are spending. A well-designed regulatory budget also allocates to each agency a certain amount of regulatory burdens it may impose. And it may not exceed that cap. This forces agencies to prioritize their rules. If an agency wants to enact a new rule, it first has to clear out some budget room by getting rid of some lower-priority rules.
This accomplishes three things. One, it forces agencies to think in terms of tradeoffs. All too often, they are happy to impose new costs on others without thinking about existing burdens. A regulatory budget would change that psychology.
Two, it would prevent mission creep. A regulatory budget would force agencies to focus on their core missions. They would not have room for mission-unrelated rules if they want to accomplish their goals—and justify their existing budgets.
Three, it would help to prevent whole-of-government initiatives from expanding every agency’s mission beyond recognition. Agencies can do one thing well or many things poorly; the EPA should stick to environmental protection rather than pursuing equity, and the Federal Reserve should stick to using monetary policy to keep inflation in check, rather than to pursue environmental goals.
Specialization is often a good idea, and a regulatory budget would force agencies to at least consider its benefits.
The bill text for Rep. Good’s Article I Regulatory Budget Act is here; Wayne Crews’ Forbes column about the bill is here. His 2016 paper on regulatory budgets is here. CEI President Kent Lassman argued for a regulatory budget here. Wayne and I pushed for a regulatory budget in 2019 in USA Today.
Rep. Good discussed his bill at a recent CEI hill briefing, along with several other reforms.