Rewards and Risks of a Federal Regulatory Budget (Part 6)

Last week I began by making the case for a regulatory cost budget but wanted to spend time exploring looming pitfalls and political traps that could make it not worth supporting, or even render it something to actively oppose.

Last Tuesday I noted how, just as the federal government treats tax breaks as an “expenditure,” budgeting could inadvertently or deliberately lead to government expansion. Wednesday I addressed problems surrounding trading off “social” benefits with private costs. Thursday I looked at a third pitfall, coping with a fundamental impossibility of “measuring” costs. Friday before Labor Day weekend I critiqued the temptation to include benefits in a regulatory budget (they have to be accounted for elsewhere). 

Here’s the fifth potential hazard for those attempting a regulatory budget, and a wrapup of this series.

Hazard 5: The Inevitable Agency Complaints that “Cutting Our Budget Costs Lives!”

By shedding light on comparative agency activity, budgeting and simultaneous improved congressional oversight could counter agency overreach. But as night follows day, agencies threatened with an impending budget cut or a transfer of allowance to another agency will argue that cutting their budget will cost lives.

So ensuring that Congress actually does strip an agency of regulatory authority when the facts warrant is a big problem. Is it insurmountable? Stopping the flurry of federal spending at the end of a fiscal year certainly seems insurmountable; likewise under a budget, no one will be surprised when agencies regulate until their budget is exhausted, at which point they all appeal for more.

A barrage of such grievances could lead policymakers to increase the universal regulatory budget ceiling (whatever it happens to be) rather than strip an agency of a portion of its budget and transfer the authority elsewhere. There is a risk that the overall regulatory budget will spiral perpetually upward rather than stabilize or fall, again bringing us back to our observation earlier that a risk of a regulatory budget is eternally expanding what gets seen as the legitimate subject matter of the federal enterprise. This is an extremely significant and worrisome risk. While one would hope that Congress would monitor and refuse requests for increases in agency budgets as a matter of routine housecleaning, and strive to replace federal with state and local and personal oversight, the fiscal appropriations process and government-shutdown episodes show that Congress has a tough time with cutbacks in media spotlights. This is made worse by a lack of vocabulary by policymakers for defending expansions of free enterprise disciplines over regulatory oversight.

Where one agency can demonstrate that they can produce greater outcomes within the budget constraint compared to a rival agency, an accountable Congress should make the transfer. There remains a risk however, that agencies and pressure groups will collude and place constant pressure on Congress to increase the overall budget, within which they would all get to enjoy a corresponding increase in the size of their regulatory kingdom. Still, unlike today, Congress will have to explicitly approve such budget increases.

Conclusion: Add It Up

Regulatory burdens increase while benefits grow more ambiguous, signifying a regulatory system that itself needs to be regulated. But we lack any bipartisan “unified theory” agreeing that regulatory burdens require measurement and control. Economic circumstances may dictate that reluctant spenders and regulators reassess, and if so, regulatory liberalization, as opposed to tinkering, will require an unprecedented relinquishing of power by agencies and legislators. With or without a quantitative budget, effective regulatory reforms must ultimately come through institutional changes that tightly specify the purpose and reach of delegated regulatory power. Once that control is established, a budget can help ensure that the regulatory state remains in check, serving public rather than bureaucratic and special interests.

Policymakers, scholars, and other observers already cite the paltry few government estimates of regulatory costs that exist, from OMB’s annual but incomplete and now often tardy Report to Congress on the Benefits and Costs of Federal Regulations and the Government Accountability Office’s reports to Congress in compliance with the Congressional Accountability Act. If disclosure improves on those, and especially if it incorporates so called “guidance documents,” the information will unquestionably become an important part of the policy landscape. As of today, we could do far worse than allocating regulatory authority among agencies in loose correspondence to where an accountable Congress believes benefits to lie. In fact, that’s what we already do now: far worse.

Also in this series:

Rewards and Risks of a Federal Regulatory Budget (Part 1)

Rewards and Risks of a Federal Regulatory Budget (Part 2) The Perverse Expansion of Government

Rewards and Risks of a Federal Regulatory Budget (Part 3) The Elevation of Utilitarianism Over Individual Rights

Rewards and Risks of a Federal Regulatory Budget (Part 4) The Impossibility of Measuring Costs

Rewards and Risks of a Federal Regulatory Budget (Part 5) The Temptation to Include Benefits In a Regulatory Budget