Say you live in an urban neighborhood where crime is worrisome but not overwhelming. The police are chronically understaffed, with no money to walk the beat, and instead depend on what we might call a "deterrence-based enforcement system" - making high-profile arrests, prosecuting the worst violators, and relying on the resulting publicity to frighten others from taking up a life of crime. Now suppose a group of trade associations representing local "businesses," that is to say drug dealers and thieves, marches on the police station demanding a gentler approach. Instead of making arrests, the police form a little club that offers conveniently scheduled workshops on how to comply with the law. And any club member that asserts an intention to try to be a better person - yard-long rap sheet notwithstanding - is invited to an award ceremony, and given a plaque for their wall along with a walk on their next couple of deals on the corner. Sound like one of Tony Soprano's feverish dreams? In fact, this scenario describes, metaphorically, the Environmental Protection Agency's (EPA) "Performance Track" program, which was recently and deservedly put on hold by newly appointed EPA Administrator Lisa Jackson. Full text
One of the most significant problems with cost-benefit analysis is its tendency to "dwarf soft variables." These "soft variables" are things that have value to all of us but are not typically traded in markets and are therefore difficult to quantify in any rigorous way. A good example of a soft variable is the value of the aquatic organisms that are not directly consumed by humans but will, along with those that are consumed by humans, be destroyed under the technology that EPA approved under the cost-benefit test that it employed. Full text
The Supreme Court today upheld a decision from the Bush administration's EPA that was good for industry and bad for the environmental health of our rivers and estuaries. But the majority opinion by Justice Scalia was written narrowly in a way that gives the Obama administration the leeway to approach these kinds of decisions in a more productive way. I'm hopeful they will seize that opportunity and avoid using cost-benefit analysis to set environmental standards in this case and beyond. Full text
Two years ago, a pair of well-meaning economists, Richard Morgenstern and Winston Harrington, who work at the moderate think tank Resources for the Future (RFF) got a large grant from the Smith Richardson Foundation to convene a group of well-credentialed academics to consider how to improve "cost-benefit analysis" (CBA). Unfortunately, their long-awaited report, released today, is a mouse that tries to roar, but doesn't quite. The reforms proposed in the final chapter -- and that are never endorsed by the report's contributing experts -- are your grandma's version of cost-benefit analysis. Rather than presenting bold ideas that might somehow have transformed the cost-benefit methodology into something that, if adopted, would not hamper -- and eventually embarrass -- the Obama Administration, it instead offers up only modest tweaks. Full text
More than 100 groups and individuals have accepted the invitation from the Office of Management and Budget (OMB) to comment on the new Executive Order on Regulatory Review that the Obama Administration is currently considering. The extended submission deadline is March 31. So far, the comments reflect a strikingly wide dividing line between regulatory opponents, on the one side, and individuals and groups committed to protecting the public's interest in health, safety, and environmental sustainability, on the other. Full text
The financial cataclysm gripping the country is often (and rightly) blamed on a lax system of public and private oversight of financial institutions. On the private side, investors trusted huge auditing companies like Arthur Anderson to rate multinational corporations for fiscal soundness. Meanwhile, Arthur Anderson also took handsome fees from the same corporations to conduct those audits. Such self-dealing makes no sense to most Americans. No one lets us administer our own driving tests, much less check our own tax returns. On the public side of the equation, we must consider the behavior of the government's watchdog, the Securities and Exchange Commission... Full text
In his appearance on Jay Leno's show last night, President Obama argued for financial regulations by making a comparison between credit cards, mortgages, and toasters: "When you buy a toaster, if it explodes in your face there's a law that says your toasters need to be safe. But when you get a credit card, or you get a mortgage, there's no law on the books that says if that explodes in your face financially, somehow you're going to be protected." But is there really a law that says your toasters must be safe? Well, not exactly. Full text
CPR President Rena Steinzor lays out the organization's recommendations for creating the new Executive Order on regulatory review: The Office of Management and Budget (OMB) invited public comments on the design of its new Executive Order on regulatory review, and CPR has now submitted our recommendations. We urged the Obama Administration to make fundamental changes in how OMB and prospective "regulatory czar" Cass Sunstein operate. We're hopeful that the new Administration will convert OMB from a regulatory Siberia into the guarantor of dramatically improved government protection of public health, safety, and the environment. Full text
CPR Member Scholar Rena Steinzor congratulates OMB for soliciting public comment on its expected Executive Order revising the regulatory review process. In a letter to OMB Director Peter Orszag last week, Steinzor had called for a public comment period. Full text
Center for Progressive Reform Member Scholar Christopher Schroeder blogs on undoing midnight regulations, cross-posted from Executive Watch blog at Duke Law School. Full text