No one seems to like the idea of regulation these days. Nudges, alternatives that try to get people to voluntarily alter their behavior by changing the context in which they make decisions, have been widely touted as a better approach. Cass Sunstein, Obama’s “regulatory czar” in the Office of Management and Budget, is a leading proponent of the “nudging” idea, and the co-author of a popular book promoting the concept that people should be gently helped to make better decisions for their health and welfare, rather than ordered to do so.
No one is against incorporating nudges into policy, at least no one I know. But the proponents of nudging sometimes make it sound like nudging should entirely replace more coercive approaches. A new report from the UK’s House of Lords Science and Technology Committee throws some cold water on that idea. The report concludes that nudges in isolation are often not as effective as a combination of voluntary and regulatory measures, and that the enthusiasm for nudges is not backed up by much evidence of success.
From the report’s summary:
Full textOur central finding is that non-regulatory measures used in isolation, including “nudges”, are less likely to be effective. Effective policies often use a range of interventions.
In April, CPR released a paper that looked at 12 critical rulemaking activities that we urged the Obama administration to finish by June 2012. The new regulatory agendas released by the agencies earlier this month show that instead of moving forward, the agencies are often slowing down. Contrary to the “tsunami” of regulations that the Chamber of Commerce claims is hampering economic recovery, this is a molasses flow that will delay life-saving public protections for workers, air breathers and water drinkers.
One rule that was on track in April is now definitely off track: an update to the National Ambient Air Quality Standard (NAAQS) for particulate matter. Another rule that was on track is now probably off track: the Power Plant New Source Performance Standards for limiting greenhouse gases were pushed back from May 2012 to Jun 2012, which is the deadline we identified to complete rules in Obama’s first term (after that point, re-election politics will likely stifle any continued efforts to finish important rulemakings, and, in any event, rules completed after that point risk being overturned under the Congressional Review Act if Republicans are able to win both houses of Congress and the White House in the 2012 elections).
All or parts of eight of the rulemaking activities highlighted in the paper have been severely delayed since the paper was released in April:
The House Energy & Commerce sub-committee on Environment and the Economy held a hearing yesterday on “regulatory chaos” (yikes!). One figure seemed popular: $1.75 trillion. That’s how much regulations cost the U.S. economy each year, sub-committee vice-chair Tim Murphy said in his opening statement. Two of the four witnesses made the same claim in their testimony (William Kovacs of the Chamber of Commerce and Karen Harned of the National Federation of Independent Business). The committee’s briefing memo on the hearing featured, you guessed it, the same number.
The number, of course, comes from a September 2010 study sponsored by the Small Business Administration’s Office of Advocacy. In February, a CPR white paper showed that the SBA study was severely flawed. Most notably, more than 70 percent of the total cost estimated had been based on public opinion polling about the perceived regulatory climate in different countries, numbers that the original researchers had never meant to be used for a guess about the total effect on the U.S. economy. In April, the nonpartisan Congressional Research Service published a report on the SBA study, including similar and additional critiques.
Even more impressive is that neither the study nor those who cite it make any effort to account for the benefits of regulation – saved lives, cleaner air and water, safer workplaces, safer automobiles, and so on. If they were to do that, they’d have to report that the benefits – even by the means of the badly-slanted-against-regulation methods of cost-benefit analysis imposed by the Office of Management and Budget – greatly outweigh the costs. But the Small Business Administration’s study simply ignores the benefits, the better to focus attention on its jaw-dropping, if wildly inaccurate, estimate of the costs.
Why is it regulatory opponents can’t seem to cite many studies on regulations other than this one?
Full textThe nation’s capital is all but intolerable these days, even for those of us who have lived here for decades and are used to excessive histrionics and gross summer weather. A pall of bad, hot, wet air has settled over the place, and serves as a backdrop to the slow-motion car wreck that is the debt ceiling negotiations—in every sense a crisis of political creation. In the midst of this misery, a small spark of comic relief was provided yesterday by the spectacle of hundreds of top-level business executives, led by the Business Roundtable and the Chamber of Commerce, pleading with their Tea Party allies not to run the economy into a ditch by provoking a default on the country’s financial obligations to institutions and governments across the globe. Having hitched its political wagon to a team of wild horses, big business has gone to the whip now that right-wing irrationality has impinged on its financial interests.
In fact, for years, big business has ridden quietly along while various brands of fiercely ideological conservatives drove the political wagon for the Republican party. Happily for them, the big business agenda—corporate welfare and the decimation of regulations that would rein in financial institutions; help blue-collar workers, and protect the environmental—fit neatly into the anti-“big government” mantra of their allies. When the Tea Party emerged, it seemed like the dance would never end. Dozens of newly elected Republicans were only too happy to make regulation the whipping boy for every problem that ails the economy, if only as a distraction from the real causes of the recession, which, let’s face it, have a lot to do with Republican anti-regulatory policies. Even better, the new Republican majority scheduled dozens of hearings aimed at brow-beating dozens of Administration officials from a cross-section of federal regulatory agencies. From Elizabeth Warren at the Consumer Financial Protection Bureau, to Lisa Jackson at the Environmental Protection Agency, to David Michaels at the Occupational Health and Safety Administration, the Republicans are eager to blame the Obama Administration for the length and depth of the recession that began on the GOP’s watch.
Full textLast week, the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget released the semiannual regulatory agenda. I pointed out that the agenda, which contains the regulatory agencies’ planned actions, was quite late. Although the plans share problems from past years, like simply pushing back the target dates for regulatory actions, there are some pleasant surprises. For example, the National Highway Traffic Safety Administration (NHTSA) is moving forward with some proactive regulatory responses to the Toyota recalls of 2009, and the EPA plans to propose or finalize updates to National Emissions Standards for Hazardous Air Pollutants (NESHAPs) for 30 sources. Here’s an overview of some highlights (not covering everything) from the regulatory plans. More information about each individual rulemaking can be found by following the links.
Occupational Safety and Health Administration
On Monday, the White House announced that President Obama had signed a new executive order on federal regulation to supplement January’s executive order to executive branch regulatory agencies. The new executive order is aimed at the “independent agencies,” so named because the heads of those agencies do not serve at the pleasure of the president. By statute, they serve for a term of years and can be removed from office only “for cause,” which usually means misbehavior unrelated to the exercise of the agency’s policymaking functions.
The new executive order urges the independent agencies to use cost-benefit analysis in promulgating new regulations, to adopt “flexible” approaches to regulation, and to engage in retrospective analyses of existing regulations with an eye toward modifying or withdrawing regulations that are “outmoded, ineffective, insufficient, or excessively burdensome.”
As Professor Rena Steinzor argued in this blog in January, the original executive order was a very bad idea. The new executive order is not just a bad idea; it could delay the critical work of the banking agencies as they struggle to promulgate and implement regulations needed to head off the next financial meltdown.
Congress may decide to make an agency “independent” for many reasons, including a desire to insulate it from political interference, a desire to avoid regulatory capture, or a general desire to achieve policymaking stability across presidential administrations. But the one overriding purpose of creating an independent agency is to allow it to function independent of presidential control.
Full textThe Administration has been busy promoting President Obama’s new approach to regulatory review, which required federal regulatory agencies to produce plans for how they would review existing regulations and look for regulations to cut. But while the mad dash to find regulations the administration can trot out as misguided or outdated continued, the agencies were delayed in releasing plans about what they want to do proactively to protect workers, children, and the environment.
As our friend Celeste Monforton over at The Pump Handle pointed out a couple of weeks ago, advocates have been waiting on these plans for quite some time. The Regulatory Flexibility Act requires agencies to submit the agendas each April and October. Monforton said OMB told her to expect the plans in early July. And so the new agenda was published today.
The agencies’ regulatory plans give advocates, business, and everyone else a window into the agencies’ work, and help groups plan in advance for how to respond to upcoming rules. But the most recent public regulatory plans are from December 2010. That plan was also late, and previous ones have been, too. They’re not usually this late, though. Spring plans have been released in late April or early May for the last six years. Fall plans have been released in November and December over the same period.
The agencies are being asked to do more (including the look-backs) with the same (or less). In January, Cass Sunstein, Administrator of the Office of Information and Regulatory Affairs, said the Administration did not plan to seek a new appropriation for the agencies to conduct the look-back work. Pressed on the issue by the Huffington Post, he simply said that he "can't think of anything that's not been done because of the review."
We’ll have an analysis of the agencies’ plans soon. President Obama’s 21st century regulatory program ought to move us to the future, not have us living in the past.
Full textUpon reading the White House Office of Information and Regulatory Affairs’ (OIRA) latest annual Report to Congress on the Benefits and Costs of Federal Regulations, one can be forgiven for wondering momentarily whether the 2008 election was just a dream and whether we’re still in the midst of a Republican administration. OIRA is telling us that the primary goal of government regulation—particularly environmental, health, and safety regulation—is not to protect the environment or public health, but to “promote[] the goals of economic growth, innovation, competitiveness, and job creation,” and in so doing “to avoid excessive regulation, to eliminate unnecessary burdens, and to choose appropriate responses.” Is it just me, or does this sound like a line taken directly from the Chamber of Commerce’s script?
Granted, the annual report, released on Friday, is something OIRA is required to do by statute. But it could have complied with the law’s mandate that it present the “total annual costs and benefits . . . of Federal rules . . . in the aggregate” with considerably less anti-regulatory rhetoric. Instead, this year—as in past years—President Obama’s OIRA has chosen to issue a report that runs longer than 100 pages and hues closely to the format and content of the Annual Reports issued during the Bush administration.
In this annual ritual, OIRA takes a bunch of squishy numbers and adds them together to create a bigger and even squishier number. The first numbers are the estimates an agency comes up with whenever it issues a major regulation of how much that regulation is going to cost society and how much it’s going to benefit society. As you might imagine, estimating such numbers is a difficult endeavor. You might even say it’s impossible when it comes to regulations that do things like reduce levels of pollution or preserve endangered species. In fact, when it comes to protecting the environment and public health, there are—as OIRA readily admits—often aspects of the benefits that simply can’t be quantified, let alone expressed in dollar terms.
That’s why, in its instructions to agencies on how to conduct a cost-benefit analysis, OIRA cautions: “A complete regulatory analysis includes a discussion of non-quantified as well as quantified benefits and costs.” Obviously, if the dollar figure only reflects a portion of a rule’s benefits, then the number is meaningless unless accompanied by caveats explaining what was left out of the calculation.
But all those caveats get stripped away when OIRA takes all the monetary estimates of the costs and benefits of various regulations and adds them together to get two big numbers—one for the total costs and one for the total benefits of all regulations issued over the past year. (This year we’re told the “total benefits” are $18.8 billion to $86.1 billion and the “total costs” are $6.5 billion to $12.5 billion, page 3.)
Full textCross-posted from ACSblog.
A series of catastrophic regulatory failures in recent years has focused attention on the weakened condition of regulatory agencies assigned to protect public health, worker and consumer safety, and the environment. The failures are the product of a destructive convergence of funding shortfalls, political attacks, and outmoded legal authority, setting the stage for ineffective enforcement and unsupervised industry self-regulation. From the Deepwater Horizon spill in the Gulf of Mexico that killed eleven and caused grave environmental and economic damage, to the worst mining disaster in 40 years at the Big Branch mine in West Virginia with a death toll of 29, the signs of regulatory dysfunction abound. Peanut paste tainted by salmonella, lead-paint-coated toys, sulfur-infused Chinese dry wall, oil refinery explosions, degraded pipes at U.S. nuclear power plants: At the bottom of each well-publicized event is an agency unable to do its job and a company that could not be relied upon to put the public interest first.
Although everyone should be able to agree that these events are intolerable to the extent they are preventable, thoughtful analysis is too often sidetracked by the nation’s polarized debate over the role of government in our daily lives. Conservative commentators argue that accidents like the Gulf spill are the inevitable byproducts of industrialization, daunting in the best of times but having little to do with government failure. They say that over-regulation is a far more serious problem than under-regulation because bureaucrats run-amok are hobbling the country’s long-delayed recovery from a devastating world-wide recession. Progressive commentators respond that one of the government’s most important jobs is to prevent industry from trading safety for profit, by compelling manufacturers to install redundant, fail-safe mechanisms to protect public health and the environment. Spills, explosions, unchecked carbon emissions, tainted drugs, and unhealthy air pollution represent chronic failures by government to forbid conduct that lies in the mainstream of business as usual.
Full textOn Wednesday, former senator Evan Bayh joined former George W. Bush Chief of Staff Andy Card at the Chamber of Commerce to formally announce their plans to tour around the country campaigning against regulations. The pair have already jumped into a series of falsehoods, endorsing, for example, the discredited SBA-sponsored study claiming regulations cost $1.75 Trillion in a year.
Over at ThinkProgress, CPR Member Scholar Sidney Shapiro takes a closer look at the pair's claims:
Bayh and Card see regulators as having “unprecedented power” and call for “restoring balance and accountability in the process.” I don’t know what regulatory system they are viewing, but it bears no resemblance to the one operating currently in the United States. Far from having “unprecedented power,” agencies find it difficult to complete any type of controversial regulation in less than six to ten years because they must negotiate a complex gauntlet of analysis and reviews before they can issue a regulation, including judicial review at the end of the road.
See more in Evan Bayh Shills For Chamber’s Anti-Regulation Campaign With A Series of False Claims.
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