Regulation Policy

AEI-Brookings Studies: Reducing Regulatory Costs

Recent studies by economists point the way toward reform and greater accountability in regulatory activities. They recommend that Congress pay greater attention not only to the high cost of regulations, but to assuring that regulations are cost-effective.

The reports, jointly published by the American Enterprise Institute and Brookings Institution, say current expenditures mandated by regulation amount to $200 billion annually for environmental, health and safety rules alone. Among their recommendations to reduce these costs:

  • Congress should rewrite key regulatory statutes -- particularly those related to environmental protection, consumer safety and workplace practices -- with the aim of achieving better outcomes at lower costs.

  • Its should devolve greater responsibility to the states for problems that can better be addressed at that level.

  • New regulations costing more than $100 million annually should be subject to a broadly defined benefit-cost test.

  • Moreover, Congress should expand the capacity of the Office of Management and Budget and the Congressional Budget Office to review important laws and regulations, while encouraging courts to use a rough benefit-cost standard in judicial review of all regulations.

The studies' authors estimate that more than half the social regulations issued between 1982 and mid-1996 flunk a cost-benefit test. Eliminating those regulations would have increased the size of the economy by almost $300 billion.

As a start, they recommend passage of the Regulatory Improvement Act, a bill introduced by Sen. Fred Thompson (R-Tenn.) and Carl Levin (D-Mich.) which aims at similar reforms.

Source: Robert W. Crandall, Christopher DeMuth, Robert W. Hahn, Robert E. Litan, Pietro S. Nivola and Paul R. Portney, "An Agenda for Federal Regulatory Reform," 1997, and Robert W. Hahn and Robert E. Litan, "Improving Regulatory Accountability," 1997, both American Enterprise Institute, 1150 Seventeenth Street, N.W., Washington, D.C. 20036, (202) 862-5800, and Brookings Institution, 1775 Massachusetts Avenue, N.W., Washington, D.C. 20036, (202) 797-6000.

Home | Support Us | All Issues | Social Security | Debate Central | Contact Us

Dallas Headquarters: 12770 Coit Rd., Suite 800 - Dallas, TX 75251-1339 - 972/386-6272 - Fax 972/386-0924
Washington Office: 601 Pennsylvania Ave. NW, Suite 900 South Building - Washington, DC 20004 - 202/220-3082 - Fax 202/220-3096
© 2001 NCPA