NCPA - National Center for Policy Analysis

Office of Management and Budget Report on Regulations Not Representative

August 26, 2013

Every spring the Office of Management and Budget (OMB) releases the president's proposed budget for the upcoming fiscal year. While Congress invites senior administration figures to testify before various committees and the media tear through the document to elucidate the administration's priorities, by the end of a week everyone agrees that most of what's in the budget has little chance of becoming enacted, say Ike Brannon, president of Capital Policy Analytics, and Sam Batkins, director of regulatory studies at the American Action Forum.

At the same time it releases the budget, OMB produces another document, one that's a manifestation of the management half of its portfolio: The Report to Congress on the Benefits and Costs of Federal Regulations. While it garners much less attention than the president's budget, the cost-benefit report deserves much closer scrutiny, because it perennially misrepresents the activities of the regulatory agencies as being above reproach.

Since Ronald Reagan was in office all presidents have had an executive order in place mandating that "economically significant" regulations issued by executive agencies (i.e., those with an economic impact in excess of $100 million) be subject to a formal cost-benefit analysis showing that the benefits outweigh the costs.

  • The OMB report compiling these costs and benefits (which was begun by the previous administration) is in essence a league table that compiles the costs and benefits of a variety of regulations formally issued during the previous year.
  • Every edition has reported that all is well with our regulatory world, with the benefits accruing to society from our government's regulatory activities far outweighing the costs imposed.

The problem is that the report is of little use in discerning whether this is, in fact, the truth.

  • Most important, the report includes only a few regulations. While 3,700 regulations were issued in fiscal year 2012, with 80 of them being categorized as "major," only 14 regulations were included in OMB's analysis.
  • As it currently stands, some entities that issue regulations don't bother, and are not required, to do cost-benefit analyses, and most regulations considered to be "non-major" never have their costs and benefits measured.
  • Still, OMB is cherry-picking less than 1 percent of regulations issued in 2012 to present in its report.

Source: Ike Brannon and Sam Batkins, "Not Worth the Paper It's Printed On," Weekly Standard, August 19, 2013.


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