At Senate Hearing, CPR's Verchick Provides Sole Voice of Reason on Flawed 'Regulatory Budgeting' Proposal

This morning, CPR President and Loyola University, New Orleans, Law Professor Robert R.M. Verchick testifies at a hearing convened by the Senate Budget Committee to examine a dangerous regulatory policy proposal known as “regulatory budgeting.”

As he explains in his testimony, regulatory budgeting represents a stark departure from the traditional focus of regulatory policy discussions, which have long been concerned with improving the effectiveness—or quality—of regulatory decision-making. Regulatory budgeting, by contrast, makes the total number—or quantity—of regulations the primary focus, relegating concerns of individual regulatory quality to a matter of secondary importance.

Regulatory budgeting seeks to impose an arbitrary cap on total regulatory costs. According to one version, agencies would get an annual regulatory budget—much like their appropriations budget—which would constrain how many new regulations the agency could implement during the covered time period. Agencies could seek to exceed that budget, but they would need to first remove existing regulations that impose a cost that is greater than or equal to the new regulation. A second version would simply require agencies to remove existing regulations any time they wish to institute a new one — what many have referred to as a “one in, one out” proposition.

Such a simple-minded system is sure to produce absurd results. For example, it would almost certainly prevent agencies from issuing effective regulations that make society better off, simply because there is no space available under the applicable regulatory cap. The cold hard logic of the cap would trump the public interest.

Verchick’s testimony also explains how regulatory budgeting risks leaving the public and the environment inadequately protected, especially against new and emerging threats. He notes:

But as we face a future in which deep-water drilling, nanomaterials, and even driverless cars become commonplace, better protections—not fewer ones—are what we actually need. Rationing public goods like health, safety, and security for the benefit of a narrow class of commercial interests is the very opposite of what a virtuous and effective government should be doing.

Verchick’s testimony provides a comprehensive condemnation of regulatory budgeting. It concludes by reasserting the importance of maintaining the traditional focus of regulatory policy debates on ways to improve the quality of agency regulations. To this end, Verchick offers several recommendations for steps Congress and the agencies can take to improve the ability of the regulatory system to produce higher quality regulations.

For more about the flaws with regulatory budgeting in general and with the “pay-go” version in particular, see this 2012 CPR report.