You Can Be for Cost-Benefit Analysis or You Can Be for Regulatory Budgeting, But You Can't be for Both
For decades, so-called regulatory “reformers” have backed up their sales pitches with the same basic promise: Their goal is not to stop regulation per se but to promote smarter ones. This promise, of course, was always a hollow one. But it gave their myriad reform proposals—always involving some set of convoluted procedural or analytical requirements designed to surreptitiously sabotage the rulemaking process—some shred of legitimacy, while insulating the proponents against any public backlash that might follow from such cynical attacks on broadly popular public health, safety, and environmental programs.
If the real motivation behind the “regulatory reform” movement wasn’t clear before, then tomorrow’s hearing before the Senate Homeland Security and Government Affairs and Budget Committees on “regulatory budgets” ought to peel away the last of any lingering doubts. The idea behind “regulatory budgeting” (or “regulatory pay-go,” as it is sometimes known) is that Congress would set a hard cap on total regulatory costs, and once the cap has been met, agencies would be prohibited from issuing any rules until their costs have been offset by the removal of existing regulations. Its proponents claim that this cap on regulatory costs somehow reflects all the safeguards our country …
This morning CPR Scholar and George Washington University Law School professor Robert Glicksman will testify in support of EPA's proposed rule to regulate ozone. The Hearing, held by the House Energy and Commerce Committee's Subcommitee on Commerce, Manufacturing and Trade will focus on the potential impacts of the proposed ozone rule on manufacturing.
Glicksman's testimony corrects misinformation about the ozone rule's potential negative impact on manufacturing. He notes,
My testimony makes four key points:
- A strong national ozone pollution standard that fulfills the public health goals of the Clean Air act will deliver significant benefits for human health and the environment.
- Regulations, such as the Environmental Protection Agency’s (EPA) pending ozone standard, can and do provide important economic benefits for U.S. businesses, including those in the manufacturing sector.
- A frequently cited study purporting to find catastrophic economic effects from a strong …
Editor’s Note: This is the second of two posts. Yesterday’s examined the need for a carbon tax as a way to reduce carbon emissions.
Real-time pricing of electricity is a logical complement to a carbon tax. Economists are fond of saying: “First, get the price right.” What they mean is, if we can take the actions needed to price a good or service at its full social cost, including externalities, we will have much less need to use crude and blunt instruments, like command and control regulation, to get results that maximize social welfare. By placing an appropriate price on carbon, we will take a major step in the direction of getting the price of electricity right by reflecting the social cost of the GHGs used to generate electricity in the price of electricity. We can complete the process of getting the price of electricity …
Editor’s Note: This is the first of two posts on market-based approaches to reducing carbon emissions. Today’s focuses on a carbon tax; tomorrow’s on real-time pricing of electricity.
There is a broad consensus among economists that we will not be able to mitigate climate change efficiently and effectively unless we place a price on carbon. Placing a price on carbon of $40 per ton or more would discourage use of carbon-based fuels. That, in turn, would reduce significantly the quantity of carbon dioxide, the most important greenhouse gas (GHG), that is emitted into the atmosphere.
Placing a price on carbon creates powerful incentives of two types. First, it encourages consumers to devise and implement methods of reducing their use of products and services that account for large emissions of GHGs. Second, it encourages tens of thousands of companies to increase significantly their research and …
Senator Rounds (SD-R) has introduced a proposed concurrent resolution to establish a Joint Select Committee on Regulatory Reform to address the alleged “regulatory overreach that is so prevalent in all sectors of the U.S. economy” by, among other things, conducting a “systematic review” of all rules adopted by federal agencies, supposedly in the name of reducing government expenditure and streamlining business procedures. Ironically, Congress, if it wishes, can spend its otherwise valuable time having a committee engage in this procedure, while at the same time increasing the costs of government by requiring government agencies to appear at hearings and respond to subpoenas to answer once again why they are doing what members of Congress have by statute told them to do, in order to protect the public health, safety and environment of their constituents. This is political theater, no more, no less.
The other provisions in …
This morning CPR Scholar and George Washington University Law School professor Emily Hammond will testify at a House Energy and Commerce Subcommittee on Energy and Power entitled, "Quadrennial Energy Review."
According to Professor Hammond's testimony:
A critical challenge for energy policy in the United States is that it has evolved in a piecemeal fashion, focusing on specific energy resources through source-specific federal and state agencies. Creating an Interagency Task Force, as this Section does, is an important step in bridging the gaps between the enumerated agencies’ particular statutory mandates. Indeed, agencies stand to be more successful—in achieving stakeholder support and in avoiding litigation—when they coordinate their efforts and ensure that their diverse perspectives are brought to bear on major policy matters.
But the composition of the Task Force has significant gaps that will hinder—not help— the development of comprehensive energy policy. Most critical …
It’s been almost 10 years now since Hurricane Katrina unleashed its fury on the Gulf Coast, setting in motion a massive failure of New Orleans’s flood-control system. More than 1,800 people lost their lives when Army Corps of Engineers-designed levees around New Orleans failed, allowing water to engulf the city.
What followed the levee failures was something not seen in an American city in a very long time. In addition to the huge loss of life, Americans outside the region watched on television as the city suffered more than $100 billion in property damage; massive and ill-organized evacuations; and the sight of thousands of Americans trapped in the squalor of the New Orleans Superdome for days, while their government demonstrated just how badly it was prepared for such a disaster. It was a slow-moving, man-made disaster, as CPR observed in a report issued a …
In her first major criminal settlement since becoming Attorney General, Loretta Lynch has delivered, trussed and on a platter, five of the world’s biggest banks—Citigroup, JPMorgan Chase, Barclays, Royal Bank of Scotland, and UBS. The five will actually plead guilty to specific crimes involving manipulation of foreign currency markets and will pay close to $6 billion in penalties for illegally collaborating to drive trading prices up and down. As one not-so-bright bank executive pronounced slyly in an online chat room that the self-named “cartel” used to communicate, “If you ain’t cheating, you ain’t trying.”
Although the settlements send a strong message to future cheaters, the striking thing about the announcement was that the new Attorney General extracted something truly unusual: guilty pleas from these large corporations. Her predecessor, Eric Holder, famously settled time and again for “deferred prosecution agreements,” no matter how egregious …
The major oil pipeline spills along the Santa Barbara coast and into the Yellowstone River in Montana this past year are only the most recent chapters in the growing list of major spills associated with oil transportation in the United States. These recent spills of 100,000 gallons and 50,000 gallons of oil, respectively, follow a nearly 1 million gallon spill of Canadian tar sands oil from an Enbridge pipeline that burst in the Kalamazoo River in Michigan in 2010, and other similar spills around the country. These spills and many others like them have resulted in significant harm to public health and the environment, created panic among residents, and forced state officials to declare states of emergency in affected area.
These more frequent pipeline spills are inevitable in light of the massive increases in oil and gas production in North America since 2007. Technological developments …
The Competitive Enterprise Institute is out with the latest in a series of industry-friendly reports overcooking the supposed costs of regulation, while understating or simply ignoring the vast benefits to health, safety and the environment. Not surprisingly, The Wall Street Journal and The Washington Times were good enough to put the right-wing echo chamber in motion in its service.
A few quick thoughts: This report isn’t scholarship, it’s arithmetic advocacy—and it’s poor arithmetic at that. The organization that sponsored the report is more concerned with advancing its political agenda of laissez faire government at all costs than it is with sound public policy. This report is meant to advance that agenda, rather than inform the ongoing debate over the U.S. regulatory system. After all, what good does it do to tally up the costs of regulation without providing an estimate of regulatory …
