Cost-Benefit Analysis: FAQs
This post was originally published on Legal Planet. Reprinted with permission.
Cost-benefit analysis is required for all major regulations. It's also highly controversial, as well as being a mysterious procedure unless you're an economist. These FAQs will tell you what you need to know about how cost-benefit analysis (CBA) fits into the regulatory process, how it works, and why it's controversial.
Q: Let's start with a basic question. Exactly what is cost-benefit analysis?
A: The term cost-benefit analysis is sometimes used to mean any comparison of pros and cons, which is something we all do every day in ordinary life. For present purposes, though, it means a very rigorous way of balancing pros and cons, using economic analysis to quantify the costs and benefits of an action. Basically, everything gets converted into dollar equivalents in this process.
Q: Why do agencies conduct cost-benefit analyses?
A: A few laws explicitly require cost-benefit analysis or at least something along those lines. Those laws are a minority. However, since Ronald Reagan's first days in office, presidents have ordered agencies to make cost-benefit analysis for major regulations a major part of their decisions. There are a few laws that actually prohibit agencies from considering …
This post was originally published on LPE Blog and is part of a symposium on the future of cost-benefit analysis. Reprinted with permission.
Over the last 40 years, the U.S. regulatory system has played an increasingly influential role in redefining our political and economic relationships in fundamentally neoliberal terms. A key but often overlooked institutional force behind this development is the peculiar form of cost-benefit analysis that now predominates in regulatory practice. Building a new regulatory system befitting our vision of a post-neoliberal America requires a formal rejection of prevailing cost-benefit analysis in favor of a radically different approach—one that invites public participation, permits open and fair contestation of competing values at the heart of policy debates, and recognizes and honors our social interdependencies.
The predominant form of cost-benefit analysis—one embraced by neoliberals—finds its theoretical underpinning in the controversial ideology of welfare economics …
This post was originally published on LPE Blog and is part of a symposium on the future of cost-benefit analysis. Reprinted with permission.
Cost-benefit analysis (CBA) is inherently classist, racist, and ableist. Since these are foundational problems with CBA, and are not simply issues with its implementation, they can never be fixed by mere methodological improvements. Instead, the ongoing modernization of centralized regulatory analyses must focus on "moving beyond" CBA, and not on fixing it or improving it. Thus, in implementing President Biden's memorandum on Modernizing Regulatory Review (the Biden Memorandum), the Office of Management and Budget (OMB) should make explicit that regulatory review no longer requires CBA, even—as will be true in the typical case—when regulatory review does demand economic analysis as part of a holistic, multi-factor regulatory impact analysis.
The Biden memorandum endorses a series of goals that are not premised in the …
This post was originally published on Legal Planet. Reprinted with permission.
The Biden administration is looking to make big regulatory changes, not least regarding climate change. Yet the White House office overseeing regulations is vacant. The obscurely named Office of Regulatory Affairs and Information (OIRA) has to sign off on all significant regulations. Even the dilatory Donald Trump had nominated a permanent administrator by July of his first year. Biden's delay in filling this important office is hard to defend.
The main reason for the delay is probably that Biden doesn't have the OIRA administrator's boss in place, either. Biden's nominee to head the Office of Management and Budget (OMB) had to be withdrawn when her Senate support evaporated. That was on March 2, however, and there's still no new OMB nomination six months later. Maybe the reason is an inability to find a candidate who can …
This op-ed was originally published in The Hill.
The surging COVID-19 delta variant is sending thousands of people to the hospital, killing others, and straining several states' hospital systems to their breaking point. The climate crisis is hurting people, communities and countries as we write this piece, with apocalyptic wildfires, crippling droughts and raging floodwaters. Systemic racism continues unabated, leading to vast economic and environmental injustices. It's beyond time for urgent action, but to get there, the federal government must reform the opaque, biased method it uses to evaluate our nation's public health, economic and environmental protections.
The day President Joe Biden took office, he ordered executive branch agencies to evaluate and reform the regulatory review process to “ensure swift and effective Federal action” to address the urgent problems we currently face. The administration is unlikely to live up to this goal unless the White House addresses …
Political Interference from White House Regulatory Office May Have Played a Role
The Labor Department’s emergency COVID standard, released today, is too limited and weak to effectively protect all workers from the ongoing pandemic. The workers left at greatest risk are people of color and the working poor.
Workers justifiably expected an enforceable general industry standard to protect them from COVID-19, and the Center for Progressive Reform (CPR) has been calling for such a standard since June 2020. But what emerged after more than six weeks of closed-door White House review was a largely unenforceable voluntary guidance document, with only health care workers receiving the benefit of an enforceable standard.
The interference with the COVID standard by the White House regulatory office, the Office of Information and Regulatory Affairs (OIRA), sends the wrong signal about the Biden administration's commitment to improving the regulatory review process, which …
In a little-noticed move on Day One, President Joe Biden issued a memo designed to institute a more progressive process for developing new regulations. Such an effort is essential, given that timely, effective regulations will play a key role in achieving Biden-Harris administration's policy agenda. To succeed, however, it must also tackle the conservative philosophy that guides our government's rulemaking process.
Biden's memo focuses on the mechanics of the rulemaking process, and especially two institutions that heavily influence regulatory decisions: centralized, White House review of proposed rules and economics-focused assessments of them. President Reagan and his successors have issued a string of executive orders to govern these institutions. Biden's memo addresses flaws in the current iteration, Executive Order 12866 (along with some other, related orders). Fixing these flaws is necessary to create a more progressive regulatory system that better protects people and the planet.
A flawed foundation …
This op-ed originally ran in The Regulatory Review. Reprinted with permission.
To paraphrase French economist Thomas Piketty, the task of evaluating new regulations is too important to leave to just economists. Yet, since the 1980s, White House-supervised regulatory impact analysis has privileged economic efficiency as the primary and often only legitimate objective of federal regulation. The regulatory reform initiative launched by President Joseph R. Biden on his first day in office creates an opportunity to reorient regulatory analysis in ways that both reformers and the public support.
Legal and policy experts object to hyper-technical regulatory analysis, and new public opinion polling indicates that voters agree.
Far from a monolithic concept, cost-benefit analysis encompasses a wide range of approaches and techniques, all with their own theoretical underpinnings and ethical commitments. Indeed, the current version of cost-benefit analysis is grounded in the conservative discipline of welfare economics and seeks …
This op-ed was originally published in The Hill.
Amid the Sturm und Drang (storm and stress) of politics these days, one fact stands out — a large majority of Americans want more regulatory protection in a wide variety of areas, according to a recent poll of likely voters.
The results are consistent with previous polls that indicate that Americans understand the importance of government regulation in protecting them from financial and health risks beyond their control. They also indicate majority support for efforts by the Biden administration to renew government regulation — as well as a stark repudiation of former President Trump’s extreme anti-regulatory agenda.
The poll, conducted in January by Data for Progress and the Center for Progressive Reform, found that a majority of likely voters favor more regulation of drinking water pollution (74 percent); consumer product safety (71percent); privacy data (70 percent); air pollution (68 percent …
This op-ed was originally published by the Philadelphia Inquirer.
In the midst of this long dark winter, it's heartening to see the Biden administration lay out a bold agenda for a more secure, fair, and sustainable future. Holding the Biden administration to its promise to reform the regulatory process to "ensure swift and effective federal action" to "improve the lives of the American people" is a crucial part of that effort. From her perch on a key congressional committee with oversight over agencies and the rulemaking process, the Delaware Valley's own Rep. Mary Gay Scanlon is well-positioned to do just that.
While not on most people's radar, the system of centralized regulatory review poses a potentially significant obstacle to President Joe Biden's ambitious agenda. Originally created by President Ronald Reagan, this process functions as the bureaucratic instantiation of the "job-killing regulations" myth that Reagan so successfully infused …
