Improving the Accountability of Federal Regulatory Agencies, Part III: What Reforms Work Best

Dept. of Treasury
by Marcus Peacock, Distinguished Research Professor
September 12, 2016

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Abstract

Eight major U.S. government reform initiatives failed to significantly improve the accountability of federal agencies. This third of a three-part series identifies (1) lack of sustained leadership and (2) unfaithful execution by agencies as two reasons for these failures. The problem of inadequate leadership could be addressed by adopting more modest reforms (incrementalism) and/or codifying the reform(s) into law. The obstacle of unfaithful execution could be overcome by creating or engaging an objective third party to implement or enforce implementation of the reform and/or creating competition among agencies that provides incentives for embracing reform. Using these lessons, three characteristics of regulatory reforms that will work are identified: codification in law; creation of an independent organization to help execute the law; and establishing a framework for interagency competition.

Washington Wants to Improve Regulatory Accountability

In the United States, congress and the president show significant interest in improving the accountability[1] of federal regulatory agencies. For instance, Congress has considered several bills that would strengthen regulatory accountability by, for instance, increasing requirements for regulatory analyses, expanding judicial review, and creating a regulatory budget.[2] Likewise, in 2011 and 2012 President Barack Obama issued three Executive Orders expanding requirements for regulatory agencies to assess the performance of existing and new regulations.[3]

These reforms are intended to make regulators assess and take responsibility for the results of their actions. Accountability reforms enjoy bipartisan support[4] and are desirable for at least two reasons. First, the public have a right to know what results their government is achieving.[5] Second, accountability leads to better performance. When an organization takes responsibility for the outcomes of its actions it is making a commitment to improve those outcomes, especially if they are poor.[6]

Learning from Eight Government-wide Reforms

A number of studies have examined past regulatory reforms in the United States, such as the Paperwork Reduction Act of 1980, to help guide new accountability reforms at regulatory agencies.[7] However, none has examined the record of past government-wide reforms, which included, but were not limited to, executive branch regulatory agencies, for the same purpose.

The first part of this three-part Regulatory Insight series[8] identified and described eight significant government-wide reforms that could help inform future regulatory accountability initiatives. These government-wide reforms included many of the same accountability methods that are being considered in current regulatory reform proposals such as strengthening quantitative analyses, requiring the comparison of multiple policy options, and/or encouraging a greater focus on the actual outcomes of federal programs. For instance, the first government-wide reform examined, President Lyndon Johnson’s Planning-Programming-Budgeting System (PPBS), mandated the quantitative calculation of the costs and benefits of alternative budget proposals. (See Table 1 for other similarities between government-wide reforms and current regulatory proposals.)

TABLE 1: Similarities of government-wide reforms and current regulatory reform proposals

Government-wide Initiative

Requirement(s) similar to current regulatory reform proposals

Planning-Programming-Budgeting System (PPBS)

Mandated the quantitative analysis of the costs and benefits of budget proposals.

Management By Objective (MBO)

Centralized decision-making and focus programs on outcomes.

Zero-based Budgeting

Required quantitative analysis of costs and benefits of different budget proposals establishing “doing nothing” as a baseline.

Grace Commission

Solicited and attempted to implement expert third party recommendations from outside government.

Government Performance and Results Act (GPRA)

Refocused programs on outcomes. Required transparent goals, measures and performance reports. Increased accountability to Congress.

National Performance Review[9] (NPR)

Refocused programs on outcomes. Provided flexibility to managers to improve outcomes and efficiency. Mandated cost reductions.

Program Assessment Rating Tool (PART)

Refocused programs on outcomes. Required public assessments of agency performance.

GPRA Modernization Act (GPRAMA)

Mandated greater internal use of performance data. Increased accountability to Congress.

The second part of this three-part series of Regulatory Insights[10] examined the extent to which these eight reforms succeeded in improving the accountability of government agencies. Based on both public polling data and expert reviews of each reform (and the reforms as a whole) it was determined none of the reforms succeeded in substantially increasing government accountability in the long-term. For instance, two experts described government-wide reforms as “hollow monuments to great expectations.”[11] This Regulatory Insight examines the primary reasons these eight reforms failed to meet expectations, what can be done to address these problems in proposals aimed at improving the accountability of regulatory agencies.

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[1]       An accountable organization is one that takes responsibility for the results of its actions.

[2]       For a discussion of recent proposals to increase regulatory accountability see Susan E. Dudley, “Improving Regulatory Accountability: Lessons from the Past and Prospects for the Future,” Case Western Reserve Law Review, 65:4 (2015), pp. 1051-1056 (accessed July 7, 2016). http://scholarlycommons.law.case.edu/cgi/viewcontent.cgi?article=1006&context=caselrev

[3]       See, Executive Order 13563, “Improving Regulation and Regulatory Review,” January 18, 2011; Executive Order 13579, “Regulation and Independent Regulatory Agencies,” July 11, 2011; and Executive Order 13610, “Identifying and Reducing Regulatory Burdens,” May 10, 2012.

[4]       See, for instance, Kevin Madden and Howard Wolfson, “Embracing the Politics of Moneyball” in Jim Nussle and Peter Orszag eds., Moneyball for Government, Disruption Books: Middletown, DE, 2014, pp. 60-81.

[5]       For a discussion regarding the obligation of government to inform the public on the results of its actions see David Walker, “GAO Answers: What’s in a Name?”, Roll Call, June 19, 2004 (accessed 4 June 2016). http://gao.gov/about/rollcall07192004.pdf

[6]       Many management experts argue that taking responsibility for outcomes is a prerequisite for any organization to improve. See, for instance, Dave Ulrich, Jack Zenger and Norm Smallwood, Results-Based Leadership, Harvard Business School Press: Boston, MA, 1999, pp. 17-20, William Gorham, “Foreword” in Harry P. Hatry, Performance Measurement: Getting Results, The Urban Institute Press: Washington DC, 1999, p. xix, and Robert Shea, “Performance Budgeting in the United States,” OECD Journal on Budgeting, 8:1 (2008), p. 2 (accessed June 4, 2016).

[7]       Three recent studies, for instance, include: Susan E. Dudley, “Improving Regulatory Accountability: Lessons from the Past and Prospects for the Future,” Case Western Reserve Law Review, 65:4 (2015), pp. 1051-1056; Patrick A. McLaughlin and Richard Williams, “The Consequences of Regulatory Accumulation and a Proposed Solution,” Working Paper No. 14-03, Mercatus Center, February 2014; and Stuart Shapiro and Deanna Moran, “The Checkered History of Regulatory Reform Since the APA,” NYU Journal of Law and Public Policy, 19:1 (May 2016), pp. 141-182.

[8]       Marcus Peacock, “Improving the Accountability of Federal Regulatory Agencies Part I: A Review of Government-wide Efforts,” Regulatory Insight, The George Washington Regulatory Studies Center, June 22, 2016 (accessed July 7, 2016).

[9]       In 1998 the National Performance Review was renamed the National Partnership for Reinventing Government.

[10]     Marcus Peacock, “Improving the Accountability of Federal Regulatory Agencies Part II: Assessing Eight Government-wide Accountability Reforms,” Regulatory Insight, The George Washington Regulatory Studies Center, 28 June 2016.  https://regulatorystudies.columbian.gwu.edu/sites/regulatorystudies.columbian.gwu.edu/files/downloads/RegInsight_Peacock-Reforms-Improving-Accountability_pt2.pdf

[11]     George W. Downs and Patrick D. Larkey, The Search of Government Efficiency: from Hubris to Helplessness, First Edition, Random House: New York, NY (1986), p. 237.