OMB’s Reported Benefits of Regulation: Too Good to Be True?

office of management and budget

by Susan E. Dudley, Director

July 09, 2013

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Since 1997, the Office of Management and Budget has reported to Congress each year on the benefits and costs of federal regulation. These reports, which generally conclude that the benefits of regulation are an order of magnitude greater than the costs, are used to refute concerns that regulations may be hindering economic growth and to suggest that smart regulation can provide large net economic gains. For example, the Democratic National Committee’s 2012 platform defended President Obama’s regulatory record against Republican criticism by repeating the president’s claim that regulations issued over his first three years produced “more than 25 times the net benefits of the previous administration’s regulations.” The OMB’s draft 2013 report estimates that regulations issued over the last decade have aggregate benefits of between $193 billion and $800 billion, compared to costs ranging from $57 billion to $84 billion. 

How accurate are these estimates? A closer examination reveals that the benefit figures are highly dependent on a few assumptions and that the ranges presented are unlikely to reflect the true uncertainty surrounding them. 

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