Commentary Archive



Exchange of ideas

Misbehavioral Economics?

June 17, 2015

By Brian Mannix, Research Professor
The spirited Point-Counterpoint debate between Cass Sunstein & Hunt Allcott and Mannix & Dudley argued the question of using “internalities” (aka “private benefits”) to justify government regulation of energy efficiency in appliances. In this commentary, Mannix argues that the model espoused by Sunstein and Allcott only works because it assumes there are no rational consumers, giving the government a monopoly on rationality.

Chart

Regulatory Action Holding Steady in Spring 2015 Unified Agenda

May 22, 2015

By Sofie E. Miller, Senior Policy Analyst
On the Thursday before the Memorial Day holiday weekend, the Office of Information and Regulatory Affairs released its semiannual Unified Agenda of Regulatory and Deregulatory Actions, which provides the public with a first glimpse at upcoming regulations. The Spring 2015 Agenda lists 1,054 final rules and 1,171 proposed rules on which agencies will take action within the coming year. Of these active regulatory actions, 140 are "economically significant."

Reg Budget figure 1: budgetary costs of regulation over time

Regulators' Budget Increases Consistent with Growth in Fiscal Budget

May 19, 2015

By Susan E. Dudley & Melinda Warren
Every year, Susan Dudley and Melinda Warren examine the on-budget costs of regulation by examining the portion of the Budget of the United States devoted to developing and enforcing federal regulations. In this year's report, Dudley and Warren find that the regulators’ budget is growing at approximately the same pace as the overall Budget, 5.3 percent in real (inflation-adjusted) terms in FY 2016 and 4.3 percent in FY 2015. The President’s proposed budget for the regulatory activities tracked here is $66.8 billion in FY 2016. Some of the largest increases reflect Presidential priorities, such as financial market reform and immigration reform.

Hiring

Why the Federal Government Struggles to Hire and Fire

April 29, 2015

By Lindsay M. Scherber, Research Assistant
In a series of investigative articles published earlier this year, Government Executive correspondents Kellie Lunney and Eric Katz explore the often discussed, but little understood, topic of federal human resources policy. Focusing on the federal government’s perplexing hiring and firing procedures, the authors shed light on the opaque web of barriers confronting government managers as they seek to recruit qualified candidates for job vacancies and fire underperforming employees who engage in misconduct or fail to meet their job requirements.

internet

Vague Net Neutrality Rule Impedes Innovation

April 21, 2015

By Gerald Brock, Co-director
The Federal Communication Commission's (FCC's) recent order imposing common carrier and net neutrality obligations on broadband Internet access providers creates a complex new regulatory structure. The rule creates a vague property right in the existing arrangements and creates an incentive to continue with the existing arrangements rather than to experiment with new ideas. Trying something new creates regulatory risk in addition to the normal market risk associated with innovation. In this way, net neutrality could reduce the incentive to innovate in favor of continuing approved practices from the past.

Ozone

Does Reducing Ozone Really Improve Human Health?

April 08, 2015

By Louis Anthony (Tony) Cox, Jr.
In revisiting the National Ambient Air Quality Standards (NAAQS) for ozone, EPA recently concluded that current standards do not fully suffice to protect public health with an adequate margin of safety and that further reductions would probably further reduce mortalities and morbidities in the population. Central to this conclusion is EPA's determination that "O3 exposures are causally related to respiratory effects, and likely causally related to cardiovascular effects, and that long term O3 exposures are likely causally related to respiratory effects." Remarkably, this key conclusion is not supported by any reliable, objective statistical tests for potential causality. It rests solely on the subjective judgments of selected experts, applied to associational data that show that both ozone levels and adverse health effects are higher in some times and places than in others.

Disclosure

CFPB Should Consider a More Dynamic Approach to Prepaid Debit Card Regulation

April 01, 2015

By Blake Taylor, Policy Analyst
Last December, the Consumer Financial Protection Bureau proposed rules intending to improve consumers’ understanding of their choices in the prepaid debit card market and to protect them from unreasonable fees. There is little to no evidence that the proposal will have desirable consequences related to either consumer or seller behavior. What is likely is that the rule will increased compliance burdens for sellers and limit consumer choice.

Power plant

Justices debate benefits and costs of EPA mercury power plant rule

March 31, 2015

By Susan E. Dudley, Director
The Supreme Court last week heard oral arguments in Michigan v EPA regarding “whether the Environmental Protection Agency unreasonably refused to consider costs in determining whether it is appropriate to regulate hazardous air pollutants emitted by electric utilities.” The regulation being considered is a key part of the Obama administration’s environmental agenda and would require coal-fired power plant operators to install equipment to reduce mercury and other air pollutants. Section 112 of the Clean Air Act directs the EPA to issue regulations that are “appropriate and necessary” to control hazardous air pollutants, including mercury. Thus, one area of debate is whether a standard that imposes very large costs relative to benefits is “appropriate” under the meaning of the statute.

Illustration of America wrapped up in red tape

Improving Regulatory Accountability: Lessons from the Past, Prospects for the Future

February 17, 2015

By Susan E. Dudley, Director
There are now more than 70 federal agencies, employing almost 300,000 people, that write and implement regulations. Every year, they issue tens of thousands of new regulations, which now occupy over 175,000 pages of code. Concerns over the accountability of what some have called the "fourth branch" of government have led all three branches of government to take steps to exercise checks and balances. Like the bipartisan regulatory reform efforts of the 1970s and 1980s, reforms today could spur economic growth and improve the welfare of American families, workers and entrepreneurs.

money

One-Size-Fits-All Regulations are a Bad Deal for Low-Income Americans

February 03, 2015

By Sofie E. Miller, Senior Policy Analyst
We're all affected by regulations; they change our circumstances and the choices that are available. Regulations have benefits and costs, but often the people who benefit from regulations aren’t the same people who bear the costs. Unfortunately, for many regulations, the costs are borne by America's poorest households. Our research at the George Washington University Regulatory Studies Center has identified at least three ways in which regulations disparately impact the poor: through upfront costs that may not be offset by long-term savings, by increasing commodity prices, and by over-regulating risks.

magnifying glass

2014: The Regulatory Year in Review

December 30, 2014

This commentary highlights ten important final rules U.S. federal agencies issued in 2014, from the Volcker Rule to Tier 3 and everything in between. Although the agencies predict each rule will offer substantial public benefits, each rule also has considerable expected costs, some of which outweigh the benefits.

Susan Dudley presenting

The Utility of Humility

December 09, 2014

What effect do regulations have on economic growth and well-being? In the United States, there is growing concern that our regulatory system has gone beyond the rules needed for an efficient, competitive market. Because of this concern, fundamental change is needed, the foundation of which must be greater humility. Without a counterfactual, it is impossible to know what a more restrained regulatory environment would have meant for economic growth and well-being, but available evidence suggests that the benefits of a simpler regulatory system that is targeted at problems that cannot be solved by other means could have enormous benefits for us and future generations.

Susan Dudley with Senator Portman

Reducing Regulatory Barriers to Transatlantic Trade

December 01, 2014

Regulatory systems that "promote competitive markets, secure property rights, and intervene to correct market failures rather than to increase state influence" are not only more conducive to greater economic growth and public welfare within countries, but they can support international trade and investment. As our economies become more global, and the EU and U.S. work to reduce tariffs and explicit trade barriers, regulations are emerging as more important and significant barriers to trade. Not only can poorly designed or conflicting regulations inhibit transatlantic trade and investment, but differences in regulatory policy and procedural approaches may continue to challenge economic partnerships between the EU and U.S. The success of the Transatlantic Trade and Investment Partnership (T-TIP) thus depends on strengthening EU-U.S. regulatory coherence, and reducing regulatory barriers to transatlantic trade and investment.

Sofie E. Miller

What's New in the Fall 2014 Regulatory Agenda?

November 24, 2014

The Fall 2014 Unified Agenda identifies 3,415 regulatory actions at different stages of development. Of these, 629 have recently been completed, and 465 are long-term. The Agenda classifies the remaining 2,321 as active regulatory actions. Interestingly, of the 599 regulatory actions listed in the Agenda for the very first time, over 40 percent are listed as Final or Completed rules, of which 11 were economically significant. This means the public didn't get notice of the rules in the Unified Agenda until it was too late to participate in the rulemaking process, even for rules that would incur more than $100 million annually in costs or benefits. This finding is consistent with our analysis of the Spring 2013 Unified Agenda, indicating a troubling pattern of lack of agency notice that could inhibit public participation. The fact that more than 40 percent of all first-time listed regulatory actions were already finalized or completed means that the public wasn't given appropriate notice of regulators' intentions, and likely had little chance to participate in the rulemaking process.

silhouette holding briefcase, umbrella

Are Internships the New 'Pathway' Into the Federal Government?

November 17, 2014

In today's competitive economy, internships have become an increasingly integral—and even necessary—part of most students' efforts to prepare for the workforce. For those of us looking to pursue a career in public service, however, one critical employer has been noticeably absent from the intern-hiring trend: the federal government. But thanks to the government's relatively new Pathways Programs, current students and recent graduates may now find it a little easier to land a full-time job in the federal government. Pathways is designed to "promote employment opportunities for students and recent graduates in the Federal workforce," through three individual programs, each of which provides for the possibility of full-time employment upon successful completion.