June 27, 2012

Countdown to Midnight

Jerry Ellig

Research Professor, George Washington University Regulatory Studies Center
Summary

Mercatus research demonstrates that the federal government experiences a surge of “midnight regulations” finalized between Election Day and Inauguration Day.

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If Dick Clark had been a regulatory wonk, that big ball in Times Square would have started its descent on June 1 of every presidential election year.  Mercatus research demonstrates that the federal government experiences a surge of “midnight regulations” finalized between Election Day and Inauguration Day. Thanks to the Mercatus Regulatory Report Card, we now know that midnight regulations proposed after June 1, 2008 were accompanied by lower-quality economic analysis than other regulations.

 When agencies conduct low-quality economic analysis, decision makers are less informed about the likely consequences of regulatory options. That means they’re less likely to adopt regulations that solve real problems, and more likely to impose regulations that cost more than necessary. Of course, sometimes the analysis is shoddy because the political decision has already been made to go ahead with the regulation regardless of what an honest analysis would show.

 Several results have emerged from our Report Card research:

· Midnight regulations have lower Report Card scores than other regulations proposed in 2008 or in 2009-10.

 · Rushed midnight regulations – that is, midnight regulations proposed after the Bush administration’s self-imposed June 1, 2008 deadline – have much lower scores. In fact,   regulations that were finalized during the midnight period but proposed before June 1 score about the same as other regulations proposed in 2008. Thus, it is the rushed nature of midnight regulations that were not proposed until the second half of the year that explains their lower scores.

 · Some regulations proposed after June 1 were not finalized by the Bush administration but instead left for the Obama administration to finalize (“rushed leftover regulations” in the chart). These also had lower scores than other regulations proposed in 2008.  Either these were intended to be midnight regulations but the clock ran out before they could be finalized, or less effort went into their analysis because it was known they would be left for the next administration to finish.

If history repeats itself, expect shoddier economic analysis to accompany regulations proposed during the rest of 2012 and finalized before Inauguration Day.