July 6, 2010

Public Interest Comment on the Draft 2010 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities

Key materials

As always, OMB has produced a very thorough report based on the instructions provided in the Regulatory-Right-to Know Act. Nevertheless, it is time to re-examine this report to see if it can be made more useful for those responsible for the regulatory state. First, more pressure must be brought to bear on regulatory agencies to do more and higher quality regulatory analysis, and this could be greatly facilitated by OMB reporting not just on successes, but on discrepancies. The Mercatus Center believes that we will be able to help in that endeavor. Second, while we applaud the use of behavioral economics in constructing remedies, care must be taken not to construe individual decision rules as market failures nor ignore the existence of market failures. Also, we recommend that OMB seek information about how firms comply with the sometimes thousands of regulations for which they are responsible. Third, we believe cost-effectiveness analysis should only be used when there is a single benefit, otherwise benefit-cost analysis is likely to be more useful. Finally, we suggest that a more careful look at economic theory is warranted as the government seeks to intervene in the obesity arena, although we acknowledge that to be a significant public health concern.