September 30, 2013

Reinvigorating, Strengthening, and Extending OIRA's Powers

Testimony before the House Committee on the Judiciary
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Thank you for your time and invitation to testify before this committee on the role of OMB’s Office of Information and Regulatory Affairs, or OIRA for short. I have been studying, teaching, and working to improve regulatory policy for over 40 years, including my time as an economist, branch chief, and acting deputy administrator at OIRA from its beginning in 1981 to my retirement from the government exactly five years ago today. While I was at OIRA, we reviewed 21,741 final rules under EO 12866 and its predecessor, out of 129,481 final rules published by all federal agencies. About 300 of these rules were major rules with costs, benefits, or both over $100 million. The cost of those 300 rules, adding up the agencies’ own estimates in today’s dollars, is about $195 billion annually.[1] 

I was a career civil servant and economist reviewing regulations and helping to manage the regulatory process under various executive orders and five presidents. I also worked at Department of Labor, Housing and Urban Development, Council on Wage and Price Stability (a predecessor of OIRA in the Carter administration), and at the Brookings Institution and the American Enterprise Institute. Before that I taught international economics in the University of Florida’s business school. I am currently an affiliated senior scholar at the Mercatus Center at George Mason University and a regulatory analyst for Bloomberg Government.2 My current jobs entail reading each day’s Federal Register and analyzing the economically significant regulations and Regulatory Impact Analyses, something I used to do as a government economist. So please forgive me if my remarks make your eyes glaze over or I don’t always use plain language. 

A well-known Washington saying is, “Where you stand is where you sit,” and I have sat in thousands of meetings at all sides of the table, discussing specific regulations as both a regulator and as a regulator of regulators, which is one view of OIRA’s role held especially by the agencies. So naturally I have some thoughts about how to improve both the regulatory process and outcomes. I hope they reflect a balanced staff perspective. They are in the form of observations, lessons learned, and recommendations for the new administrator from a lifelong advocate of better regulation. In view of the fact that OIRA’s key function is to review regulations according to the good government principles of various executive orders and the president’s own policies, I wish to make two broad points. First, OIRA should focus on its traditional mission of being a “watchdog” for the public, including citizens not yet born, seeking and attempting, if possible, to mitigate any unintended consequences of agency actions. Even a well-functioning process is not likely to produce good regulations absent a strong advocate for the broad public interest in the rulemaking process or an independent ability to verify agency claims. I will explain why the incentives and pressures applied to agencies create an ever-present risk of decision-making influenced more by politics and preferences than by the objective analysis focused on problem-solving that OIRA and OMB have traditionally been advocates for. 

My second, and related point, is that an effective OIRA needs more of the right staff members—individuals trained in benefit-cost analysis and risk assessment—and more time to evaluate economically significant rulemakings. 

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