November 18, 2014

Presidential Priorities, Congressional Control, and the Quality of Regulatory Analysis: An Application to Healthcare and Homeland Security

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This article is published in Public Choice, Volume 161, Issue 3-4, December 2014.

Elected leaders delegate rulemaking to federal agencies, then seek to influence rulemaking through top-down directives and statutory deadlines. This paper documents an unintended consequence of these control strategies: they reduce regulatory agencies’ ability and incentive to conduct high-quality economic analysis to inform their decisions. Using scoring data that measure the quality of regulatory impact analysis, we find that hastily adopted “interim final” regulations reflecting signature policy priorities of the two most recent presidential administrations were accompanied by significantly lower quality economic analysis. Interim final homeland security regulations adopted during the G.W. Bush administration and interim final regulations implementing the Affordable Care Act in the Obama administration were accompanied by less thorough analysis than other “economically significant” regulations (regulations with benefits, costs, or other economic impacts exceeding $100 million annually). The lower quality analysis apparently stems from the confluence of presidential priorities and very tight statutory deadlines associated with interim final regulations, rather than either factor alone.

For related work see, Regulatory Analysis and the Affordable Care Act's Interim Final Rules.