August 31, 2007

OMB's 2007 Report to Congress on the Cost and Benefits of Federal Regulations

Key materials
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Highlights

Our Findings

  • By compiling benefit and cost estimates from agencies without any independent verification of their objectivity, it is impossible to tell whether the current year's estimates or the ten year trends are accurate.
  • It is unclear even theoretically how a compilation of total benefits and total costs of the subset of regulations that OMB has chosen can be used in any useful manner.  Further, OMB has not provided any evidence that these numbers have utility, a requirement under the Information Quality Act.

Recommendations

  • OMB could provide reports of the objectivity of various benefit-cost analyses, and in turn, the totals they aggregate, by providing measures of direct (e.g., scholarly estimates) and indirect (e.g., peer review, organizational independence) evidence of objectivity.
  • OMB could improve the utility of this Report by including benefits and costs by program, along with measures of how the regulations and enforcement have advanced specific Agency goals as demonstrated by the Performance Assessment Rating Tool (PART).
  • In addition to linking regulations to agency goals, the utility of the report could also be improved by reporting total on-going costs by industry sectors to have a true measure for both existing and potential firms.