It’s the end of an era. The GOP, in the person of Donald Trump, has fallen out of love with subjecting regulations to cost-benefit analysis…
Liberals complained that cost-benefit analysis biased OIRA against protecting health and safety because a regulation’s benefit to society, being widespread, was harder to quantify than its narrow cost to specific businesses. In addition, because calculations of regulatory cost relied on industry input, these were highly exaggerated.
For Republicans, though, regulatory cost-benefit analysis became a kind of religion. So confident were they that it was a reliable regulation killer that in the 1994 midterm elections they pledged, as part of Newt Gingrich’s Contract With America, to make it a statutory requirement. After Republicans retook the House of Representatives in 1995, the House passed a bill that fulfilled that pledge—and rigged cost-benefit methodology even further in industry’s direction. The legislation died in the Senate, in large part because President Bill Clinton had already signed in 1993 an executive order that reaffirmed Reagan’s cost-benefit requirement for major rules. By then cost-benefit analysis was, among social science wonks across the ideological spectrum, too respectable to discard. Whatever its flaws, cost-benefit analysis was rational, it was market-friendly (these were the “Washington consensus” years), and, with a little effort, its pro-business bias could be reduced.
Lo and behold, that started to happen during the presidency of Barack Obama. Obama’s OIRA administrator, Cass Sunstein, broadened cost-benefit’s scope to include, for instance, the calculation of benefits to people living outside the United States, and to assign a (human) cost to the release into the atmosphere of carbon ($21.40 per metric ton). You can guess what happened next. “As economists got better at measuring the benefits of regulation,” Stuart Shapiro, a onetime OIRA analyst and now professor of public policy at Rutgers, observes in The Regulatory Review, “benefit-cost analysis began to be seen as a tool that supported more stringent regulation of the economy.”
In October, Jeffrey Bossert Clark, acting OIRA administrator, issued a memo leveling yet another blow at cost-benefit analysis. Instead of taking 90 days to evaluate some proposed deregulatory action, OIRA will now take 28 days—and 14 if a given rule is “factually unlawful.” That’s not even close to enough time. “If high-quality analysis suggests that deregulation is costly, and it often will,” concludes Shapiro, “the [Clark] memo effectively instructs OIRA to turn a blind eye.”