President Trump’s first year in office prompts four steps for reform.
In the past year, the Trump Administration has largely ignored benefit-cost analysis (BCA) in the regulatory process, implementing reforms without taking regulatory benefits into account, a key step in the logic of BCA.
Under the Trump Administration, regulatory agencies have come under fire for issuing regulations backed by shoddy analysis and concealing the regulatory process from the public. Just recently, for example, the U.S. Department of Labor reportedly moved ahead with its “tipping rule”—a regulation that would allow employers to keep employees’ tips—without publicly disclosing an analysis of the rule’s economic impacts.
In Congress, legislators have introduced several bills to address shortcomings in the regulatory process by increasing the role and scope of BCA. But these bills have failed to advance very far, caught up in the partisan rancor that has generally hampered congressional action.
What can be done to reinvigorate the use of analysis in regulatory policy?
The first and most critical step is to simplify the presentation of analysis for consumption by the informed public and decision-makers. Environmental impact statements, risk assessments, and cost-benefit analyses can all number in the thousands of pages. These dense products are often impossible for even well-informed parties to wade through. Complicated analyses often obscure a failure to consider reasonable alternatives to the agency’s preferred policy. If the public and decision-makers can better understand the tradeoffs between alternative policies, then the decisions they make are likely to be better.
Second, lawmakers should consider putting deadlines on the production of analyses. One of the chief criticisms of analytical requirements is that they can stretch out the decision-making process for years or even decades. Deadlines can force agencies to simplify their analytical products by limiting the work that can be done on less critical aspects of the policy question at hand.
Third, analysts should be given greater independence from the agency whose work they are evaluating. Some agencies have offices that are dedicated to economic or environmental impact analysis. Analysts in these agencies reported greater receptivity to their criticism of agency proposals. Although they acknowledged that their independence meant the analysts were not always in the room when policy options were initially considered, the analysts uniformly felt that the benefits of independence made the tradeoff worthwhile.
Finally, based on a detailed case study I conducted of the Small Business Regulatory Enforcement Flexibility Act (SBREFA) panel process, I believe that using panels of affected communities to engage in early stages of the analysis can be useful. The National Academy of Sciences called this type of method “an analytical-deliberative process.” Even though the SBREFA process is tilted in favor of small businesses, the panel approach can be and has been used successfully in other venues, such as in the use of health impact assessments in local communities.
Each of these four recommendations aimed at encouraging and improving the use of analysis in regulatory development draws on research I conducted for a book on the role of “comprehensive-rational analysis”—a term coined by famous political scientist Charles Lindblom—in government decisions.
My research canvassed BCA and discussions of environmental impact assessment and risk assessment. I based the research on interviews conducted with 48 analysts, including economists, risk assessors, and practitioners of environmental impact assessment, in which I asked about their experience in conducting analysis for regulatory agencies. These interviews identified cases where analysis worked to aid government decisions and cases where regulatory analysis was either ignored or used by interest groups to cripple agency decision-making.
When looking to reform the regulatory process through analysis, it is important to remember analysis is not without its own shortcomings. Analysis in government is constrained by politics, legal requirements, and the bureaucracy. It is also critical to remember that analysis cannot give answers to value questions such as debates on fairness and dignity. No matter how comprehensive and how rational, analysis can only describe the possible consequences of those answers. If analytical reforms are going to be viable, they need to be designed with these constraints in mind.
Still, in the four decades since BCA, risk assessment, and environmental impact assessment became prominent in policy-making in the 1970s, these techniques have generally made a positive difference in the making of public policy. Hopefully the experience of this past year will, in the longer run, prompt a re-examination of how to best use regulatory analysis. If so, the reforms described here should be a part of that debate.