President Joe Biden’s recent steps to “modernize” the regulatory process will lead to bad governance and undermine fiscal accountability. Biden’s executive order seeks to loosen fiscal-analysis constraints and replace them with input from demographic groups that the administration perceives as political allies, under the guise of promoting equity. However, stakeholder input should not be considered a panacea, and it is no substitute for traditional accountability measures. The White House proposes revisions to existing analysis guidance that “emphasize promoting distributional fairness and equity,” but who defines “fairness and equity” remains to be seen.
Biden’s order also directs agencies to limit “duplicative” meetings, which could lead to certain issues going unresolved or unaddressed. While administrative rulemaking at times requires bureaucrats to weigh and act upon grand principles, more commonly, it entails the comparatively banal tasks of competent and fiscally responsible administration. Properly done, most regulating is rather procedural and technical.
Biden’s order also raised the threshold for the annual economic impact a proposed rule must have to be subjected to an administrative cost-benefit analysis from $100 million to $200 million, adjusted regularly for inflation. Cost-benefit analysis is a type of administrative review that promotes fiscal responsibility by requiring executive agencies to estimate their proposals’ likely net value to the public, typically in dollar terms. By eliminating such accountability, Biden’s proposals will fundamentally undermine the concept of cost-benefit analysis, allowing the administration to hide the true costs of its aggressive regulatory agenda.
Agencies seem to have had little trouble operating under the old threshold of $100 million, successfully producing vast quantities of new regulations. If agencies maintain their regulatory pace, the 2023 Federal Register will exceed 79,000 pages, and the US regulatory costs would be the world’s eighth-largest economy, ranking behind France and ahead of Italy.
“Cost–benefit analyses and other procedural checks introduce in the regulatory process a necessary measure of accountability. Among other advantages, such measures can restrain bureaucrats who seek improperly to implement ill-conceived social policy. Scrapping them or diluting them with subjective metrics to swell the federal Leviathan will do no good.”
