Since 1981, the President has required executive branch agencies to calculate the costs and benefits of their significant regulatory proposals. This practice has been reaffirmed by presidents of both parties (the Clinton executive order cementing this practice recently had its 25th Anniversary). Similarly, agencies are required by statute to publish “Environmental Impact Statements” with an analysis of their decisions that impact the environment.
Advocates of cost-benefit analysis (CBA) tout the virtue of ensuring that government interventions in the market achieve their desired effects and don’t cause unintended problems. Opponents of CBA argue that it undervalues benefits of regulations that cannot be counted, and that it makes it unduly hard for agencies to regulate.
The same types of arguments usually take place over environmental impact statements (EIS). In this case, environmental groups tout the benefit of forcing agencies to grapple with the environmental consequences of their actions on the environment, while industry argues that the requirement slows down valuable projects and permitting decisions. In both CBA and EIS, there are numerous instances that both sides can point to that support their arguments.
But there is another important impact of requiring agencies to produce public analyses of the effects of their decisions. Doing so, informs both the public and political decision-makers of the likely consequences of the regulations and allows them to better judge whether those consequences are desirable. It can also cast light on the otherwise shrouded process of agency decision-making.
In the past several weeks, agency analyses have cast such a light on two proposals by Trump Administration agencies. While both analyses are flawed, the debates they have provoked have shown that even a flawed analysis can help foster public (and eventually judicial) accountability.
Last month the Trump Administration proposed weakening Obama Administration requirements on gas mileage for new cars and light trucks. The agency proposing the new standard, the National Highway and Traffic Safety Administration (NHTSA) was required to issue an environmental impact statement.
NHTSA argued that freezing gas mileage standards would have a limited environmental impact. How is this possible? Well last week, reporters digging into the EIS found that the Trump Administration assumed that the planet was already on track to warm seven degrees by the end of the century, so efforts to curb climate change were useless. This is in marked contrast to the public rhetoric from all parts of the Trump Administration which largely deny or minimize climate change.
Whether or not the estimate of change is valid (a seven degree increase would be disastrous and would argue for much larger interventions by NHTSA and the Environmental Protection Agency, not to mention remaining party to the Paris climate accords) the EIS exposes serious questions about the views of the Trump Administration.
The second instance of analysis exposing a questionable policy decision involved a redefinition of who the Department of Homeland Security would deem a “public charge.” The redefinition would make it harder for legal immigrants to claim benefits. Here, the cost benefit analysis showed that the requirement would have costs of $1.1 billion, largely in paperwork burdens.
The analysis here is also flawed, it omits (among other things) costs in additional health care for immigrants who forgo benefits as a result of the proposal. But even with this omission, the analysis highlights the economic foolishness of the Trump proposal and could lead to its eventual reversal in the courts. It also highlights for the public the negative effects of the proposal.
The requirement for agencies to do various types of analysis is not one that gets a lot of attention. But it results in revelations that do – and should.
Stuart Shapiro is professor and director of the Public Policy Program at the Bloustein School of Planning and Public Policy at Rutgers University, and a member of the Scholars Strategy Network. Follow him on Twitter @shapiro_stuart.