Friday, July 22, 2016

Washington Post “Fact Checker” Column Still in Denial over Regulatory Costs

By Clyde Wayne Crews of CEI.
"The Washington Post “Fact Checker” column is running its critiques of the Republican convention this week, and in the process is trying again to rebuff a figure of $15,000 per household that I employ as a placeholder for the annual cost of federal regulations.

The Post didn’t debunk the reality of regulatory costs as “pretty bogus”; that’s their opinion-column slur. For my part, I have always bent over backwards to fairly include qualifiers regarding uncertainty (even impossibility--who else admits that?) of regulatory cost measurement, not to say the figures are wrong, but that they are a baseline. Vast swaths of federal compliance and intervention costs remain untabulated—not just by me and other observers, but by a federal government that refuses to measure itself anymore; and that when it did, presented figures in the same ballpark I occupy in today’s money.
The Post column seems to realize its convoluted effort to discount my cost figure by using my own caveats is sleight of hand because they grudgingly note the magnitude when they get around to what they really to say:

But there is one huge element missing — the benefit side of the analysis. The report concedes that the $1.8 trillion figure purposely does not subtract any potential benefits from regulations. But that’s unbalanced. Every regulation has costs — but also benefits. (For instance, seat belts are a regulation, but they also result in fewer deaths, which is presumably a benefit.)

The Post has it exactly backward. Allowing unelected government regulators to define the net benefits of their own regulations is what would be “unbalanced.” Congressional overseers have to make the calls knowing where benefits lie, and make tradeoffs among agencies regarding regulatory authority. Agencies making their own benefit claims as the Post apparently supports would mean unrelenting regulation.

Besides, some regulations meant to impose benefits can instead cause harm, such as children killed by airbags as happened in the early days of those mandates (here’s a picture of Ralph Nader personally demonstrating the “safety” of airbags on a 3-year-old in a front seat), or the ethanol mandates that aggravate food shortages.

In any event, even when regulations do good things, we need to know the compliance and indirect costs in and of themselves. We don’t say federal taxes have net benefits, and therefore dispense with explicitly recognizing corporate and individual tax collections by telling the public they don’t really pay that much to the IRS because they get such great benefits in return. I addressed issues about appropriateness and inappropriateness of offsetting benefits in detail in recent testimony in the House Budget Committee (here is written testimony, oral remarks, and video). Also, mountains of untabulated costs appear as guidance and other “regulatory dark matter,” on which I also recently testified in the Senate (written, oral).

Long story short, it is not the Competitive Enterprise Institute that ignores benefits.

Alas, the snarky attitude of the Washington Post's fact checkers perfectly exemplifies why the original working title of my “Tip of the Costberg” working paper on this issue was “Piss and Vinegar.” There are some who simply will not accept the extraordinary burdens that today’s vast bureaucracies can impose, whether or not benefits are taken into account, and want to excuse big government come what may.

Interestingly, in context of the Post’s denial of households’ being burdened, a new Mercatus study “The Cumulative Cost of Regulation” finds:

Had regulation been held constant at levels observed in 1980, our model predicts that the economy would have been nearly 25 percent larger by 2012 (i.e., regulatory growth since 1980 cost GDP $4 trillion in 2012, or about $13,000 per capita).

Per capita! That ends up being way more than my household placeholder, but here too it would be inappropriate to “offset” with benefits to contrive a phony net benefit figure. As far as high costs for households, that ship has sailed. The question is only whether or not to do anything about it, and if so, what.

The New York Times also attempted the you-gotta-offset-costs-with-benefits critique to try to stifle conversation about regulatory cost burdens recently when House Republicans issued a series of task force reports. My colleague Sam Kazman responded on “the need to know…straightforward costs,” but was given only 150 words to do so (read it here). My own response was too long for a letter to the Times, but I've included it below.

Dear New York Times Editor, 

It looks like the regulatory costs deniers at the New York Times didn't read as far as the subtitle of my regulatory cost tabulation ["Mr. Ryan’s Plan to Revert, Regress and Deregulate,” June 18, 2016]. So I shall certainly not repeat it here. The Times misleads by presuming the Competitive Enterprise Institute and others ignore benefits of federal regulation, when it is the federal government that presents reviewed benefit estimates for less than half a percent of its regulations yet gets camouflage from the Times on cost burdens regardless. A glance at the chronically late Office of Management and Budget Report to Congress on the Benefits and Costs of Federal Regulation further shows that independent agencies, today’s big guns, get no OMB cost-benefit review at all.

Our watchdog media misleads the public when it condones unelected agency personnel assessing benefits of their own rules. Benefits are what an elected Congress should have in mind before it delegates regulatory authority to unelected regulators. Further, the Times misleads when implying that benefits should be used to offset costs to present a false overall net benefit of regulation. We do not assert a net cost of federal income taxation by subtracting benefits of government spending. That the public needs to know the obligation imposed upon it is rudimentary.

While the Times doesn’t wish to inform the public that regulations cost nearly $2 trillion annually, even that leaves out numerous categories of economic and social costs, job losses, and incalculable lost liberties generated by the nanny/surveillance/administrative state. The proliferation of memos, guidance and other matter in President Obama’s “pen and phone” approach take costs of intervention to new realms.

Other regulatory cost estimates top out far higher than my account, such as a National Association of Manufacturers model, and a new report from George Mason University’s Mercatus Center more than double my placeholder, with a cost to households of twice what I contend and that the Times singled out as having been “debunked” by the left-leaning, pro-government-regulation Washington Post. My working paper account is a baseline incorporating all too inadequate government reports, the rare private sector study and academic analyses. So I realize my reckoning should be considerably higher than it is (see, I too can engage in a little denial just like the New York Times), but I'll be sticking with it, thank you just the same."

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