Regulation And Government “Science” Cost Us More Than Dollars

Today, the Independent Women’s Forum blog highlights a new NERA Economic Consulting study (produced for Manufacturers Alliance for Productivity and Innovation) on the costs of regulation. IWF’s Emily Wismer notes:

According to the report, a major federal regulation is one for which compliance costs more than $100 million per year. Using cost estimates from the federal government, which the Washington Post calls conservative, Clinton averaged 27 major regulations per year, Bush 35 per year, and Obama has averaged 44 per year in his first three years. … Regulations are meant to keep us safe and should increase the quality and competitiveness of American products. Yet when compliance costs $164 billion per year, it is appropriate to question the role of regulations and whether or not 44 regulations per year costing over $100 million really make sense. We should also note that these regulations tend to come from federal agencies and are divorced from Congress, the body responsible for writing the laws guiding our nation and affecting Americans.

Meanwhile, environmental activists and others complain that the Obama administration’s Office of Management and Budget (OMB) is holding up too many regulations. In a story for Inside EPA last week, a coalition of environmental groups suggested that Congress or the president himself (via executive order) should eliminate policies demanding regulatory review and cost-benefit analysis at OMB. But this is a very bad idea.

We all experience the costs of regulations, but they are usually hidden in the price of the products we buy. Unfortunately, since these are essentially hidden taxes, regulators are not particularly accountable. My colleagues Wayne Crews and Ryan Young do a superb job quantifying and highlighting regulations and their costs.

Still, many people think the regulations are all necessary to protect our health and well-being, failing to consider the trade-offs. But the costs can reduce our ability to pay for basic health needs — like putting food on the table or buying health insurance. When small towns are forced to shoulder the costs of drinking water regulations, sometimes they have to sacrifice other items in the budget, including things like fire trucks. And when governments ban products, substitute products may prove riskier or less effective. For example, bans on many pesticide products mean that public officials at the local level face increasing difficulty controlling dangerous pests — including West-Nile virus carrying mosquitoes. And potential bans on BPA-based resins that line food containers could translate into increased food-borne illnesses.

Given these realities, regulatory review is essential to ensuring some level of accountability. But we also need to re-evaluate the laws under which agencies operate and demand greater transparency in the process. This includes greater scrutiny into underlying government science used to justify regulations as well as government programs and studies that have impacts on the marketplace, such as EPA’s proposed “chemicals of concern list.” Today, Henry Miller and Jeff Stier have a great article on Forbes.com  that underscores why we need oversight of government science — particularly when it affects regulatory decisions or commerce — and ultimately our lives.