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Less than 1 percent of federal rules get a cost-benefit analysis

Published in Blog on July 18, 2017 by Convention Of States Project

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When it comes to the federal regulatory state, we don’t know what we don’t know.

In an intriguing and worrisome post, Clyde Wayne Crews, a vice president at the Competitive Enterprise Institute, crunches the numbers to find that less than 1 percent of all federal regulations are subject to an official cost-benefit analysis. Even many so-called “major” regulations never get scrutinized to determine whether they will help or hurt the economy.

“In fiscal year 2014, for example, the White House Office of Management and Budget reviewed 54 major rules and a few hundred significant ones. Only 16 had cost estimates OMB reviewed, and only 13 had both cost and benefit assessments,” Crews writes.

Since 2001, somewhere between 3,000 and 5,000 new federal rules were issued annually. The vast majority of those new regulations are minor updates and changes to existing regulatory framework, but they do contribute to the growing size of the regulatory state, and no one within the government is keeping an eye on their effectiveness.

Even some major rules don’t get analyzed by the OMB, because the office is not empowered to review rules issued by so-called “independent regulatory agencies.”

Those agencies include some of the big players in Washington, D.C., such as the Federal Communications Commission.

In theory, that’s supposed to keep nonpartisan regulatory agencies like the FCC from being subject to review by the White House, which runs the OMB. In practice, though, it means that huge regulations —such as the FCC’s net neutrality rules — are never critiqued for their costs and benefits.

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Oversight is great, but we have something more effective in mind. An Article V Convention of States can propose constitutional amendments that actually shrink the power and jurisdiction of these federal agencies, limiting their ability to regulate every area of our lives.

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