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

By Eric Boehm

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.

As Crews notes, the lack of a cost-benefit analysis fails to stop elected officials and regulators from making pronouncements about the supposed benefits of their rules. The White House, for example, has claimed that net neutrality will be a $200 million positive for the economy.

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