Congress Should Halt OMB’s Rewrite Of Circular A-4 Guidance On Regulatory Cost-Benefit Analysis

People love to gripe about red tape; but not only is there a method to the madness, there’s a certain madness to the method these days.

Regulations typically go through public notice-and-comment procedures. That’s obscure enough when they appear in a Federal Register of tens of thousands of pages annually that nobody can actually read. Down another layer below that, the assessments of the purported costs and benefits of what agencies plan to inflict are called Regulatory Impact Analyses.

The Biden administration has just proposed a rewrite of the White House Office of Management and Budget’s so-called “Circular A-4” guidance on regulatory impact anaysis preparation (with a too-rapid early May deadline on public comment that ought to be extended).

If you’ve been unsettled by the federal government’s insatiable appetite for growth over the past few years, OMB’s proposed rewrite of regulatory assessment procedures presents a big-time dilemma of such gravitas that “mere” public comments aimed at tweaking the end product cannot resolve. At this advanced stage of federal government consolidation and covetousness, only a work-stoppage by Congress can clear a pathway to preserve regulatory restraint and restore constitutional normalcy when it comes to the Administrative State.

The Draft Circular’s assumptions and biases underscore irreconcilable differences (many longstanding) in what classical liberals and Progressives (who now comprise the bulk of the Administrative State career apparatus and Biden appointments) might be willing to recognize as a regulatory cost or a benefit in the first place when it comes to the introduction of coercion into human affairs.

Politicization and pursuit of grand-scale federal intervention — from climate to digital currency to federal custodianship of able-bodied adults — has converted OIRA from a watchdog against regulatory excess into a promoter of progressive regulatory conceits. (See, for example, the Biden “Modernizing Regulatory Review” Memorandum and Executive Order 14,094, and preambles to recent editions of the twice-yearly “Unified Agenda” of federal regulations).

This last step cannot be first; Congress, to the extent its substantial inquiry, oversight and appropriations authorities allow, should not permit a White House Office of Management and Budget Circular A-4 rewrite to proceed without forcing OMB and its Office of Information and Regulatory Affairs to address certain elements of decay in regulatory oversight processes that the re-write as presented will not only fail to repair but worsen.

Some of the underlying concerns demonstrating the unworkability of an OMB re-write at this time include:

• The failure to comply with existing regulatory disclosure law such as the “Regulatory Right-to-Know Act” (the “annual” Report to Congress on regulatory costs and benefits was last seen for fiscal year 2019) and the suspect (or at least largely untrackable) adherence to mappable reporting of rules and guidance documents to both Congress and the Government Accountability Office as required by the Congressional Review Act;
• The recent abandonment of executive order-based regulatory streamlining, protections for the regulated, and accountability for civil servants; and certain unilateral agency moves dampening regulatory disclosure.
• The counterproductive and cynical abandonment of Trump-era guidance document portals and formal mandatory procedures for the preparation of such documents;
• The underlying paucity of cost-benefit analysis in spite of the homage continually paid to it; and the wholesale failure to provide the aggregate regulatory cost estimate that is not only mandatory but necessary to claims of “net-beneficial” policy within some reasonable regulatory budget constraint;
• Related to the failure to provide an aggregate cost estimate, the failure to recognize most categories of government intervention in assessing burdens of the administrative state and regulatory apparatus;
• A failure to recognize that the “market failure” and “behavioral biases” emphasized by OIRA in the Draft Circular A-4 as rationales for rulemaking are swamped by political failure. As CEI founder Fred L. Smith Jr. often noted, what policymakers confront in most instances is not market failure but the failure to have markets;
• The continued exclusion of independent agencies from central OMB review, even as their prominence in the pursuit of progressive ends now being incubated rather than restrained by OIRA (like “equity” and “ESG”) is surging. The conundrum here of course is that, where once upon a time OMB review was thought of as a way to restrain the independent bodies, OMB is now more inclinded to propel their regulatory aims;
• The non-reality of claims of agency “expertise” (the underlying but always suspect justification of the Administrative State) in both legacy and frontier sectors, which again threatens to lock many enterprises into inappropriate regulatory capture and sub-optimal paths of evolution, dampening wealth creation and consumer well-being. Recent passage of highly interventionist legislation such as the CARES Act, Infrastructure law, CHIPS Act and the Inflation Act heighten this problem and will feed the revamped circular a4’s appetite for regulatory escalation;
• The disregard of federal monopsony and monopoly power; and the related exploitation of federal spending, procurement and contracting heft to advance malignant regulatory ends, increasing that power still further.
• Not last and not least, given the character of today’s Progressive movement, the emphasis on “distributional effects,” “equity” and “net benefits” saturating the Draft Circular A-4 is a recipe for energetic expansions of federal government authority past a point of no return for liberty and constitutional normalcy.

Congress should recognize that already, even without the Circular A-4 revamp, Biden’s E.O. 14,094 has raised the threshold for the “significant” regulations that ostensibly receive more scrutiny from $100 million annually to $200 million annually. While more of the pursuits noted above would be enabled by A-4, scrutiny would decrease as not only will costs be denied, rules of all sizes would be more readily deemed “net beneficial.”

The White House Circular A-4 rewrite with its rapidly approaching deadline for comments must be seen in context of the progressive legislative transformations of recent years that are increasingly international in scope, and, again, the proclamations of support for this agenda articulated by recent acting OIRA leaders.

The U.S. today ought to be engaging in large-scale regulatory liberalization and shrinkage of bureaucracy and the entire federal enterprise. The opposite is happening.

Congress should — with oversight hearings, inquiries, withholding of funds, and whatever other reasonble and legitimate means it has available — press pause on an already maddening system of regulatory analysis that stands on the precipice of a redesigned aimed at making it still easier to add but not subtract regulation.