Regulation is under new crosshairs

A certain diner in New Jersey off the mainline to New York is famous for the sheer size of its food. A corned beef on rye can serve six or eight people. A slice of cake must lie on its side because it’s about 18 inches tall.

On my one visit there, I marveled as patrons downed prodigious quantities of food.  One stood out, devouring a ten-pound brisket sandwich and a five-pound hunk of layer cake and compensating with … a Diet Coke.

A large slab of chocolate cake at a New Jersey diner famous for its large food.
A large slab of chocolate cake at a New Jersey diner famous for its large food.

That diner came to me in thinking about President Trump’s executive order on regulations. He wants agencies to remove two rules for every one they propose issuing. If you want to reduce regulations, that sounds like one way to do it.

But one listener asked me, well, which ones do you get rid of? Can agency managers just rummage for all the old, obscure rules (the Diet Cokes) and offer them up in exchange for a big new rule (two quarter-pounders with cheese)?

The more I thought about it, the more complicated this could all get. In reality, a regulations review shouldn’t get complicated, but instead conducted according to a methodology people can understand and buy into. Regulatory agencies regulate. It’s what they do — what citizens ask them to do. No one likes the idea of undoing their own work, any more than anyone likes going on a diet. So regulations have a way of growing, and each new administration launches its own cost-benefit analysis.

Regulation and deregulation have been a ceaseless process at least since the Carter administration, when landmark deregulation of the airline and trucking industries occurred. President Reagan established the Office of Information and Regulatory Affairs, which President Obama later used to coordinate a governmentwide regulation review under OIRA Director Cass Sunstein. Trump hasn’t appointed an OIRA director, but he should.

So, back to the question. If the offset for 37,000 calories of cake and brisket is a Diet Coke (or in my case, Diet Mountain Dew), could the same dynamic apply to rule-making and vaporizing?

That is, suppose EPA — and I’m just making this up — proposed a rule banning cattle flatulence that would cost farmers a billion dollars in special balloons. Could it offset by cutting two rules, say one banning snail-darter fishing, which nobody does, and one requiring Swedish-made cars with two-stroke engines to have filters on their tailpipes?

That would be a couple of packets of Splenda traded for a giant Snickers bar. And it illustrates the problem with across-the-board types of solutions.

big snickers
A one-pound Snickers bar spotted by Tom Temin

In theory that can’t happen because of the regulatory “budget” process built into the latest executive order. It requires agencies to offset the estimated costs of new regulations by removing ones with greater cost. This idea didn’t originate last week. Theories of regulatory budgeting date back to the 1970s.

An effective regulations strategy starts with knowledge. Which ones are most costly? Which ones may no longer have relevance? Which are most burdensome to businesses? Which ones have the greatest safety or environmental effects? Each rule — and there are tens of thousands of pages of them, maybe hundreds of thousands — had some original reason for being. Some proportion could disappear with little consequence before you’d get to the ones that invoke real debate. At that point, something will have to happen that nowadays seems remarkable. People will have to listen to one another.

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