During the first few months of this year, the new House majority has led a wide-scale attack on regulations, claiming that they significantly undermine job creation and dampen economic growth. This perspective is inaccurate, as a forthcoming EPI study will demonstrate. This issue brief takes up a related concern: The critique on regulations is too narrow. Regulations have multiple purposes, including protecting people and the environment from harm. While the effects of regulations on the economy and employment are important to consider, these effects constitute far too limited a frame to assess regulations’ merits.
Determining the true value of a regulation requires undertaking a comprehensive assessment of its effects—both positive and negative. One approach to such an assessment is cost-benefit analysis, which all federal executive agencies are required to conduct before releasing major rules.
At the beginning of March, the federal government issued two new cost-benefit reports, both mandated by congressional legislation. One report focuses on the costs and benefits of all major regulations reviewed by the Office of Management and Budget over the past 10 years. The other focuses on the far-reaching Clean Air Act Amendments of 1990. Both show that the benefits to regulations far exceed their costs. Of further interest, when the current OMB data is combined with OMB data covering earlier decades, the pattern is the same: the net benefits of regulations have consistently dominated their costs.