IU School of Public and Environmental Affairs dean testifies at Senate hearing on regulatory budget

  • Dec. 9, 2015


WASHINGTON, D.C. -- In testimony today at a U.S. Senate committee hearing, Indiana University’s John D. Graham said Congress should accept political accountability for the costs it imposes on businesses through a new “regulatory budget.”

“Congress imposes strict annual limits on the magnitude of an agency's appropriations, but there are no limits imposed on the unfunded mandates that federal agencies may impose on the private sector and state and local governments,” Graham testified. A regulatory budget would require federal agencies to include the compliance costs of new regulations as part of the budget process.

Dean of the School of Public and Environmental Affairs, Graham was the administrator of the Office of Information and Regulatory Affairs in the White House Office of Management and Budget during the George W. Bush administration.

Graham was one of four witnesses to testify at the Dec. 9 Budget Committee hearing. Committee chairman Sen. Mike Enzi, R.-Wyo., described the hearing as an effort to move to a stronger economy through regulatory budgeting.

Graham testified that setting a regulatory budget would have these advantages:

  • Force Congress to accept political accountability for regulatory costs -- both the costs of individual agencies and programs and the overall magnitude of regulatory burdens on the economy.
  • Spark a healthy competition between new regulatory proposals, since the budget may not be large enough to support all of the new proposals suggested by regulators. By setting priorities among worthy proposals, the regulators will work to advance the best proposals and drop the weaker ones.
  • Create an incentive for agencies to streamline or eliminate wasteful regulations, since those savings can be used, under the regulatory budget, to pay for the cost of promising new regulations.

Graham also took aim at several myths he said are associated with regulatory budgeting, including the misconception that it looks only at the burdens of rules and not the benefits.

“The fact that the regulatory budget is defined as a cap on regulatory costs does not mean that regulatory benefits play no role in the process,” Graham testified. He said agency leaders would advance whatever case they wished for benefits and, if it was persuasive, they would be awarded with higher budgets.

The key question with regulatory budgeting is how to move from theory to reality, Graham cautioned. He urged Congress to design a project where three agencies would work under a regulatory budget for several years. If successful, the pilot could be extended to the entire federal government.

Other witnesses at the hearing included Jerry Ellig, senior research fellow at the Mercatus Center at George Mason University, and Robert Verchik, chair of environmental law at Loyola University New Orleans. Video of the hearing is available online.

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