Regulatory 'Pay-Go': Rationing the Public Interest

Abstract

Attacks on regulation have become commonplace in Washington, D.C., and on the campaign trail. Regulatory opponents in Congress have sought to translate their attacks on regulation into legislative proposals that, if enacted, would subvert the process by which regulatory agencies carry out their statutory mission of developing and implementing rules.One of these anti-regulatory proposals, “regulatory pay-go,” embraced by Republican presidential nominee Mitt Romney, relies on a gimmick: It would prohibit agencies from issuing new rules, no matter how beneficial they are, unless they first identify and eliminate an existing rule that involves greater or equal costs for industry. Regulatory pay-go thus creates an overall regulatory “budget,” and by placing an arbitrary cap on new safeguards, it seeks to keep that budget of total regulatory costs from growing, without regard to the hazards from which those regulations protect Americans.This CPR Issue Alert examines regulatory pay-go in greater detail, finding that it would further undermine the U.S. regulatory system’s capacity to protect people and the environment while doing nothing to improve the economy. The proposal is based on a dogmatic assumption that social benefits from regulation cannot possibly justify any increase in overall regulatory costs. Supporters of regulatory pay-go have not and cannot provide empirical support for this categorical assumption that ignores a long history of regulations saving lives, preventing injuries, and protecting property and the environment. Among its many implementation problems, regulatory pay-go would operate as a one-way ratchet, gradually reducing safeguards over time, and it would add to the already massive procedural obstacles agencies must overcome to continue protecting people and the environment against new and emerging threats. If adopted as an executive order, it would be illegal. If adopted as legislation, it would create a litigation nightmare.