REGULATORY REFORM: More Work Is Needed.

• Author: Weidenbaum, Murray L.

"Despite well-intended presidential directives, it is impossible for regulators to strike a sensible balance between costs and benefits when the basic regulatory laws prohibit the former from being considered at all."

ASEA CHANGE has occurred in public attitudes toward government regulation since 1980. Like the state, the regulatory apparatus has not withered away. In important dimensions, regulation has expanded substantially. Nevertheless, a fundamental shift has occurred in the public policy process.

"Command and control" is no longer a phrase used in polite company. Its place has been taken by references to "the magic of the marketplace." Proponents of regulation now feel obliged to talk about costs as well as benefits, private- as well as public-sector alternatives, incentives and disincentives, and thus to consider the disadvantages as well as the advantages of government intervention.

Despite significant achievements, the regulatory reform effort of the past two decades has run its course. A new strategy is needed, one that focuses on reducing the shortcomings of the basic regulatory statutes. It is necessary to eliminate the statutory barriers to agencies doing regulatory analysis as well as the permissiveness that enables them to go beyond the role envisioned by Congress. Each Congressional committee ought to be required to present estimates of the likely benefits and costs of regulatory actions necessary to implement proposed legislation--before that legislation is voted on. To improve the credibility of these estimates, Congress should establish an independent Office of Regulatory Analysis, staffed with experienced apolitical analysts willing to let the chips fall where they may.

The year 1980 was a time of transition. That year, the regulatory workforce of the Federal government reached a new high. The total of 121,791 represented a steep average annual rise of 5.8% from 1970. The next several years witnessed the sharpest decline in the employment of the Federal regulatory agencies, at least in modern times.

Also in 1980, Congress eliminated much of the apparatus of railroad and trucking regulation. In addition, the Regulatory Flexibility Act and the Paperwork Reduction Act were enacted. The regulatory flexibility statute was perfunctory, but the paperwork law turned out to be a sleeper. It established the Office of Information and Regulatory Affairs (OIRA), the part of the Office of Management and Budget (OMB) which carries out the centralized regulatory reviews mandated by Pres. Ronald Reagan and continued by his successors. Because it enjoys substantial bipartisan support, centralized regulatory review can be expected to stay regardless of the outcome of the elections in 2000.

Not all change on the...