Philip Wallach and Kevin R. Kosar write,

The office would have two core functions. First, it would perform cost-benefit analyses of agencies’ significant rules, which number around a hundred per year, in order to provide a disinterested check on agencies’ self-interested math. These CRO analyses would coincide with the prospective estimates that agencies themselves perform. This would create a legislative counterweight to the rule-review function of the Office of Information and Regulatory Affairs — which is nested within the OMB and thus the Executive Office of the President, and is therefore unable to provide a credibly neutral review process that goes beyond concerns internal to the executive branch.

The CRO’s assessment of a proposed regulation, like CBO’s bill scores, should be posted online and delivered to the committee of jurisdiction. Doing these things would increase the political salience of agency rulemaking, thereby fostering congressional oversight and encouraging policy entrepreneurs in the legislature to take up the subject. A CRO cost-benefit analysis should also be automatically submitted as public comment to the rule, which would oblige an agency response and possibly a recalibration of the rule.

Second, but perhaps just as promising, would be to have CRO perform periodic retrospective analyses informed by real data rather than forward-looking estimates. Agencies sometimes perform “look-back” assessments, but they are modest in number (certainly compared to the massive corpus of standing regulation) and produce only nominal changes. This is unsurprising, since each agency is passing judgment on its own work. CRO reports would regularly goad Congress to examine how the rules produced by existing laws are performing, such that they could work to revise those statutes that have yielded problematic results.

My thoughts.

1. Take the analogy with the Congressional Budget Office. People love the CBO, but its practical impact has been questionable. Since 1975, the Congressional budget process has become worse, not better. Congress has become more evasive of accountability, not less so.

2. The proposed CRO is a solution if the problem is that Congress lacks information about bad regulatory policy. But is that really the problem? The problem is that, as with the budget, there is not much collective will in Congress to set policy.

I think that we have the state of affairs that we do because politicians like it. That means either that the regulators are getting away with something without the public realizing it or the public is basically complacent about regulators running amok. I am afraid that it is the latter.

Would a CRO make the public less complacent? Well, CBO has not made the public any less complacent about the unfunded liabilities of Social Security and Medicare. Instead, the CBO’s main impact has been to increase policy makers’ hubris about the ability of deficit spending to create jobs.

In a better world, what are called “regulations” would be called “laws,” and every single last one of them would require Congressional votes. In an even better world, politicians in Washington would look at all the things that agencies are attempting to regulate and say, “Gee, we have no business doing that. We are not properly informed. We should only regulate in areas where we have a good set of information on which to base regulation.”

I don’t know how to get to a better world. Look, I love checks and balances in theory. And I don’t mean to discourage creative ideas for addressing what I agree is a serious problem. But I am afraid that I must assign a low probability to a CRO moving us in the right direction.

He wrote,

greater responsiveness only increases the opportunities for concentrated interests to exert influence over the agencies that are supposed to regulate them. Perhaps ironically, it may be the case that only those regulatory agencies that are able to escape domination by politicians will be able to effectively pursue the goals that those same elected officials wrote into law back when the public was paying attention. Effectiveness, in short, may demand a significant degree of bureaucratic autonomy, rather than democratic control.

…Carpenter’s key insight is that bureaucrats themselves have the power not only to shirk or subvert their principals, but in some cases to guide or even dominate them. The canvas on which he explains how this is possible is the history of one of America’s most powerful agencies, the Food and Drug Administration.

Teles is reviewing a book by David Carpenter, in which the author argues that the FDA’s power stems from its reputation. Because the FDA is highly regarded, it can maintain its independence from Congress.

Teles sees that as a good thing. His model of politics is that there are fleeting demands for regulation, to which Congress responds by establishing an agency. However, once the spotlight is off and the actual regulatory process is underway, the more politically responsive the agency, the more likely it is that the agency will be manipulated by special interests. It is better for the agency to polish its reputation and sustain independent power.

In this model, what is it that limits an agency’s power?

In theory, the loss of reputation leads to a loss of power. When has this happened? The Federal Emergency Management Agency (FEMA) has a terrible reputation, but it has at least as much responsibility as ever. Same with the Transportation Security Administration (TSA). The Environmental Protection Agency (EPA) recently spilled chemicals into the Colorado River, and as far as I can tell it suffered no consequences.

Still, I think that it is fair to say that technocrats focus on their reputations. Bad publicity does attract Congressional attention, and perhaps that makes an agency less aggressive than it otherwise might be.

But reputation-protection, rent-seeking, can be costly. A place like the Fed selects for chairmen who write self-serving memoirs. The question is whether the focus on reputation leads to better behavior or mere image-polishing.

In the private sector, there is the same tension. Reputation can be earned, or it can be manipulated through public relations. But one hopes that the competitive process will eventually expose the manipulators and reward the good performers.