Competitive Enterprise Institute Counts Costs But Not Benefits of Safeguards—and Hopes You Won’t Notice

, Washington representative, Center for Science and Democracy | April 19, 2018, 8:02 am EST
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Today, the Competitive Enterprise Institute (CEI) released another misleading “study” about the “costs” of regulation (read: science-based safeguards, public protections) while virtually ignoring the benefits. They do this every year because some reporters fall for it and it confirms what some elected officials and editorial boards want to believe. Policymakers and the public would be best served by ignoring the latest edition of this report that is nothing more than propaganda to promote the rolling back of science-based safeguards that protect public health, safety, and environment.

CEI trots out an outrageous (and bogus) number about the cost of federal regulations. And of course, the report conveniently fails to look at the benefits. Instead, the anti-government think tank exaggerates numbers, takes data out of context, and tries to have the information they present fit a predetermined anti-regulatory narrative.

CEI's report is in denial about benefits of science-based safeguards and public protections.

CEI’s report is in denial about benefits of science-based safeguards and public protections.

The Washington Post’s factcheckers found “serious methodological problems” in the 2015 version of the report.  The latest version is just more of the same.

The author of the latest CEI analysis suggests that federal regulations in 2017 cost Americans nearly $2 trillion dollars. However, the report fails to take into consideration the many quantitative and qualitative benefits of regulations. In the minimal amount of time it does spend on the benefits of public protections, the paper casually dismisses a congressionally mandated draft report recently released by the Office of Management and Budget, which found that the benefits of major federal regulations from 2006-2016 was somewhere between $287 and $911 billion, and the costs were somewhere between $78 and $115 billion.

As the Coalition for Sensible Safeguards described, this distorted valuation of the cost of regulations is as if a couple deciding to have a baby considered only the estimated cost of raising a child from birth to age 18 but failed to consider the priceless benefits of parenthood. Without the context and inclusion of a thorough conversation about benefits, it would be as if ESPN reported that the San Antonio Spurs won on Monday night by just saying ‘Spurs 101,’ without mentioning that the Golden State Warriors scored 116 points.

The author also argues that science-based safeguards are a “hidden tax.” However, it all comes down to who pays for environmental and public health problems: taxpayers or the companies that create these problems? Responsible businesses comply with common sense public protections because that makes the most business sense—they don’t want to hurt their customers. If they do, who will consume their product? They understand that regulations help create a fair and predictable playing field for all. And when irresponsible businesses don’t comply with regulations, or if there are no regulations on the books (see Facebook), taxpayers are left with the bill, whether that’s for cleanup of toxic rivers and dirty air, increased healthcare costs, or figuring  out how to handle the release of personal information.

Further, what CEI and other opponents of regulation also fail to acknowledge is that the regulatory process is transparent. It’s not ideal, but it’s not a black box (at least historically). Under laws that govern rulemaking and the development of public protections, public input is frequent, and industry groups engage at every step of the process. And public comments are just that—public.

When developing rules, agencies are required to show their work and justify their conclusions with evidence and the best available science. Rules that are arbitrary and capricious are thrown out by the courts. (I think some members of this administration may want to re-read the last couple lines, because that applies to deregulatory actions as well).

CEI’s approach to this study is fundamentally flawed. What the report does tell us is that cost-benefit analysis is not the most useful tool to understanding the impacts of science-based safeguards. Cost-benefit analysis consistently fails to adequately account for the benefits of public protections, many of which are unquantifiable. For example, how can we put a monetary value on a clean bill of health, or that of a life? It’s the result of regulations that we have better public health outcomes in the United States (and yet there is much room for improvement, as the better public health outcomes are not always equitable).

What CEI is advocating for through this report would likely mean less science-based safeguards, and less use of evidence in policymaking. Their approach to regulation is to make all decisions political, which has shown itself not to work very well when it comes to protecting public health, consumers, worker safety, and the environment.

Photo: emilykbecker/CC BY-NC-ND 2.0 (Flickr)

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