Counterpoint: Does Centralized Regulatory Review Ensure Democratic Accountability?

This post is the second of a three-post point-counterpoint-rebuttal series. The other posts, written by Member Scholar Richard J. Pierce, are available here and here.

In today's "point" post on this blog, Member Scholar Richard Pierce described how centralized regulatory review conducted by the White House Office of Information and Regulatory Affairs (OIRA) is effective in ensuring the democratic accountability of the administrative state. In this companion post, I’ll offer a competing view of whether centralized review fulfills this objective in practice and what that means for the standards and safeguards designed to protect our health, safety, and lives.

OIRA’s role in the regulatory system has generated considerable controversy since it was first inaugurated more than 40 years ago during the Reagan administration. In the face of this controversy, OIRA's defenders have lauded the office as essential to democratic accountability.

Pierce’s post expertly distills this argument by making three key points, which I will examine in turn. First, that OIRA promotes accountability to the president among the various agencies by monitoring their performance in advancing the president’s policy agenda. Second, that cost-benefit analysis provides OIRA with an effective tool for carrying out its accountability function. Third, that OIRA’s accountability role should be expanded by giving it more staff, extending its review authority to independent regulatory agencies, and establishing a comprehensive regulatory lookback program for it to superintend. (All of this presupposes that the regulatory system suffers from a major democratic accountability problem — a premise I happen to not accept. But I will bracket that issue for the purpose of this post.)

Does OIRA Promote Democratic Accountability?

In my view, OIRA operates to undermine democratic accountability. Civil society groups and the Government Accountability Office (GAO) have documented OIRA’s troubling lack of transparency, which makes it hard for the public to understand how centralized review affects the substance of regulations. Members of Congress and the public are left unable to gauge why certain decisions were made, thereby defeating accountability. In particular, it is hard to judge whether a regulatory decision was made based on permissible factors under the authorizing statute, or if they were motivated by other, legally irrelevant considerations.

Moreover, OIRA is an imperfect instrument for accountability, as it suffers from the same principal-agent problems that it is meant to correct. Incidentally, part of this is by design. According to Executive Order 12866, which governs OIRA’s centralized review responsibilities, the office is asked to pursue two different goals simultaneously: “good” policy and the president’s policy priorities. Left unanswered is what OIRA staff are supposed to do when those goals conflict (as they often do), leaving them plenty of room to “go rogue.”

More than that, though, OIRA, like any human organization, will develop its own internal culture and set of values. In this case, OIRA has developed a strong organizational culture built around skepticism, if not outright hostility, toward regulations and a strong ideological affinity for economic efficiency.

The pull of this culture can put OIRA staff on a path that is in direct conflict with the president’s goals — a dynamic that is poorly suited for promoting accountability. After all, no one elected OIRA’s professional staff, nor has there been anything like a referendum for their policy preferences of economic efficiency above all. Yet, the very real possibility that OIRA’s ideological preferences are subverting that of the president’s raises troubling questions about democratic accountability.

Is Cost-Benefit Analysis a Useful Accountability Tool?

Cost-benefit analysis suffers from several theoretical and practical flaws that render it a poor tool for promoting accountability. As a theoretical matter, it is hardly value-neutral. Rather, the libertarian’s ideological preference for economic efficiency is baked into its methodological DNA.

This aspect of cost-benefit analysis is troubling for several reasons. First, it is fundamentally inconsistent with the values at the core of virtually all authorizing statutes for regulations. Second, unlike those authorizing statutes, the cost-benefit analysis standard has virtually no democratic pedigree, given that it is the product of an executive order. Third, the economic efficiency values, while popular among professional economists and committed libertarians, is conceptually foreign to most Americans. Indeed, public polling shows that voters across the political spectrum reject economic efficiency in favor of other values.

As a practical matter, cost-benefit analysis is highly malleable and can be used as a vehicle for advancing nearly any political agenda (though, its bias leans heavily in favor of less regulation). A methodology that is so prone to manipulation — as we’ve seen over the last several decades — cannot be used to avoid improper politicization of policymaking.

To make matters worse from a democratic perspective, the inherent complexity of cost-benefit analysis means that this manipulation is a game only the best-resourced stakeholders can play. Most Americans, especially those from structurally marginalized communities, lack the extensive training required to understand these cost-benefit analyses, much less use them as an advocacy tool.

Should OIRA’s Responsibilities Be Expanded?

In light of the foregoing, I am leery of proposals to expand OIRA’s role in the regulatory system. As for bringing independent regulatory agencies into the centralized regulatory review process: Not only is there nothing to be gained in terms of increased accountability, doing so also raises significant threats to the ability of those agencies to fulfill their unique statutory missions. Agencies like the Securities and Exchange Commission and the Nuclear Regulatory Commission benefit from being insulated against political interference from changing presidential administrations, given the peculiarly technical issues they work on and given the need for steady, continuous policy development in those areas.

I don’t see a need for adding a new OIRA-supervised regime of regulatory review, either. Agencies already perform regulatory reviews — both required ones under various statutory programs and voluntary ones. Not incidentally, the GAO has found that agencies are in the best position to determine which regulatory reviews best serve their missions. Because of that, the voluntary reviews are the most successful.

There might, however, be some benefit to diversifying the staff at OIRA — especially to add different disciplinary perspectives other than economics, which has long predominated there. I have advocated for bringing in people with backgrounds in sociology and community organizing. I’m not categorially adverse to bringing in people trained in natural sciences. But I will say that a past experiment with this during the George W. Bush administration was a failure, as that individual functioned to undermine scientific integrity in the review process on behalf of polluting industries.

I have great admiration for Professor Pierce, and I’m honored to engage in this exchange of ideas with him as we work toward our shared goal of strengthening the U.S. regulatory system to benefit all Americans.