AP Photo
Reagan holds a Cabinet meeting, November 1984.
This article is part of our policy roundtable on “The Future of the Regulatory State.”
This story is also part of the Prospect’s series on how the next president can make progress without new legislation. Read all of our Day One Agenda articles here.
Since the Reagan administration, the Office of Information and Regulatory Affairs (OIRA) has been tasked with managing rulemaking across government, reviewing agencies’ cost-benefit analysis, and circulating draft rules among agencies—building upon efforts launched in the Johnson, Nixon, Ford, and Carter administrations, respectively. And from that moment forward, progressives have loved to hate it.
For decades, OIRA has been blamed for slowing or even stopping important rules that would better protect workers, consumers, borrowers, and anyone else in the crosshairs of big business. That’s why some progressives have proposed abolishing OIRA so that Cabinet agencies can be free to pursue regulations at will.
But when we look at OIRA, we see its potential. In our recent report, “OIRA 2.0: How Regulatory Review Can Help Respond to Existential Threats,” we propose using OIRA as a force to help address existential threats, not to mention modernizing its version of cost-benefit analysis to support progressive structural change and center equity.
In examining today’s OIRA, we identified four deeply intertwined factors that can lead OIRA to delay or block ambitious regulations. First, the agency is inadequately staffed to review routine rulemaking, let alone to move quickly against existential threats that may require broad structural change to the economy. Second, the agency’s role as peer reviewer and keeper of certain standards and procedural requirements is misaligned with the need for expedient action. Third, and relatedly, OIRA’s regulatory review process must strike a continuous balance between expediency and rigor in reviewing regulatory packages. Finally, OIRA’s traditional use of cost-benefit analysis is insufficiently rooted in a structural accounting of which groups in society gain or lose from courses of action or inaction.
That’s where our recommendations come in. For one thing, we propose the creation of a new Regulatory Planning Office (RPO) within OIRA that would serve as a think tank within government to identify areas of under-regulation. The RPO would play a forward-looking role, pressing agencies to pursue more effective agendas and arming them with important tools to achieve those goals. This new office would function as a partner to agencies to work through ideas that may not have previously been pursued due to a lack of resources, and could even partner with outside academics and academic associations to add research capacity.
In other words, we see a revamped OIRA as a potential industrial planning facilitator—something the American state sorely lacks. This absence puts us at a significant disadvantage relative to our economic competitors when it comes to enacting bold transformational industrial policy of the kind needed to respond to pandemics, soaring inequality, and climate change. Our reforms will empower OIRA to deliver on a progressive mission, and a new administration could hold it accountable accordingly.
Equally important, we suggest additional reforms to modernize and enhance OIRA’s cost-benefit analysis standards for analyzing rules. For example, one consequential but wonky technical change involves decreasing the “discount rate” that is used to reduce the “present value” of benefits that accrue well into the future. To explain, the Trump administration favors a 7 percent discount rate, which means a benefit of $2 billion would be “worth” $1 billion in up-front costs only if it were realized in the next ten years. A more aggressive (and we think realistic) 1.4 percent discount rate (favored by the U.K.’s Stern Review on the Economics of Climate Change) would validate the same up-front costs as long as the benefits were realized anytime in the next 54 years—which they certainly would be. Choosing the right discount rate—including zero when there are significant intergenerational equity issues—will make a huge difference in justifying efforts to tackle the climate crisis, many of which involve high up-front costs with vital payoffs farther in the future.
As a second example, we also explain how OIRA could use reimagined standards to compel agencies to center equity and inclusion in crafting regulations. By considering the disparate costs and benefits shouldered by women, people of color, immigrants, people with disabilities, and other communities that are too often marginalized in the policymaking process, a new equity analysis could highlight differential impacts of policies on those populations, whether intentional or not. In anticipation of these disclosures, agencies would design policies with greater equity; and the disclosures would provide impacted communities hooks for their own campaigns to advance regulations or demand changes.
As individuals who have worked on ambitious rulemaking agendas from the inside and outside during the Obama administration, we viscerally share frustration over rulemaking delays. But even beyond legal questions about abolishing OIRA or cost-benefit analysis altogether, it’s unlikely that a Biden administration would give up centralized control over rulemaking or unilaterally abandon an established process for justifying important rules to the public. This is perhaps especially true of a candidate increasingly positioning himself on the left, who will be under constant scrutiny by the media, and facing attacks from well-funded business interests claiming that the administration’s regulatory efforts are choking the economy in a recession (or worse).
If anything, it’s far more likely that there will be a push to restore OIRA to its pre-Trump status quo, simply undoing the damage that Trump has done to this institution as he has to so many others. And while a full appraisal of OIRA is at least complicated—the longest delays blamed on the agency sometimes originate elsewhere—it would be a lost opportunity, to say the least, not to modernize OIRA to support a robust regulatory agenda, especially in the face of the existential threats that our nation faces.
Moreover, on the merits, we do not believe the White House should delegate rulemaking responsibility entirely to agencies. A progressive administration needs mechanisms to hold agencies accountable to deadlines and to ensure they take its preferred positions. And even the most trustworthy agency leaders cannot be expected to fully understand the implications of their policy proposals for every other agency around government. If rulemaking is fully decentralized, a proposal to limit pesticide use may still be inadequate in terms of child labor, for example.
With strong leadership and additional resources, a reimagined OIRA can serve to push agencies to think more creatively and proactively. Such an OIRA could make the difference between years of frustration and wasted opportunity, and the advancement of a proactive agenda for workers’ rights, climate justice, consumer protections, access to health care, and even an industrial policy that will create new jobs to support our nation through our economic rebuilding effort and beyond.
