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4 Regulation 44 (1980)
Truth in Regulatory Budgeting

handle is hein.journals/rcatorbg4 and id is 106 raw text is: make it seem more natural to treat them as
public expenditures outright, and easier to cali-
brate them according to the good behavior of
the groups and individuals affected. This possi-
bility-easy to dismiss, hard to evaluate-could
dwarf the problems of cost measurement and
other technical aspects of implementing a reg-

ulatory budget. It is worth pondering at length
before we invest too much effort in the details
of implementation. If there is anything to it,
the regulatory budget might join a long list of
government programs which, for all of their
abstract appeal, end up achieving nearly the
opposite of their intended results.       0

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GOVERNMENT PROGRAMS are expected to
bring benefits; they also have costs. For
many of these programs, the total (or
social) costs imposed on society are largely the
same as their administrative costs and thus
are largely measured by the fiscal budget-over
which there are direct legislative controls. But
this is not true for regulatory programs. In
their case, most of the social costs are not re-
flected in the fiscal budget. Instead, they are
borne by the private and public organizations
being regulated and are, therefore, not subject
to legislative controls. This situation has be-
come a matter of growing concern. With in-
creasing frequency in recent years, legislation
authorizing a new regulatory program has
stated broad goals but then given the agency
broad discretion on implementation. There are
no direct constraints on the magnitude of the
cost burden that can be imposed on society to
achieve these goals.
The regulatory budget is one proposal for
dealing with this phenomenon. It has been sug-
gested largely in the context of health, safety,
and environmental regulation and takes its cue
from the normal fiscal budget for government.
Just as Congress authorizes broad fiscal pro-
Lawrence J. White is professor of economics at
New York University.

grams but then allocates specific spending
budgets for each agency for each fiscal year,
Congress could pass broad regulatory pro-
grams but then place annual limits on the costs
that each regulatory agency could impose on
the sectors it regulates. Thus, each regulatory
agency would have its own regulatory budget,
and there would be a total regulatory budget
for the entire federal government. The legisla-
tive process for this new budget could parallel
the legislative process for the existing budget.
(For greater detail on many aspects of the reg-
ulatory budget, see the preceding article by
Christopher C. DeMuth.)
The Major Problem
There are, unfortunately, a number of prob-
lems with the concept of the regulatory budg-
et. For example, to administer the proposal,
either the management and oversight capa-
bility of the Office of Management and Budget
would have to be greatly enlarged or some new
budgetary agency of at least equal size would
have to be created. Also, the budgetary burdens
on Congress-apparently onerous even now,
judging by the delays that plague the appropri-
ations process-would become much heavier.

44 AEI JOURNAL ON GOVERNMENT AND SOCIETY

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