Better in their words…

I need some help here….

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President Obama’s executive order to sweep out the regulatory chimneys deserves the benefit of the doubt, if only on the chance that it does some modest good. But now that we’ve had a chance to inspect the fine print, there’s reason to believe this is less than meets the press release.

No sooner had Mr. Obama told the bureaucracies to subject all regulations to a cost-benefit test than the bureaucrats began telling reporters that they are already a model of modern efficiency, thank you very much. Among many others, the Environmental Protection Agency said in a statement that it was “confident” it wouldn’t need to alter a single current or pending rule. “In fact, EPA’s rules consistently yield billions in cost savings that make them among the most cost-effective in the government.”

Perhaps the EPA’s confidence owes to a little-noticed proviso in Mr. Obama’s order. When the agencies weigh costs and benefits, the order says, they should always consider “values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts.”

Talk about economic elasticities. Equity and fairness can be defined to include more or less anything as a benefit. Under this calculus, a rule might pass Mr. Obama’s cost-benefit test if it imposes $999 billion in hard costs but supposedly results in a $1 trillion increase in human dignity, whatever that means in bureaucratic practice. Another rule could pass muster even if it reduces work and investment, as long as it also lessens income inequality.

Any cost-benefit analysis depends to some extent on matters of judgment, but typically the criteria are more economically tangible, such as how to price risk or the discount rate. No business would recognize Mr. Obama’s version, since his “values” loophole boils down to a preference for bigger government. The danger is that his executive order will transform an important tool to check excessive regulation into a way to justify whatever rule the permanent bureaucracy wants.

The current EPA is a perfect case study. One of Administrator Lisa Jackson’s top priorities is “explicitly integrating environmental justice considerations into the fabric of the EPA’s process,” as a July 2010 memo to all senior regulators put it.

“Environmental justice” is the left-wing grievance movement that claims pollution has a disproportionate effect on minorities and the poor. Ms. Jackson’s memo introduced new regulatory guidance—that is, rules about how to make rules—so every EPA action has “a particular focus on disadvantaged or vulnerable groups.”

Ms. Jackson wrote that a new goal for rulemaking, enforcement and permitting is to have “a measurable effect on environmental justice challenges.” But these amorphous concepts are not measurable at all. According to this guidance, EPA must nonetheless consider them when estimating the “economic impacts of regulations,” and even its scientific analysis should “encompass topics beyond just biology and chemistry.” So put on your lab coat and complete a randomized controlled experiment in politics.

Sure enough, EPA justifies its 2009 carbon “endangerment finding” by noting that climate change will “add further stress to an existing host of social problems that cities experience, including neighborhood degradation, traffic congestion, crime, unemployment, poverty, and inequities in health and well-being.” Oh, and it will “accentuate the disparities already evident in the American health care system, as many of the expected health effects are likely to fall disproportionately on the poor, the elderly, the disabled, and the uninsured.”

So while Mr. Obama wants the country to think a new rigorous empiricism is guiding his government, his appointees can justify any rule that fits their ideological goals. This sounds more like the end of cost-benefit analysis than the beginning.

via Review & Outlook: Obama’s Rule-Making Loophole – WSJ.com.