Under Shelby’s legislation, any new rule for which costs outweigh benefits would be prohibited from final implementation, The Hill reports:
“If a regulation’s costs outweigh its benefits, it should be thrown out,” Shelby said. “By providing a clear, rigorous and consistent process for regulators in making that determination, this legislation will eliminate unnecessary burdens on our economy.”
Shelby’s past efforts to ensure that cost-benefit analyses are performed on new regulations has drawn harsh rebukes from regulators and the Obama administration. “[W]e are seeing a determined effort to slow and weaken reforms that are critical to our ability to protect Americans from another crisis,” former Treasury Secretary Tim Geithner said of such a change in 2011.
Such a proposal may seem benign, but “quantifying costs and benefits objectively is notoriously difficult,” Reuters’ John Kemp wrote in 2012, and “the result tends to depend on who is doing the measuring.” Those analyses would likely throw out many regulations that could protect the nation from future financial crises or from incidences like the rate-rigging scandal that embroiled the financial industry last year. Independent studies have shown that the financial crisis cost the U.S. $22 trillion, including nearly $13 trillion in lost economic output.
And while they have support from the Chamber of Commerce and other financial industry interest groups who have challenged new regulations in court, the analyses are meant not to ensure smart regulations but to slow down or block the regulatory process. “The standard they seek to enforce,” Kemp observed, “would be impossible to meet.”