The last several years have seen
a marked increase in protests against regulation by the Federal government. One
source of the protests is concern over the costs that regulation imposes on the private sector of the economy and on non-Federal
governments. Those costs arise from efforts to comply with regulations, from
lags or uncertainties in government procedures, and from distortions in the incentives of both regulators and regulatees.
In response to mounting political
pressure, various attempts at reform have already been made. Thus far, however,
those attempts have been tentative and piecemeal. Calls for more comprehensive
reform measures have come from both inside and outside the Federal government.
One such reform measure is
the regulatory budget. Secretary of Commerce Juanita Kreps suggested the idea
in April 1978 in Congressional testimony. Senator Lloyd M. Bentsen of Texas
introduced a bill, S-3550, to establish a regulatory budget in the second session of the 95th Congress (1978),
and a similar bill, S-51, in the first session of the 96th Congress. Professor
Murray Weidenbaum urged inclusion of a regulatory budget in a comprehensive reform program outlined in the New York Times of December 17, 1978. In October 1978, interested
parties from the Congress, the administration, business, labor, universities, and public interest groups discussed the regulatory
budget as part of an all-day seminar on reforming regulation, sponsored by the Department of Commerce and chaired by Secretary
Kreps.
The interest in a regulatory
budget reflects the promise that it appears to hold as a tool of public management. With
the promise, however, go a number of problems of design and execution. This study
explores both the promise and the problems of a regulatory budget.
The purpose of this study is
to analyze rather than to advocate; to explore rather than to conclude. The study
does not address the question of whether the Federal government should adopt a
regulatory budget. Rather, it considers how a regulatory budget could work, what
the economic and other properties of a workable regulatory budget would be, and what difficulties would be encountered in
trying to make the idea work.
Go to Chapter 1
Go to Executive Summary
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