we must also export. i would say that is necessary. that is a business model, otherwise you need an enormous to get theoney abilities, the technologies that are needed today. to get the so yes, sometimes we succeed in exporting our weapons and military systems. of course we have to be extremely cautious. is it safe to do it? do we comply with international rules? of course we have to do that. setthese rules are accordingly. we do our best to comply with them. heather: madam minister, thank you so much.

you gave comprehensive insights that helped us understand greater french security priorities and its defense needs. thank you so much for your partnership, for the embassy. we benefit from french diplomats that enrich our research. thank you for managing this cold.sation with a that is above and beyond the call of duty. thank you for agreeing to come back at a future date. we will work with your calendar. most importantly, thank you for the incredible partnership cold. and military cooperation. the united states is a safer place for it. ift award -- just a word, everyone could remained seated at the end, we will escort the minister and delegation out. as soon as we are out the door, please enjoy a fantastic fall weekend. ministere thank the

with your applause. >> [applause] >> c-span's washington journal, live every day with news and policy issues that impact you. coming up saturday morning, defense fund executive editor on the u.s. military presence in niger, and the death of four american service members this month. then, a magazine contributor talks about her piece on the role that rural electric cooperatives could play in a

transforming the energy sector. and an author on education secretary betsy devos' decision to rescind an obama era decision on how universities handle sexual assault. be sure to watch washington journal, live at 7:00 eastern saturday morning. join the discussion. >> good morning, everybody. it is a beautiful day outside, and you are all here to talk about regulatory policy. i love it. my kind of people.

i am the vice president and director of economic studies here at brookings. i am also the founder and director for the center on regulation and markets, which is a relatively new endeavor at brookings. its goal is to improve regulatory policy through independent research on regulatory performance and process, and to host events like this where we can have informed debate on regulation, and everything with the word reg in it. there is a long tradition at brookings working on regulatory policy. way back in the 1990's in my youth -- and i'm going to stick by that being my youth -- i was affiliated on the aei side with the joint study on regulatory structures. that center no longer exists. i want to start something up again, and lo and behold, here we are.

it is a particularly opportune time to focus our attention on regulatory policy. in recent years we have seen increasing delegation of policymaking authority from congress to the agencies. we see this now nine months into the trump administration. if you look at the priorities of the president, on domestic policy front, you had the repeal of the aca, and that did not go as planned. we have tax cuts or tax reform, depending on how you want to categorize it. it is moving along, but the process is uncertain. and we have any agenda of deregulation. unlike the first two, the regulation does not require congressional participation. it is safe to surmise that is more proactively moving forward within the executive branch. the plan for today is for me to talk about 20 minutes or so on a

new paper we just released tonight. it is a paper that i co-authored with my colleague at brookings, and bob at the council on foreign relations. bob is unfortunately recovering from illness, so he is not here today. i hope he is watching on our webcast online. hello to everyone else watching online too. thank you for watching us tonight. after i finish my talk, we will monitor a panel discussion of the paper and the state of trump's regulatory policy more broadly. as we do with, our events at brookings we will take questions from you. save your questions for time. i will give you an overview of the paper. i encourage you to read the paper as well. we are looking at trump's

regulatory plan, our twofold requirement. more or less running at the beginning of an administration, issued an executive order which set up a regulatory offset requirement, and a regulatory budget requirement. the regulatory offset is essentially what it says -- for every new regulation, we have to offset it by eliminating two regulations. the regulatory budget is each fiscal year, the omb director will come up with a budget for each agency, and there can be no net increase for that budget in the fiscal year. this is a break from the emphasis of democratic and republican administrations, where it was based on maximizing net benefits to society. there is a lot of methodological discussion and debate, and

indeed disagreement about how you measure benefits and costs. with trump's executive order, it is not a discarding of that methodology, but a redoubled effort on the cost side. if you look across the administration's there have been some differences. president reagan had an executive office saying that benefits should outweigh costs. clinton changed that to benefits should justify costs. you can see a bit of nuance. broadly speaking, the democratic administration puts more emphasis on distributed impacts and equity when considering benefits of regulation. by and large, the whole goal is to measure benefits and costs. so what is the rationale in the history of this? from an economic point of view, a redoubled emphasis on the cost side through an offset budget. it doesn't make economic sense. if you have a regulation that is going to be extremely costly,

but has even more tremendous fun -- amount of benefits, you would want to promulgate that regulation consistent with law. nonetheless, from an economic point of view, that is a welfare improving regulation we should pursue, and we should not disfavor it with another regulation that would have smaller benefits, but less costs. if you are living in a world of cost constraint, you might wind up doing this. economically it doesn't make much sense. politically, there is a political economy argument why you would use such an instrument. some literature suggests the institutional framework of policymaking could lead to overregulation. you could have agencies trying to maximize their authority. some could be unwilling to undo regulations that may not be effective. the notion that some costs may be diffused, but if concentration benefits, you may

have more political emphasis on one side, even though it may not be justified from a net benefit point of view. one way to think of trump's proposal is as a blunt political instrument against overregulation. it is in some sense analogous to what we do with fiscal budgeting, direct expenditures that limit agency spending. it is not like agencies can spend so long as net benefits are increasing. they are subject to budget constraints on the cost side. i would point out, a regulatory budget is not a new idea. i am going to talk a little bit about brookings. if you go back to 1978, longtime economist here at brookings wrote a paper on economic activity, essentially advocating for a regulatory budget. not an offset, but a budget. my co-author at the time at brookings, wrote a book in 1983,

again advocating for a regulatory budget. even if you dig down and look at president carter's economic report from the president, his counsel who wrote that book was chaired by someone from brookings. they don't endorse a regulatory budget. they say this is one we might consider. it is not out of thin air that these ideas have come up. one key difference, if you look at those historical advocates for a regulatory budget -- in those worlds, congress had a strong role in determining what those budgets to be. in the world we live in now with trump's plan, it is through executive order. it is absent a role of congress, unlike the previous suggestion. there is also some international experience with regulatory offsets and budgeting. british columbia in 2001 established a 2-for-1 offset requirement, every new

regulation had to have two offsetting ones. it was regulatory requirements, which is a little bit more subjective than regulation. i will talk about how you go about measuring costs in a regulatory budget framework. that is a key issue. in the british columbia example, they went through all the regulations. they counted what they thought were regulatory requirements. this is a subjective measure. an action or step they have to do to be in compliance with a in 2012, often perceive success of the british columbia policy, canada as a whole started the one-for-one offset requirement in this case it was not it was actual regulation.

they also sent a regulatory budget cap. the cost measure they used was the administrative burden cost, compliance cost to business. it is important to consider for all of these how you measure cost presents differences, challenges, and implications for what comes as a result of the the policy. in the u.k. in 2001 instituted a one-for-one, then increased it to a three for one offset. more of a budget than an offset. for every dollar of regulation you had to reduce a dollar regulation elsewhere. they used net cost to business. you can imagine scenarios where this happened, where society is not being made better even though you are reducing the net cost to business. if you have a rule saying that businesses can reduce engine costs to workers, it is

transferred from the workers to the businesses. under this definition it would be a cost reduction and you can get a perverse outcome if you are not careful about how you measure cost. with trump's plan, it faces both legal and practical challenges, which we outlined in the paper. first, the legal one, we had the good fortune of working with bob who early in his career was part of arguing the case the motor vehicles association versus state farm. in that case, what happened was president reagan came into office and wanted to rescind an existing transportation rule on airbags and seatbelts the carter administration had promulgated. they went through with the administrative procedures act, a review process. their argument was since they

were rescinding a rule didn't need to meet the same standard of review. they could be a looser standard of review. and they lost. procedurally, if the administration comes in they can't just eliminate a rule. they have to go through the standard administrative procedures act requirement. you can't just strike something. you have to provide a full notice and comment and provide evidence for the rulemaking you are promulgating. on the evidence front, another part consistent with the law, you can't promulgate a role that the court sees as capricious. you have to establish an evidentiary basis that is consistent with existing statutes and provide evidence in support of the rule you are proposing. this constrains the administration's ability to deregulate. i think if you read the executive order and the guidance documents, and other documentation from the trump administration, there is language that suggests they understand and are deferential

to the fact that they have to comply with these requirements. i just put some phrases up there. these are permeating the executive order. it acknowledges permits by law, otherwise required by law, in accordance with the administrative procedures act, etc. so there is an understanding in their actions that they may not need congress to do this, but there will be a judicial review coming and they better be prepared for that. on the practical challenges, there are a number of practical challenges. i already alluded to the biggest one. if you are going to require an offset or a regulatory budget on cost, how do you measure cost? such is life, generally the more that a measure gets to what we care about, the harder it is to , a cruelt reliably twist of fate. for example, it is rather easy to measure the pages in the code of regulations.

you can count each year. if they go up, you can say this correlates to cost and cost is going up. if that is the requirement for budget neutrality, that is very imprecise. you can imagine more pages but a less burden on society. you can step it up more than that and count the number of regulatory restrictive words. this is where you get kind of biblical. you count the number of shalls and musts, i almost said thous, but that is the wrong book. use that as a proxy for regulatory costs. it is relatively easy to measure. it is somewhat informative, but not perfect for a cost. in the u.k., you could look at the cost to business. it gets harder to measure compliance cost and other costs in complying with the regulation might inflict on

them. it is one-sided because transfers from workers, customers, to consumers or businesses wouldn't be captured in that. economists, we are high-minded sorts, we have defined what the true costs are, opportunity costs. for this regulation, what with the private entity be doing with their resources? what would be the next best thing they would be doing and their willingness to pay for that? this is opportunity cost, not just for regulation, but for everything. when the government draws resources away from the private sector, opportunity cost is what would be done with those resources if they hadn't been subject to the rule? this is a conceptually correct approach to measuring opportunity cost, and is also enormously different. it is like the economist work program. it gives us lots of things to do and measure, but it is enormously difficult to do.

certainly on a regulation, broadly speaking, if you want a budget for all of the regulations of a given year, that is a hard number to come by. it does create a challenge, and that is the biggest challenge practically with achieving what the trump administration's rules are trying to do here. there are other questions over flexibility of time. how far can they bank that in the future and use it later? every agency has a cost setting. there is a question of that flexibility across agencies. that allows for some of the cost savings at one agency to be used as an offset for another agency. it is hard to see how that will work out, but it is at least in the guided documents conceivable. then there is the big question of exemptions. what rules does this offset apply to, and what don't they? for one, it doesn't apply to nonsignificant rules, smaller rules, less than $100 million. it does apply to guidance documents. it doesn't apply to independent agencies.

it might apply to international agencies. then you have emergency regulations, foreign affairs functions. i think most of those it does not apply to, but there is some discretion about which rules would be subject to the offset requirement. i'm going to be winding down soon. ok, so scenarios, we kind of lay this out at the end of the paper. this is our attempt at what will happen. one of the luxuries, or challenges, when you have three authors for one paper, you can lay out lots of scenarios and we can all carry our own probability weights across those three scenarios. i don't know if we all necessarily agree on what will happen, but these are just possibilities. one thing that is omitted is it could be offset in the budget doesn't make it difference.

not that we all agree on what will happen, these are just possibilities. one is that it is nonbinding. that is conceivable because if you have an administration like the trump administration, that is predisposed to this change in process not to regulate, the fact you are adding other constraints might not be binding. if you have plans to do the minimum out of propagation of new rules, meeting requirements on a budgetary or regulatory cap or offset might be relatively easy. that is probably an extreme version. then we have best and worst case outcomes. on the worst case outcomes, you could have this being a total morass, and that might even be the design of it. as i said before, we are talking about the legal challenges. if they want to promulgate a rule subject to this offset, they have to promulgate three rules. measuring the opportunity costs and all the rest, so it is creating headwinds to promulgating new regulations and

it could just mean irrespective of net benefits, is slowing the process down. another bad possible outcome is we need to meet these requirements, how are we going to find two regulations to cut? let's do it haphazardly because we don't have a well agreed upon inventory of regulations where were we have precise measures of opportunity cost. it could just be haphazard. on the pro side, it could do what those advocates starting in the late 1970's and 1980's were suggesting. that it could be a political instrument to put some sort of budget discipline. if for each rule you need to maintain a budget neutral, it does give you an incentive to triage, to prioritize and go deeper in the existing rules to find out which ones are not effective or costly. that will be part of the

discussion following my talk. i will leave that for the discussions to probe deeper into. i want to highlight one additional thing. this slide tells you our take on the possibilities of what might happen. so the question as we move forward is what is happening? in addition to the paper we are releasing today, we are releasing something we are calling tracking deregulation in the trump era. this is what we have online. this is not interactive what i have here, but it is more interactive on the website. this is a screenshot. we are looking at the timeline of key regulations, the ones that have been most highlighted or most in the target of deregulation and giving a timeline of what happened. what happened under obama, what is happening under trump, and describing the process now. so, this, again, this is a screenshot. it is an interactive thing. go interact with it.

you will see on the website. you can also google it. you will also see in email. so we are looking for feedback,, questions, suggestions, things we may have missed. we would love to hear from you. i'm going to pause and an invite the panelists up. let me introduce sheryl bolin, a reporter for bloomberg, a white house correspondent who writes on regulatory policy. there you are. we are delighted she is here. i will sit down. my co-author will represent me, let's hope, on the panel. represent us on the panel. thank you for being here. panelists, come on down. [applause]

cheryl: alright. i am cheryl bolin. i am the white house reporter for bloomberg bna. i have been covering regulatory policy since 2009. i finally recall asking our administrator at the time this really easy question, does regulation kill jobs? little did i know books have been written on that topic. no such softballs for these guys today. let me introduce our panel.

to my left is howard shulansky. he is currently a professor at georgetown law. we have stewart schapiro. he is a professor at the edward faustian school of public records and university. and a senior fellow here in government studies at the brookings institute. and susan dudley, director of the george washington university regulatory studies center. and former administrator in the second term of president george w. bush. what i would like to do is start off by asking the panelists to take one or two minutes. if you have any opening thoughts

or have any observations about the paper, if you would like to share those thoughts with us. howard? howard: i will start with a couple of observations about the paper. i think it is a terrific paper that is incredibly valuable right now. it does a nice job of pointing out some of the history of regulatory review, reform, and some of the challenges it will face. looking at the actual executive orders, i think that there are things to watch out for as we watch the implementation of those executive orders going forward. one thing the paper points out is a very salient point. when one reads executive orders

of that 13771 or 13777 relevant to regulatory reform in the trump administration, no changes are being made to the underlying governing structure of regulatory review in the united states. executive order set the criteria. the underlying circulars omb has sent out to tell agencies how to do regulatory impact analysis and how to review rules are not being changed, but there is a shift on emphasis of regulatory costs. because there is a lot to play in the joints methodologically in terms of data that is used, in terms of just the political valence this emphasis a particular administration has, without changing the underlying executive orders, a shift in focus to cost can have substantial impacts. if one looks at the leadership of the agencies have been doing, and the leadership of omb, there is a clear mandate being sent out through the executive branch, that the executive

branch agencies and beyond to the independent agencies, better make sure that the benefits really justify the cost. and that every cost is accounted for and, as well as possible, quantified. my evidence for that are two things. most notably, what is interesting to me, is mick mulvaney at a certain point criticized the obama administration for not having taken into account cost and looking one sidedly at benefits. that was not an accurate statement and was debunked in a subsequent "washington post" article. where we only looked at one side, it turned out we looked at about 15 rules where we only look at the costs. we did not look at the benefits. when one sees the perception of the leadership of the very office in the government that will be running regulatory review, that is a pretty clear

signal, i will be watching to any extent the agency has not accounted for costs, hence the cost emphasis. similarly, when one looks at what the epa is doing on climate regulation, it is clear the emphasis is overwhelmingly on cost. again, i would refer you to an interview that chris wallace had with scott pruitt on fox news, where prewitt was talking about how he was going to take down the clean power plan. wallace came back and said, what about the tens of thousands of asthma cases a year that will be prevented by the clean power plan? what will you do to make up for those lost benefits? i am putting some words in his mouth. i am not sure he said lost benefits. he held his feet to the fire

because he didn't have an answer. that signals i'm not looking at benefits. i am looking at cost. i think we will be entering a period where the emphasis is on cost. costs will be the main criteria and we will see a lot of of rules pull down because of cost. the thing to watch for is insufficient and inaccurate accounting for very genuine benefits. cheryl: stuart? stuart: thank you. thank you for inviting me. i also really enjoy the paper. thought it was a nice outlining of the world we are in right now. a lot of the rhetoric that has accompanied. many things today i want to pick, accompanied many things today. these executive orders do not make that big of a difference. that is not an unlikely scenario. quite frankly, given what howard said, if you tell scott pruitt he has to get rid of two regulations for every one he enacts or has to keeps costs and regulations within a budget, that is like telling my kids

they have to either candy before they can have their vegetables. to put that in political science terms, the existing means of control of agency actions, particularly the appointment power and the fact that they republicans controlled congress right now i think is sufficient in the short term to ensure that there is not much regulatory accumulation and there is an emphasis on deregulation and eliminating regulatory costs. the real impact of this order is what happens after the short-term, what happens in a longer-term period, where like gorsuch being replaced, scott pruitt eventually moves on and is replaced by whitman or someone like that. when congress goes to the democrats rather than being in the hands of the republicans. the question then is no longer, are the executive orders needed? but rather, are they sufficient to try and slow regulatory accretion? i think the answer there, this is more guesswork, is likely to be no. once political forces align in

favor of regulation, once judges tell the administration they have to issue regulations, those exceptions are going to loom very large in implementation of the executive order. in the longer term, when we have a democratic administration, i have to think these executive orders are among those that get revoked on the proverbial day one of the new administration. i don't think these would be like executive order 12291, which was then modified by bill clinton and accepted and adapted and regulatory impact analysis became a permanent part of the regulatory framework. i don't think 2-for-1 regulatory budgets are the same, and i am happy to elaborate on that later and comment. >> thanks. i do like the paper. i recommend everyone read it.

i just want to emphasize i disagree with stuart. i think there is real ambition behind this design and it would be a real disappointment if it all amounted to a complicated type of moratorium. i think the business community that, let's face it, is largely behind the push for this, it did not come out of president trump's head, they think regulatory accumulation is a really serious problem. this is designed to get agencies to use some of their energy to tackle accumulated regulations that have built up over many decades now over a very active regulatory state. that is not something that is so off the wall, right? as howard well knows, the obama administration undertook a regulatory look back program designed to get some existing

rules and say, let's assess these, let's get out of the deadwood where we can. most people will say it was a fairly modestly sized effort, and this is designed to supercharge it. the point i want to make is that will be a real disappointment to a lot of people who have been instrumental in designing these executive orders if all that it amounts to is more new regulations. it is really designed to get agencies to get back into the closets and figure out what can be thrown out. cheryl: susan? susan: i also really like the paper, and i wasn't a co-author. [laughter] susan: i think it does a nice job stating up front what most economists would agree, and that is that benefit cost analysis, the net benefits test is the right measure, the right way to go about introducing new

regulations and evaluating existing regulations, but there is a paragraph i will quote repeatedly that says, the reason for doing a constraint like this is not economic, but it is political economy. adding that constraint is because there are problems with the way benefit cost analysis is done. as ted mentioned briefly, agency incentives to look at and evaluate new regulations and measure benefits and costs, but also to look back and evaluate the effect of existing regulation. the fact that often regulated parties once regulations are in place, not removing them or evaluating them. and that it is just plain hard to do.

i think there are a lot of arguments. i think the paper makes an excellent case for why despite the fact that we all think things can be done perfectly, benefit cost analysis should be the governing rule. having this as an overlay, and i think that is a key point. it is not replacing or should not be, this is something that stuart or howard mentioned, should not be replacing that requirement for net benefits, but an overlay on top of it. i also think that the paper does a nice job of saying there are a a lot of challenges though, which is why we might have a different sense of what might the outcome be. also, it is just hard to measure, it is hard to do the measurements, and measuring just costs is harder than measuring net cost or net benefits.

for a variety of reasons and that is probably not worth going into now. i also like the way they laid out several scenarios. stuart has added a fourth, but the best case scenario does depend on this new requirement being something that is overlaid on top of the existing requirements for net benefits, and that it actually stimulates and incentivizes real evaluation of existing regulations, which despite every president since carter and even before have told agencies don't only look going forward at the benefits and cost of future regulations, but look at the regulations on the book. look and see whether they are achieving their intended objective. there really has never been an incentive, and i hope this incentivizes that, and in so doing provides the tools we do not have right now to look back at existing regulations and look at their benefits and costs. cheryl: great. thank you.

so, moving on, the title of this panel is can trump's ambitious deregulatory agenda succeed? but before we can determine if he can succeed, i have to ask, what is president trump's regulatory agenda? does anyone have a good sense of the goal here, what he is trying to do? is it really to cut regulations by 75% or what have you, and what would that look like? if anyone has a view on where he is going. [laughter] howard: i don't have a view on where he is going, but a couple of things that might help us to see where he might be going, what is likely to happen. i would draw a distention between retrospective review of regulations and deregulation. retrospective review of regulations, as some of the crop

executive the trump orders say, could be reforming a rule or strengthening a rule or repealing a rule. it can be any of those things. i think when one looks beyond some of the superficial language of the executive orders to the system it is setting up, it is not really a retrospective review effort that is designed to find out what is not working well, what could work better, how should we change things. it is a deregulatory effort. it is an effort to get rid of rules. when one looks at 13777, which is the thing that sets up these regulatory task forces within agencies, they are deregulatory taskforces. look at their mandate. so i think the objective is to look at rules that can be removed more so than rules that can be reformed, so that is one place he is heading. i think that is the biggest interest there. there are limited resources within agencies. you have a choice to strengthen

a rule or get rid of one and make your regulatory budget and live up for the two-for-one executive order. you will get rid of the rule. that will be the ultimate objective. i think they are starting with rules that they perceived to have big political payoff, and whether it stops after that and becomes effectively just a moratorium remains to be seen. but i do think there is good evidence that what we will see where this is all really heading is getting rid of a bunch of big rules that have political payoff and then settling into what is really a roadblock to new rules. part of the reason that is true is there is actually much less of a constituency for deregulation than people think, and this is what you discover when you get out there and try to get rid of rules. asked theobama business roundtable, i think 25% of rules might be able to be

cut. give me your suggestions. get those suggestions from the business roundtable. i waited, i got zero. not one. not one from the business roundtable or the u.s. chamber of commerce. that have yet to be implemented, like clean power and others they want to get rid of, the beyond that they do not have a broad agenda for getting rid of long existing rules because they absorbed the fixed costs of accommodating them. they exist as barriers to a new firm. don't have a big constituency from business knocking on the door to get rid of the old rules. who else is going to come to ask for that? not the public interest community. the unions. not the agencies, because they could would rather go forward

and backward. the forces aligned against true rid -- true review, and sweeping deregulation of the long-standing rules is very limited. once you get beyond a few high-profile rules, once industry has not yet had to absorb the compliance costs. where trump is heading is a big statement, let's get rid of everything we can. let's get rid of big high-profile rules. then, let's stick to the budget. i think we will see a blip of deregulation, and in the emphasis is to say at the end of a period of time, look how much lower we are on regulatory activities and past administrations. will point out a pack lost in all of this, the obama administration issued you are rules than the bush administration or the clinton

, this maytion, or shock you, the reagan administration. issuedma administration fewer significant regulations and the bush administration. it did issue more economically important regulations. when you strip away the ones that congress required the ministration to do, there is a myth that regulatory activity under obama was a marked departure from the historical norm is nonsense. trump does not have some big rules thatock of this of ministration can just go away. sweet -- sweep their operating on well curated rules on the books, and once they get rid of the ones they do not like, they're going to have a harder time than they think sweeping away the stock. i agree.

the reddick -- the rhetoric is deregulatory. more than we have seen in decades. i also agree there will be interests that make it hard to remove regulations once they are on the book. there are funny stories about companies that were the most this of risk opponents of regulations, and was the theyation was in place, were the most the suppress opponent of removing that regulation. if we look at the evidence other countries, which this paper does illustrate there is some low hanging fruit. you can always modify regulations so they are easier to comply with, less redundant,

so again, i'm hoping for the best case scenario that the paper presented. it is in nobody's interest to that have regulations large net benefits and keep regulations that don't. i hope the focus is on what regulations could be done more efficiently. there are two parts to the executive order. -2 out.the 1-in only big rules count as inns -- only big rules count as ins. the cost part is going to be more binding, and that is explicitly about the modifications to the cost as well as elimination.

stuart: trump's goal was not the 70% which was the flourish on the campaign trail. of which there were a few. the rather to do what howard says. to get some regulations that he can go ahead and say, look what we did. we got rid of the fiduciary role. a couple of controversial obama rules. and then to slow the pace of regulation. there is a constituency for deregulation in small businesses that want to expand, and people that want to start small businesses. the rhetorical attention given to small businesses, they are not a powerful political constituency compared to large businesses, who are happy with the way they are. cheryl: i think the

administration would make the point. we really need that. we're going to be out looking for it. that is to the administration would be empowered by. we touched on a couple topics that i was going to ask about. me, isrtant question to regulationbetween and economic growth, and job creation. when you hear this of ministration talk about deregulation, they said they are doing it to grow the economy, to increase jobs for innovation. is, doeson to you

regulation kill jobs, what is regulation and economic growth? does regulation depress economic growth? does deregulation grow the economy? susan: that is a very good talking point. harder one. regulation on economic growth, there is a general sense that regulation wilts -- will restrain economic growth. it will prevent new businesses from starting up. it does protect entrenched interest at the expense of the innovators. it is so hard to measure, in part because measuring, how do we measure regulations?

is it the number of pages? is it the number of command words? we don't have a good estimate of the cost. we have estimates of economic growth, the less on innovation and things we care about. ,hat is what we are working on and other groups have done admirable effort, but to say empirically, yes it does, and yet here is the point at which the right amount of regulation for economic growth. and when we get over the hump, a lot of people would agree we are over that point. we are at the point it may be inhibiting growth, but the optimal point, there is no empirical evidence that will tell you one number.

stuart: i think susan gets it absolutely right. some people lose their jobs because of regulation. some people gain jobs because of a regulation. the people that lose their jobs because of regulation, or believe they lost the job because of regulation, remember it and vote, and donate accordingly. people gain jobs because of regulation are probably unlikely to credit the regulation with them getting a job. inre is an asymmetry there addition to the difficult measurement issue susan talked about, which makes it hard to estimate the impacts. there is clearly an imbalance politically. cheryl: howard, you're nodding your head. great point.is a

there really is a difference in political selling its there. when it comes to the link between growth and regulation, there is a sense that at some point, there is a link. it is better not to have rules that you don't need, because we don't know what that point is. speaking,, loosely ,omething like the laffer curve if you think about a curve that asld show growth increasing a curve of growth with regulation, at some point growth is going to drop off and the regulatory love gets too high. we don't know where that is. there is a question would regulatory costs are a tiny fraction of gdp.

whether that can be really tagged with dragging things down . overtime that turns out to be relatively simple correlation between the measure of economic growth and the measures of regulatory costs. people can talk about regulatory obamagoing up in the administration, and it would urge people to look closely at the data, but remember, job growth expanded to the whole administration. admittedly, one has to be very careful when one talks about job growth. what jobs western mark was the quality of work people are getting? those are serious and difficult issues to take into account. you don't know about the jobs not created. would we be at 3% unemployment without the regulation? no, i don't think so.

but it is a difficult story to assess. in general, my sense is our regulatory burden on the economy, and there are sectors where there may be exceptions, that as a whole it cannot be tied closely to our growth rate to get above a 2% growth rate. susan, you touched on this a little bit, the idea of excessive regulation. that is a question i often have. this plays into some that we have already said. this of ministration says it wants to illuminate those rules that are unnecessary, duplicate burdensome,, excessively costly, or unlawful. can argue with that? , how much is too much regulation? many of these monster regulations are out there? why haven't we been able to get rid of that before?

susan: president clinton's executive order starts with the premise that market forces and competition are pretty good regulators. that can regulate behavior. you are not going to cheat your customers because people will know about it. your paper also mentions new technologies that were not 36 -- in 1993 to 1990 101996. competition is a very good starting point in market forces. it is only when we find material failure in those markets that it may be worthwhile and convenient in regulating. ourselves back that full requirement that every , thatent has agreed on

may be the way we can weed out things that are excessive will stop too often legislators and regulators, a crisis happens and that anecdote is enough to drive new regulatory policy even if we have not identified what the core problem was and how to address it. stuart: there are regulations out there that are problematic. i was talking a couple weeks ago with somebody who makes cider in the midwest, and they were complaining about the , and this caused a great deal of burden and all they wanted to do was make cider. there are examples out there like that.

find,re challenging to previous administrations have tried. you have to get out there and ask people what are the problems. if you do not have a good way to do that, there is no easy way to do that, it is hard to find the right answers to that question. cheryl: we are getting closer to the time when i will turn to audience questions. i want to ask a couple more here. what i would like to turn to next is the issue of cost benefit analysis, and whether that is at risk right now of turning political in this administration. director have questioned the legitimacy of

obama administration assumptions , perhaps undervaluing costs and overestimating benefits. , thisthere a standard way is a loaded question, of evaluating costs and benefits? how much flexibility is there? how much trust with putting cost-benefit analysis? philip: cost-benefit analysis is not some way to the truth. it is a way of clarifying that serves a vital accountability purpose, but assumptions can be made differently. a lot of what we are seeing in the high profile rules is that the trump administration will make different assumptions than the obama minute -- obama

administration would. on one hand could weeks -- on one hand, should we just count benefits to u.s. citizens? or should we count them globally. the trump administration will not count them globally. benefits are not what the rule is designed to prevent or address, but just by putting it co-benefits -- power're rule forces coal those kindshutdown,

of health benefits were not what the rule was designed to secure. overlooked how much these struggles are about the future of coal. that is a running theme through a lot of these debates. whatould understand cost-benefit analysis can get us and what it can't. i cannot solve political questions for us. it ought to be a mechanism that forces you to put your cards on the table. susan: cost-benefit analysis is the worst possible tool for doing policy. , laying out ofbe the alternative and the best information you have on the

likely consequences, positive and negative. there are so many assumptions in that. plug a paper that stuart and i are writing right now. a consumer's guide to regulatory analysis that walks through 10 look at ahen you revelatory tory impact analysis or benefit cost analysis, what are the questions you should ask, and what should you be skeptical of so you understand what are the assumptions that went into something, and what different outcomes would you get if you make a different plausible assumption. makel: -- howard: you can

-- there are different legitimate assumptions you could use. there is not a single right way of doing things. the choice of which methodological paths one is going to follow is going to be somewhat dictated by policy. that is natural and normal. there is a difference between cooking the books, and a different set of methods and assumptions. what is ultimately important is to not confuse the two and color difference in methodology cooking the books. what is critical is those assumptions and methods be carefully spelled out in regulatory impact analyses so they can be commented on and challenged. it might well be legitimate for somebody to decide that we should not include certain in the calculation. or the evidence on a certain kind of indirect cost is too weak to count the cost.

one should spell out why one is making that determination, and what the evidence is. with a concern comes in is not where one gets to different results to two different administrations. but where some important piece of data is left out, or wrongly discounted, or miss portrayed, and where the method is opaque. as the methods are spelled out so they can see the light of day, and the public can comment, and experts can comment, that is ok. we may get different results, but they are legitimate paths. whether they are in a democratic or republican administration, they are pushing back on the assumptions that the agencies are making, whether they are

probed regulatory or deregulatory, and making sure they are well grounded and legitimate. reasonable minds could differ. it is not a cooking of books. as long as the staff is given free reign to do that, and they take the results up, the win andrators have to the debates higher up in the policy in the white house. the administered does have to bring the news to the people who are the ultimate decision makers. as long as they are there to do the analysis and hold peoples feet to the fire, and administrators are given the -- and when it is bad higher up the chain, i'm not worried about the different paths through cost-benefit analysis could lead to different results.

stuart: i agree with all of that. if cost and if it analysis is done well it is a great aid to policy. it is not a science. assumptions, and those assumptions can change. the difficulty comes in the way that it is communicated. if the changes are communicated poorly, it is going to erode faith and underlying analysis because it is going to look like we are cooking the books, even if it is a legitimate change of assumption. --ryl: i howard: if one over that of

sizes the cost benefits, one will weed out lots of very legitimate things that a rule could achieve that are not subject to quantification. there may be real and if one shrinks cost-benefit analysis to a mandate to only count things that can be rigorously and properly quantified, then one rigs the game. as a general rule, costs are more quantifiable than benefits. if one reads the executive orders, non-quantifiable benefits are permissible to be counted as in the basket of benefits that will justify costs. and if one moves away from nonquantifiable benefits, dignitary interests, equality, distributional goals, all kinds of things that many rules actually pursue, then one winds up in the situation where some very good rules, very significant social benefits will not pass cost-benefit analysis.

not because there are not real benefits, but because we have shrunk the criteria to focus too much on what is quantifiable. benefits, but because we have shrunk the criteria to focus too much on what is quantifiable. that is one change that i think may be occurring and i would watch out for because that really could go beyond different legitimate methods for cost benefits to tilting cost-benefit very much in the direction of overweighting costs.. >> all right. my final question before we turn to audience questions is to bring out your crystal ball productions and how successful will trump be in deregulating, as whether you call it retrospective review, many administrations have tried often running up against courts. not so many have succeeded. can trump do it?

what obstacles will he face? i will reverse it and start with susan.. i think he will face obstacles, challenges in the courts, challenges in the agencies who are less enthusiastic about his goals. so i think at least in the short term what we will see is a continued slower pace of new regulations. we have not talked a lot about this, but it is in the paper. removing regulations takes a long time. at least as much time as introducing a new regulation, and part of that is litigation that will come when you have two

public records, the one supporting the regulation, and a new one supporting changing that regulation. that is as far as i am willing to go.. your crystal ball? i will say that this part of the trump administration work has been handled with a lot of professionalism. i do not see it necessarily as so distinctively trumpian in the way so many other of the president's sort of trademark initiatives might be. i think there are a lot of pro=s on-the-job here. a little better at being created as sort of permanent standing committees in each department. it is a clever

managerial strategy that could turn out to be effective. i would just say that so far what i have seen from them is a pretty serious effort.. >> i think if we set the criteria as we outlined earlier, as howard and i outlined earlier, as being the elimination of a few high-profile rules and a slowdown in regulatory accumulation, i think there is a reasonable chance he will succeed at that. it depends on the litigation of the high-profile rules, which is unpredictable. i think beyond that, i would be surprised to see large-scale changes, but we will see.. >> i think that if one measure success by the number of rules repealed, he will be more successful than past administrations, but probably not dramatically so. so i am probably largely in agreement with the rest of the folks here, but i want to point something out, and this is where the larger effect may be felt. there is a variety of ways to deregulate. one does not merely have to repeal the rule. one can stop enforcing the rule. when one looks at what happens in the agencies, one needs to look beyond the regulatory count to what is happening in the

personnel who are experts at monitoring and enforcing. can you sense that we start to see fewer enforcement actions and a depletion of the capacity within agencies perhaps taking people who were good at enforcement and moving them to deregulation task forces or who knows, to accounting? one might start to see some real effect out there that are deregulatory without repeal, and i will speculate, this is. speculation, that that is actually where the larger impact will be felt out there, and that can endure. it is one thing to repeal a bunch of executive orders when a new administration gets into power and to initiate rulemakings to restore rules that were revealed. toto rebuild can be a much slower process, so if the goal is to really make regulation less present an effective, he may be dramatically more effective than if we measure simply by the

reduction of rules on the books.. thank you. i have a lot more questions, but i would like to give our audience an opportunity. we do have a microphone. excellent. lots of interest right up here in the front. if you could speak loudly, say your name and who you are with, and try to keep it to a short-ish kind of question.. the gentleman right up front. >> robert with international investor. we heard something mentioned that we would like to hear about the opposing groups. we all know the analysis can be twisted or spun according to who is doing it. the medical community will get involved in a lot of this. we have not heard much from labor yet. i think there is other constituencies as well.

certainly food safety advocates, consumer safety advocate advocates. will they become more evident? will that add to the political turmoil trying to assess the actual cost of deregulation in terms of people's health and the consequences for labor and consumers?. are you talking about their involvement in cost-benefit analysis or lobbying certain rules? both in the analysis and the political turmoil that will follow a lot of this. this is a perfect foil if you would for not just the democrats, but anybody who is going to fight against big business.. there is already a lawsuit filed, and i should differ to lawyers, defer to lawyers who say the executive order itself is illegal. generally, consumer advocacy groups, environmental groups are

extremely well institutionally established as a permanent presence in washington. trump has probably been very good for their fundraisers. [laughter]. these are all going to be quite contested. i do not know that those people have much influence among the political appointees in the trump administration, but certainly they do among civil service. and they will certainly be contesting everything every step of the way in court.. casey with the coalition for regulatory innovation, which is supported by the national association of manufacturing and

north america's building trade unions. was curious if brookings intends to study potential legislative frameworks moving forward.. you mean regulatory reform? yeah. that is definitely one of the focuses of our center. we are keeping a close eye. obviously, nothing is happening imminently. >> if i can just follow, looking at congress and regulatory reform legislation, do any of the panelists see a particular bill or proposal that you think might make it all the way through this year?. i mean, it seems like there is the most optimism with the regulatory accountability act, which passed the house. a significantly different version, but senator portman looking for votes in the senate. it is not inconceivable it can count up to 60 votes with certain changes. that is not going to happen in 2017. we will see what kind of progress it can make a 2018., in 2018.. there were a couple of

democratic senators. ok. in the third row. hello. astrid ruiz with a private sector company, which works in rural revitalization and development. how does the cost benefit analysis take into account the urban, suburban, rural inequalities? how can it avoid being skewed in terms of its assumptions on economic development?. we talked a little about this. cost-benefit analysis itself tends to not look at distributional impacts, but regulatory impact analysis is broader than benefit cost analysis. it uses that but also tries to look at different impact. the executive orders are

quite explicit about that. it is an important part of regulatory analysis.. on this other side of the room. i am ken with the competitive enterprise institute. one of the points that howard was concluding with about the difficulty, particularly distribution another social benefits. how much difference should -- how much deference should courts give the regulatory agencies when it is not spelled out in the statute? on the question of those benefits. >> the chevron difference. our difference. legal analysis here? [laughter] i won't, but one thought i had when howard was making that point, which is an important

point, is there are also a lot of indirect costs and less quantifiable costs. it is very hard to measure the opportunity cost, which is what we care about. what does this mean about a new business getting started? those are invisible. compliance costs tend to be easier to measure. i think they are equally difficult things on the cost side. in terms of the co-benefits or the things, co-benefits and global benefits are probably examples of what you are asking about. it is the clean air act asking the epa to protect u.s. citizens. should courts question whether the epa should count benefits of protecting or affecting non-us citizens? i am not a lawyer..

>> we have lawyers here. i mean, look, i think it is a tough question. all of the benefits that flow from a particular action should be counted in the cost-benefit analysis. the fact that you happen to get a benefit that is not exquisitely addressed by the statute, i am not sure. one would have to think hard about what is a legitimate case for saying and then you cannot count it. on the other hand, i think that if what we think is the primary purpose of the rule really is is to use some kind of shoehorn to get at those co-benefits outside the scope of the statute, then the rule is probably not valid. the fact that i am doing rules that i am authorized to do by mike granted authority from congress, it happens to have an externality from another great set of benefits that will flow

to the benefits. if those are really inexistent, my cost-benefit half says, why would i not count them? whether i should be legally prohibited from counting them i think is not so much a difference question as a policy decision to be made in the agencies because we do not want to give agencies incentive to pursue rules that are not really high priority rules themselves under the grant of statutory authority, but you can get at something else you do not have authority at. that is the bigger concern.. >> that was in this consumer's guide 10 tips document. 19 co-authors, and we have very different views on things like how to handle co-benefits. the way we settled on that is making a point that usually it is more cost-effective to target those benefits directly rather than as a side effect of something else, so you should look at your regulation, and if there is some other way to get at those, that is probably the better way so you should question co-benefits that dominate the end, that dominate the benefits, that dominate your analysis because there is probably a better way

to get it.. >> i would add that cost-benefit analysis is at the end of the day a tool for assisting policymakers to make decisions. the questions about the legal propriety of those decisions may have been impacted by some of the cost benefits, but usually there are other specific questions that are more important.. all right. where is the microphone? there it is. in the blue. >> hi. michelle mcintyre. my question is the impact of agency budgets and what is going on with staff in a lot of these agencies, rulemaking, especially in compliance with the one and two out. >> i think howard talked about enforcement. i think the effect

will be agency budgets will be dwarfed by the effect. the biggest part of that will be the effect on enforcement. when you talk about the number of people at an agency that are tasked with enforcement compared to the number tasked with rule routing, enforcement is much bigger, so there are large cuts in agency, that is where you will see the largest effect. >> there is a capacity issue. if you see the executive order really working in the optimistic scenario, it will take a lot of work to do these retrospective analyses well, and so some agencies may have more economists laying around that they can apply to that than others. it will be interesting to see

how omb tries to support agencies in that task. that being sort of in the active optimistic scenario. >> oh, this side. thank you. >> tim. i was from literature of the commodity futures commission from 2000 14 to 2017, 2014 to 2017. i thought it was an excellent paper and discussion. i would like to offer a few observations. one is a lot of times people may have seen these measurements of how many rules were issued, and they are often talk to pages of the federal register, the problem is in the rule, you first have a proposed rule and you have a final rule.

each of those has a lot of things that are not the actual rule like the discussion of cost benefits. in the final, you have to have a discussion of all the comments he received, and you have to respond to all of those comments.otherwise the rule is not valid. i had my staff at one time go back after one of these editorials came out and measure how many pages of rules and rule proposals did we issue? and how many of those pages are the actual rules? the actual rules were less than 10%. more like 5%, i think. that is not to say we should not try to simplify and eliminate some rules. i agree with a lot of the comments that were made. in the staffing issue i think is a very real one because if you are in

an agency and you are mandated to implement. dodd frank, you don't have the staff to go back and look at the rules in the books over time even though you know they could be over simple fight or maybe we don't need them anymore. it is a challenge. all the comments on cost-benefit were right on point. this is not a science. this is not a mathematical equation. particularly in the financial regulatory space, the challenge for us was a lot of the rules we were mandated to issu were designed to reduce the risks of certain types of activity so that you might reduce the risk of a failure of firms, not because we want to prevent the failure of a particular firm. we want to have an economy where firms can fail, but we are trying to prevent the possibility of the next financial crisis. you have to measure the impact of that and the probability that this rule will have it reducing that risk. it is a very hard thing. that is why it is not a science. >> so i can assume from that that is a tall stack of pages from the federal register is not a good way to measure regulatory burden. ok. does anyone want to respond to that? >> i would just go out one point, which we have not dwelt on, but i think the way the eo is set right now, things are not covered by it, so that is just worth pointing out. although

there is an mo you. >> sam. i guess i would be interested to hear your thoughts on the threat to cost-benefit analysis just as a concept at this point. you have a situation which some people suggest you not accurately capturing all the benefits. you are overestimating costs, etc. and then you have the obama administration come in

and say we will do a really good hard look at this, and we will put forward rules that have significantly more benefits than costs. howard probably knows this off the top of his head. 8.5 times more? you have the trump decision come in and say, ok, let's ignore benefits and focus on the cost, which gives a sense that the object here is not to find net beneficial activity. it is to reduce costs on certain large businesses. just to get your sense of whether this sort of next step really, to the extent in which it calls to the attention with serious concerns about cost-benefit analysis in the first place. >> one quick response to that. i would note be things phil said about the text of the executive orders. what is interesting to me is

somebody did look carefully and think about writing the current trump executive orders because they say a lot of the right things. the devil is in the implementation details. so i do not think cost-benefit analysis, i don't feel cost-benefit analysis itself is under threat. i know there are a lot of people who would like it to be and would be delighted if the system got broken here and people said it is too politicized, we are never going to do it. i think everyone on this panel but certainly at least three of the four of us are serious proponents despite its flaws of the art and science of cost-benefit analysis. maybe my optimism is coloring my response a bit, but i think given that there is some real thought when you read 13777 that since mvd the deregulatory task force, it says a lot of the right stuff. you could actually have imagined another administration having written that to sincerely set up a retrospective look back at institution within the agency. it is the same people who are thinking about maintaining that legitimacy. it is naomi and the faults of a group that are given a voice that they should have in this process. i think in the end what you will have is as we , described earlier a tilting of , the scales of the ways toward

cost, but not to a degree that threatens or breaks the integrity and the durability of cost-benefit analysis. >> i am a little more pessimistic, i think, t howard on this. >> because you want to be? >> i have a huge advocate of analysis, but i think the threat is not from these orders in particular, but the threat for analysis and science more broadly when you see complaints about the congressional budget office and proposals to restructure it. when we see the debate over cost-benefit analysis, when we see disputes over the science underlying certain policy issues, i think those are all of one piece, and that is what worries me. >> in addition to 13777, which explicitly references the

previous executive order on these guidance, the staff that howard talked about being very important in all of this, their guidance is very explicit about the values of benefit cost analysis, and it is not cost to businesses. i think that is inaccurate and a mistake. it is the opportunity cost for society at large, not just the business costs, which we see in canada and the u.k. one more thing. maybe i will think about it. >> just one follow-up that i think is really important, and it is similar to the potential degradation of enforcement capability capacity. we are seeing a deliberate and widely reported degradation of the scientific capacity in the agencies, and to build on the point about the broader threat to analysis, the reduction of that capacity will again be very difficult to build back up. that does affect the quality of the