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There's never been much doubt about what George W. Bush thinks of regulation. Running for president as a Washington outsider, he scorned federal regulations as a costly scourge for business and an often-irrational burden for average Americans. As soon as he got to Washington, he moved to roll back the spasm of last-minute regulations issued by President Clinton.

Since then, regular controversies have followed Bush's efforts to loosen environmental, health, and safety rules that business leaders said were sapping productivity and yielding few benefits. Democrats in Congress were able to stop or slow some of these actions, and their differences with Bush over environmental regulations are shaping up to be an important issue in the 2004 presidential campaign.

Still, over the past decade, Democrats and left-leaning opinion leaders have generally moved toward the view that, too often, federal regulations are costly and in need of reform. The change began early in the Clinton administration, which adopted regulatory reform as a key part of its centrist agenda. Vice President Al Gore's reinventing government initiative included the elimination of many regulations. The evolving consensus was reflected by the formation of the AEI-Brookings Joint Center for Regulatory Studies in the mid-1990s. The center united two leading thinks tanks of the right and the left behind the idea of major reform.

In a 1997 paper posted on the center's Web site, Brookings Institution scholar Robert Crandall summarized the reform movement's raison de guerre: "The problem is not simply that current expenditures mandated by regulation are large.... It is rather that a substantial share of those regulations are ineffective: as a result, more-intelligent policies could achieve the same social goals at much less cost or more-ambitious goals at the same cost" [Crandall's emphasis].

As this passage makes clear, the linchpin of the reform movement is cost-benefit analysis - the simple idea that policy decisions ought to be guided by calculations to ensure that the costs of an action do not disproportionately outweigh the benefits. One measure of how opinion has shifted on this approach is to recall the controversy generated when cost-benefit analysis was first applied to regulation in a systematic way during the Reagan administration. Today, almost everyone accepts that cost-benefit analysis should be an important part of regulation.

Some of the anti-regulatory crusaders have relied on "horror stories" about burdensome regulations, but many of these anecdotes are hard to verify or are simply wrong. Rep. Michael Bilirakis, R-Fla., used to claim that allowable arsenic levels in drinking water were lower than the amount that naturally occurs in shrimp, but his information on the regulation was wrong. Republicans often maintained that the Clean Air Act permitted regulations without regard to costs, but this wasn't correct either. In one notable case, House Majority Leader Tom DeLay, R-Texas, claimed that property owners were denied development rights because "the footprints of cows" were declared wetlands. The "footprints" were actually sloughs in a coastal forest that were several feet deep, up to 200 feet wide, and used by migratory birds.

Anecdotes have been a powerful tool in focusing public opinion on excessive regulation, but even the most committed reformers return to costs and benefits as the real test.

Over the years, economists and regulatory experts have refined their techniques for calculating costs and benefits, and a full-blown analysis of a new regulation today can run hundreds of pages. Reform advocates, however, often use less-exhaustive approaches when they make the case against regulations in general, rather than one regulation in particular.

Among the best-known was a 1995 study by two Harvard economists, Tammy Tengs and John Graham, who is now heading up the Bush administration's regulatory reform effort at the Office of Management and Budget. Tengs and Graham identified many regulations, especially those controlling toxins, that cost far more than they deliver in benefits. To put the costs in perspective, they took a step that has become an important part of the case for reform - recall the AEI-Brookings manifesto saying that "more-intelligent policies could attain ... more-ambitious goals at the same cost."

In a follow-up study in 1996, the authors took the most inefficient of these regulations and estimated that 60,000 lives a year could be saved if wasted costs were reallocated to more efficient regulation. For example, by eliminating one or two expensive regulations that save a handful of lives, the government could require inoculation of everyone for the flu and save 21,000 lives a year. Graham called the misdirected regulatory emphasis "statistical murder."

Unsurprisingly, his claim attracted a lot of attention.

The regulatory analysis by Tengs and Graham, along with a handful of other such "scorecards" of federal regulation by other critics, have fueled the reform movement. The studies are cited often by the AEI-Brookings center and by popular figures who crusade for reform such as Philip Howard, author of The Death of Common Sense. But a new analysis of these regulatory scorecards by a University of Connecticut law professor questions the basis of those claims.

Richard Parker spent two years examining the work of Tengs, Graham, and the other major "scorekeepers" who have calculated the costs of federal regulations. Parker's paper, "Grading the Government," contends that these studies are badly flawed and can't be used to justify wholesale reform.

In part, he takes on the very premise of cost-benefit analysis by questioning whether strictly monetary benefits should be all that is considered in justifying some regulation. But the most interesting part of his paper shines a light on the empirical techniques behind the scorecards. He concludes that the studies were flawed because of misreported or misrepresented data; a widespread lack of documentation; the use of guesses when actual data was available; bad estimates; and biased sampling. In short, he suggests that the reform-minded scholars who generated these scorecards cut corners and in some cases distorted data to support sensational conclusions.

It is not possible to recount all of Parker's criticisms in the 111-page paper. One scorecard that comes under heavy criticism was done by Robert Hahn, who is now director of the AEI-Brookings center. Parker says that while Hahn claimed to have used "the government's numbers" in estimating costs and benefits, he actually used many of his own numbers when he felt that government numbers were unreliable. Hahn and his economist colleagues, Parker says, are unqualified to make many of these estimates, especially ones that involve human health.

In most cases, the adjustments raised cost estimates or lowered benefits. According to Parker, Hahn excluded "all but a handful of environmental benefits," for no apparent reason. In one case where a rule was identified, Hahn disregarded the Coast Guard's estimate that a pollution rule would yield $230 million to $6 billion in benefits, Parker said.

Hahn told National Journal that the Coast Guard numbers were left out inadvertently, but that omitting them doesn't affect the overall results very much. He said that all of his purposeful changes to "the government's numbers" were warranted. Parker's criticisms amount to quibbling and don't challenge the overall conclusion that many regulations are inefficient, Hahn said.

Parker asserts that the claims made by Tengs and Graham also contain some holes. Many of their numbers for high costs and low benefits were not from actual experience of regulation that is readily available but from estimates made beforehand (sometimes 10 years beforehand) and never updated. Like other reform advocates, they don't explain why the regulations they choose were representative, Parker says. And on their claims about "statistical death," Parker says, two-thirds of the 60,000 lives that Tengs and Graham estimated could be saved if regulatory resources were redirected came from just two potential regulatory actions - requiring continuous oxygen for lung patients and vaccinations for the flu.

This is not to mention the fact that it seems arbitrary, Parker says, to choose a particular environmental regulation as a waste of money-one could easily say that a superfluous weapon system or unneeded highway project "caused" the deaths of others. And it's not as if the reformers were eager to issue new regulations with low costs and high benefits. Parker notes that since Graham joined the Bush administration a couple of years ago, he has gone after some inefficient regulations but hasn't yet found the money to save lung patients or flu victims.

A few patterns are evident in Parker's criticism. He says that all of the scorekeepers wrongly assume that agency estimates of costs and benefits are biased toward regulation (he shows that isn't true), and that the scorekeepers often don't seem very scientific in making their own estimates. Numbers give an air of precision to the results that is not justified by the informal way many calculations were made. There's no objective standard for choosing which regulations to look at, while a general lack of transparency to the scorecards makes it hard to verify them.

John Morrall, an OMB official targeted by Parker, said that part of the problem is that reformers drawing on his research have made excessive claims. "I can't control what people do with my work," he said, adding that much of his research is now mostly out of date.

Parker sets up a straw man to the extent that he sees an establishment intent on dismantling regulations willy-nilly. Graham's office at OMB, in its latest report estimating the costs and benefits of regulations, found that environmental, health, and safety regulations adopted in the last 10 years had cost $38 billion to $44 billion a year and had yielded $135 billion to $218 billion a year in benefits. Elsewhere, OMB has advised agencies to consider regulations that would cost little and save many lives. It was one such "prompt" from OMB that led to new rules making portable defibrillators common in public places.

But if Parker's criticisms stand up, reformers might need some more ammunition. Parker would create an independent body that would use rigorous techniques to evaluate government regulations. Hahn of the AEI-Brookings center said that he welcomes scrutiny from Parker, as well as better techniques for evaluating regulations. "I'm all for it," he said.

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