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Senators consider British approach to regulatory review

Warner examines proposal to create CBO-like body to gauge costs of rules.

The British government's success with tools for weeding out obsolete or burdensome regulations could provide a model for the current U.S. bipartisan push for regulatory reform, according to testimony given Wednesday to the Senate Budget Committee's special task force on government performance.

But differences in political cultures could limit the extent to which the English approach could bridge the American ideological divide over the value of regulations.

Sen. Mark Warner, D-Va., called the hearing as part of his ongoing efforts to improve agency performance and to respond to frequent complaints from business constituents about the burden of regulatory compliance. "We don't do a good job of culling out the regulations that have outlived their purpose," he said, "and we don't know enough about costs. Inside agencies, people get rewarded with more staff and personnel if they add regulations, so we need to reverse those incentives."

Warner disagreed, however, with the assertion by many Republicans that regulations have ballooned under the Obama administration. He displayed charts based on Government Accountability Office data showing that major regulations in the first two years under Obama were 175, only a few more than the 168 in the final two years of the George W. Bush administration. A line graph from 1997 to the present, he noted, shows much fluctuation in the number of regulations, which have averaged 3,000 to 4,000 a year.

He said he is preparing "regulatory pay-go legislation to incentivize regular reviews to make room for high-priority regulations."

Graham Turnock, chief executive officer of the United Kingdom's Better Regulation Executive -- part of the Business, Innovation and Skills Department -- described a "one-in, one-out" rule that requires government departments to assess the net cost to business of complying with any proposed regulation. "These calculations are validated by an independent advisory committee, which we established at the end of 2009 -- this is the Regulatory Policy Committee, or RPC," he said. "It is charged with providing independent challenge on the evidence and analysis, presented in an impact assessment, supporting new regulatory proposals."

That committee, which consists of six experts on regulation from different backgrounds, scrutinizes the agencies' assessments and can decide to block any of them. A semiannual report tallies the number of proposed regulations accepted, along with estimated costs, and which regulations are being canceled elsewhere in government to compensate.

The only non-Brit on the panel of four, Massachusetts Institute of Technology economist Michael Greenstone, said he sees potential for adopting something similar in the United States, though the "British approach is focused almost entirely on the cost side," he noted. President Obama's January executive order mandating a governmentwide regulatory review to examine costs and benefits, he said, "is a revolutionary step in the right direction." But such reviews should be institutionalized every five or 10 years. Greenstone recommended establishing "a new, independent body for regulatory review" that would provide a "dispassionate voice." It could be housed within the legislative branch and modeled after the Congressional Budget Office or even become a division within the existing CBO, according to Greenstone. "I prefer a policy that shakes up the system and identifies those regulations whose benefits exceed their costs," he said.

Sen. Ron Johnson, R-Wis., said he was concerned about creation of a new governmental body and asked the British official whether the Regulatory Policy Committee had added employees to the bureaucracy. Turnock replied that the overall impact of the reorganization was to cut the relevant employees from 100 to 60.

Senators waging today's political battles over the effects of regulation did not show signs that such a new organization would settle their philosophical disputes. Sen. John Thune, R-S.D., said it is easier in the United Kingdom to rein in regulation than it is in the U.S. Congress, which plays primarily a reactionary, secondary role in the process. "Too often here we confuse quantity with quality of regulations," he said.

Sen. Sheldon Whitehouse, D-R.I., expressed worry that such a new body might itself fall victim to "regulatory capture" by special interest lobbyists so that "we end up gutting the Clean Air Act and killing Medicare."

Jitinder Kohli, a British citizen who works in Washington as a senior fellow at the Center for American Progress, noted that the British approach to curbing regulations now in effect under David Cameron's Conservative Party government started under the Labor Party in 2005. "International comparisons in this area are difficult," he said.

"Not only is the institutional context different -- the United Kingdom has a parliamentary system of government, and as a member of the European Union much of our legislation comes from Brussels -- but we also have a very different regulatory culture with broad, bipartisan acceptance of the importance of regulation in safeguarding the public at large. One example of that is on climate change, where business and politicians largely agree that government needs to take decisive action," Kohli added.