In the News

First came the explosions. Then the funerals. Then the calls for reform. Five years ago, it was the Texas City explosion that killed 15 workers and cast the spotlight on the Chemical Safety Board, the chronically underfunded agency assigned to oversee worker safety at American refineries.

“It’s as though the nation is walking into a casino and spinning the roulette wheel every day,” says Michael Liver­more, a government regulation specialist and executive director of the Institute for Policy Integrity at New York University law school. “It’s only a matter of time before we’re going to come up with snake eyes and have another disaster.”

With the announcement earlier this week that President Obama will nominate Jacob Lew to replace Peter Orszag at the Office of Management and Budget (OMB), it is worth taking a fresh look at how decisions are made within that agency. When the Environmental Protection Agendy (EPA), or any other federal agency, promulgate a significant regulation, the decision is pored over and scrutinized by OMB’s Office of Information and Regulatory Affairs (OIRA) to ensure it is a wise course of action. But when the government fails to regulate, little attention is paid, even when the stakes are high. To lessen the imbalance, there should be a formal process that reviews inaction.

If the Obama administration is finding itself able to achieve its goals under the current executive order, it might prefer to avoid issuing a new directive that could prompt a political fight and force the White House to commit scarce resources, said Michael Livermore, executive director of the Institute for Policy Integrity. Livermore, who has argued that cost-benefit analysis can be reconciled with environmental regulation, said he supports a revised executive order that would apply the administration’s transparency initiative to regulatory policy. Though it is hard to “look behind the curtain” of the White House, he said he understands that the administration might want to maintain the balance struck by the Clinton-era policy.

For a cost-benefit analysis of just focusing on US legislation, New York University School of Law’s Institute for Policy Integrity demonstrated last year that the Waxman-Markey American Clean Energy and Security Act (H.R. 2454) is “cost‐benefit justified under most reasonable assumptions about the likely social cost of carbon.’”

According to an EPA analysis released Monday, the Kerry-Lieberman climate bill—also known as the American Power Act—would cost $146 per year per household. The only catch? The EPA didn’t assess the benefits of the bill, particularly the fact that it’s a necessary step for averting the worst effects of climate change. And that’s unfortunate, because when you look at what the $146 per year would buy us, it’s a pretty good deal.

Some have tried to assess such impacts. In a study of energy-climate legislation last year, the nonpartisan Institute for Policy Integrity found that the House bill would generate between $750 billion and $1 trillion in total benefits between 2012 and 2050.

Some consumers would see modest cost increases — we’re talking about literally $7 a month — but the legislation includes mechanisms to help consumers offset those costs. As Dave Roberts explained, “Cost is simply not a credible reason to oppose a carbon cap.”

Michael Livermore, executive director of NYU’s Institute for Policy Integrity, argues that leaving these substantial benefits out is a huge mistake. “It’s like telling someone in the market for a home to pay $200,000 without telling them the property is a mansion on Fifth Avenue or a mountain ranch in Colorado,” he wrote in Grist.

As Michael Livermore wrote last week, the “all costs no benefits” method of analysis utterly distorts lawmakers’ perspectives. Obviously if the costs of unrestrained climate change were included, the bill would look like a screaming bargain.