Trump’s Wall Fails Trump’s Test for New Regulations

(Bloomberg Opinion) -- Suppose that in the next few weeks, a federal agency wanted to issue a new regulation that would cost the American people $5 billion in 2019. Under both Republican and Democratic administrations, the agency would be required to submit its regulation to the White House Office of Information and Regulatory Affairs, seeking its approval.

OIRA, as the regulatory office is known, would be highly skeptical.

By any calculation, $5 billion is a huge amount. In fact, it would exceed the reported annual cost of all federal regulations approved by OIRA in some recent years.

Whether the president is Barack Obama or Donald Trump, any White House would think long and hard before approving any regulation costing $1 billion. That’s a bright red flag. But $5 billion? That’s a monster.

(As you might have guessed, my real topic is the Trump administration’s proposed wall between the U.S. and Mexico. Bear with me for a moment; I’ll get there before long.)

Further reading:

If the Environmental Protection Agency, the Department of Transportation or the Department of Homeland Security sought to issue such a regulation, it would have a ton of explaining to do. Its explanation would have to include a full-scale “regulatory impact analysis,” with the aid of a handy White House checklist, asking a series of tough, specific questions, including careful consideration of alternative ways of achieving agency goals.

An agency might seek to defend its $5 billion regulation by insisting that it is trying to save lives. If it is the Department of Transportation, it might point out that tens of thousands of people die each year in motor vehicle accidents. If it is the EPA, it might say that air pollution takes a similar toll.

But as defenses of a $5 billion regulation, these explanations would be hopelessly inadequate. No agency would be content with them.

All agencies know that the Office of Information and Regulatory Affairs would immediately shoot back: What are the benefits of your regulation, in particular? How much will it achieve? Can you quantify those benefits? What’s the evidence?

On the basis of academic research, federal agencies tend to agree that the value of eliminating a premature death is in the vicinity of $9 million. Under both Democratic and Republican administrations, OIRA will probably insist on a figure in that range before it approves a new regulation. At that point, a little arithmetic is enough to identify the key questions.

Will the $5 billion regulation save 50, 100, 200 or 300 lives? If so, it would seem impossible to defend, based on that $9 million figure. Or would it save 600, 700, 800 or 900 lives? If so, OIRA might start nodding, since the value of saving so many lives obviously exceeds $5 billion.

To be sure, the regulation might be meant to prevent nonfatal illnesses or accidents, not just premature deaths. It might also be designed to protect against property damage. Benefits of that kind would certainly count in OIRA’s assessment. But they would have to be demonstrated, not just asserted.

The agency might also lack essential information. It might confess to OIRA: “We are unable to quantify the benefits of our regulation. There is a lot of uncertainty out there. But we think that the $5 billion is a good investment.”

OIRA would not love that answer, but it would welcome a conversation.

Perhaps the agency could explain that even with the uncertainty, it is reasonable to think that the benefits of its proposed regulation would justify its costs. Perhaps the agency could explain that under plausible assumptions, it could project a minimum of 500 lives saved, alongside significant reductions in illnesses and property damage.

But OIRA would require the agency to defend any such projections. Optimism, scare tactics, opinion polls, enthusiasm and political will are not enough.

Here’s the point. The Trump administration’s arguments for a wall between the U.S. and Mexico lack anything like the discipline and rigor that the Trump administration (rightly!) demands from its own agencies, whenever they seek to impose costly burdens on the American people.

As recently as late December, the Trump administration made an unusually aggressive statement about the importance of quantified, demonstrable benefits to justify any such burdens.

To support a whopping $5 billion regulatory expenditure, the Trump administration’s OIRA would find it inadequate and even embarrassing for the Department of Homeland Security to speak broadly and generally about the magnitude of the problem of illegal immigration, much less to offer anecdotes, to quote crime victims or to talk about politics.

It would instead ask: What, concretely, are the projected benefits of that expenditure? How much would it do to reduce the problem? What, exactly, is the evidence on behalf of your projection? How would the benefits justify the $5 billion cost?

The Congress of the United States is not OIRA, but it is certainly entitled to ask those questions. The Trump administration may be able to answer them.

So far, it hasn’t even tried.

I was administrator of OIRA during President Obama's first term.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Cass R. Sunstein is a Bloomberg Opinion columnist. He is the author of "The Cost-Benefit Revolution" and co-author of “Nudge: Improving Decisions About Health, Wealth and Happiness.”

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