Question

A frequent proposal has been to replace the oversight process through a system known as a “regulatory budget.” Each agency would be assigned a total cost that it could impose on the American economy, and its task would be to select the regulations that best foster the national interest subject to this cost.

Can you identify any problems with the regulatory budget approach?

How feasible do you believe it would be to calculate the costs of all the regulations of a particular agency?

What, for example, are the costs associated with affirmative action?

Are they positive or negative?

Answer 1

The Regulatory budget is the result of the oversight that has been a major concern of many decades in the United States political system, which has often resulted in to serious economic ramifications and the costs of many plans and projects to go overhead. The agencies have in many instances been guilty of oversight, which has cost millions of dollars of loss for the nation. Therefore, the concept of such a regulation is well acceptable. However, it is the process of implementation of this regulation and the execution of the tasks that are questionable. Moreover, it is also being accused that such a regulation over critical departments and agencies might work as a contracting force and create hurdles in the execution and the free-flowing functionality of many agencies. Another issue with this type of regulation is the decision of how much of the total cost would be allocated in the beginning. This has been a major point of debate, as to what procedure would be followed to identity the rightful amount to be allocated for the budget of the agencies in the preliminary stage.

The feasibility of the appropriate calculation of the cost of regulations of the agencies is the major contention where it the agencies are yet to come out with an appropriate and acceptable detail. Most of the actions and regulations of the prime agencies are of very high budgetary claims. This being seen that most of the regulations of these agencies spread over many years of planning, implementation and execution, which highly increases the cost of the programs or regulations. This is because, the calculations done in a particular year change when the price or cost of materials or products related to the regulations increase in the approaching years. Therefore, unless a definitive plan and procedure of the implementation of the regulatory budget is tabled, the process seems highly unfeasible.

  If there is an affirmative action , it will incur costs such as the cost of setting up of a panel who would be responsible for the decision making of this regulatory budget, the extra cost incurred in the maintenance and upkeep of this body, the cost required to finalize a program and plan to decide as to how this whole process would be implemented. Then comes the final high cost of the implementation and execution of the plans and procedures. Even after that the maintenance of the plan and procedures will also incur heavy costs.

The costs are positive in nature only if the execution and implementation comes out to be fruitful and positive.If after planning and implementation, the results are not as expected, then all the costs would be termed as negative costs.