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1 Mar 2011

The REINS Act:
Would it work as intended?

by Richard Belzer

in

House and Senate Republicans have proposed legislation (HR 10, S 299) intending to substantially change federal regulatory practice. The proposed Regulations From the Executive in Need of Scrutiny Act of 2011 (The "REINS Act").

What is the bill supposed to do? What is it likely to do?

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21 Jan 2011

Regulatory Review in the Obama Administration:
Clinton and Obama directives compared

by Richard Belzer

in

On January 18, President Obama issued an executive order that modifies longstanding principles and procedures for centralized regulatory oversight conducted by by the Office of Management and Budget.

The three tables below provide a side-by-side comparison of the new text with the text of Executive Order 12,866, issued by President Clinton in 1993. To guide readers in making comparisons, text that is underlined is the same in both documents.

Interpreting such texts requires close attention to detail. For this reason, we have color-coded both texts as follows:

GREEN HIGHLIGHT: Directive language (e.g., "shall", "must") with tightly defined verbs (e.g., "identify", "assess", "design", "maximize", "promulgate") often applied to concrete objects (e.g., "net benefits", "duplicative", "burdensome", "least burdensome", "most cost-effective") sometimes comprehensively (e.g., "only").

Objective performance evaluation generally is possible.

YELLOW HIGHLIGHT: Hortatory language (e.g., "should", "may") with loosely defined verbs (e.g., "consider", "promote", "endeavor to provide", "harmonize"), or used to modify directive language ambiguously (e.g., "where feasible and appropriate", "to the extent feasible").

Objective performance evaluation typically is impossible.

Where GREEN text is preceded or followed by YELLOW text, the result is always weaker. 

 

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23 Mar 2010

Black Market Economics:
Humboldt County, California

by Richard Belzer

in

Mexico is getting a lot of attention for how the illegal drug business has distorted its politics, economy and society. A Dallas Morning News story reports that there have been 4,500 murders in Ciudad Juarez since January 2008.

Black markets affect parts of the United States, too, and not just major urban areas. There is the case of bucolic Humboldt County California, a verdant rain forest hard up on the State's northwest coast.

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17 Feb 2010

Counting Jobs Created or Saved by the "Stimulus" Bill, Part 5:
On the first anniversary

by Richard Belzer

in

Yesterday the White House released the Administration's first annual report on the "stimulus bill" (the American Recovery and Reinvestment Act of 2009, or "ARRA"). The Administration and its critics are sparring over how many jobs the bill "created or saved."

Where do the numbers come from?

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1 Feb 2010

Counting Jobs Created or Saved by the "Stimulus" Bill, Part 4:
Jobs 'created or saved' becomes jobs 'funded'

by Richard Belzer

in

Washington Post staff writer Ed O'Keefe says the "Obama administration's economic stimulus program created nearly 600,000 jobs in the final three months of 2009."

These figures are analogous to those reported three months ago and which caused significant controversy. Initial reporting was rife with errors and relied on a system that impeded error correction.

They are different, however, in ways that make them incomparable with the figures initially reported.

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23 Jan 2010

Counting Jobs Created or Saved by the "Stimulus" Bill, Part 3:
Estimation replaced by assumption

by Richard Belzer

in

Previously, we have noted that the Recovery Accountability and Transparency Board, which is responsible for ensuring accountability and transparency in the reporting of jobs "created or saved" by the American Recovery and Reinvestment Act (ARRA, or "stimulus" bill), was not actually performing this task. Further, the underlying data were invalid and unreliable because the Office of Management and Budget did not specify a consistent estimation methodology.

Recently, Washington Post staff writer Alec MacGillis reported that White House Council of Economic Advisers chairman Christina Romer now claims ARRA "has created or saved between 1.7 million and 2 million jobs."

Examining these figures closely reveals that they are not estimates at all, but assumptions built into the Administration's estimation model.

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14 Jan 2010

Paperwork Reduction Act
How to improve implementation of the law

by Richard Belzer

in

On October 28, 2009, the Office of Management and Budget solicited comments on its implementation of the Paperwork Reduction Act. The purpose of the PRA is to minimize burdens on the public resulting from the federal government's information requests.

Neutral Source managing editor Richard Belzer submitted comments on his own behalf. These comments eventually will be uploaded by OMB to Regulations.Gov, the Federal government's web portal for all regulatory matters. (Clicking on the link above will reveal a fundamental weakness of the web portal: Unless the agency chooses to include information identifying the name and organizational affiliation of the submitter, there is no way to find any specific comment without opening them all.)

In response to numerous requests, a copy of these comment is posted to the Library.

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7 Jan 2010

A Pollution Tax or a New Sales Tax?
The District of Columbia charges 5 cents for each disposable shopping bag

by Richard Belzer

in

On January 1, the District of Columbia began imposing a a 5-cent "fee" on disposable shopping bags.

Is this a pollution tax, as its backers claim, or just another sales tax?

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4 Jan 2010

The Market Failure in Mail-Order Brides:
Can State regulation help?

by Richard Belzer

in ,

Washington Examiner reporter Alan Suderman says "Maryland lawmakers are pushing for tighter regulations on the mail-order bride industry."

There is no question Maryland can write more regulations. But can regulation solve market failure?

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24 Nov 2009

Counting Jobs Created or Saved by the "Stimulus" Bill, Part 2:
Program design prevents error correction

by Richard Belzer

in

The federal government's reported figures for jobs "created or saved" by the "stimulus" bill (formally the American Recovery and Reinvestment Act of 2009, or "ARRA") are now known to be wrong. The Recovery Accountability and Transparency Board, which oversees these figures, apparently has decided not to correct them.


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20 Nov 2009

Counting Jobs Created or Saved by the "Stimulus" Bill:
A lesson in information quality

by Richard Belzer

in

A scandal has erupted over the federal government's reporting of the number of jobs created or saved by the "stimulus" bill (formally the American Recovery and Reinvestment Act of 2009). 

This scandal would have been avoided if the government had complied with the Information Quality Act.

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11 Nov 2009

The AIG Bonuses, Part 12:
Pay limits affecting recruitment and retention

by Richard Belzer

in ,

We've published a long series on the controversy over retentions bonuses paid by AIG and other firms. (To see the entire series, search for "The AIG Bonuses" using the Google search utility in the upper right corner.)

There are three general problems with executive pay restrictions. First, pay restrictions have no effect on those who were responsible for decisions that went south if they no longer work for the institutions in question.

Second, when imposed retroactively, pay restrictions impair legal contracts. This is both constitutionally suspect and creates serious economic and financial uncertainty. Markets perform poorly when parties cannot rely on the rule of law--including contract law.

Third, pay restrictions deter the recruitment and retention of the most qualified people. Some will be motivated by nonfinancial considerations such as a sense of duty or public spiritedness. However, these motivations are undermined when the public or its representatives treat them as if they were culpable for the problems they have agreed to serve, often without pay, to correct.

Today's Wall Street Journal suggests that AIG now faces this government-induced dilemma.

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29 Jul 2009

What's Suddenly Wrong with the Oil Market? Part 3:
Open disagreement about 'speculation'

by Richard Belzer

in ,

On July 8 we blogged on a commentary published in the Wall Street Journal under the joint bylines of UK Prime Minister Gordon Brown and French President Nicolas Sarkozy.  The two European leaders alleged that speculation had damaged the world crude oil market by making it "dangerously volatile." We surmised that the sudden interest in oil market speculation, which seemed to have come out of the blue, was instead highly coordinated. There is now more evidence supporting that hypothesis, but some indication that it is encountering resistance.
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29 Jun 2009

The AIG Bonuses, Part 11:
The Administration's program to clean up 'toxic assets' has failed

by Richard Belzer

in

We've blogged ten times about the "AIG bonus problem" and its sequelae, most specifically about the adverse effects that arise when the government signals its intentions not to honor contracts. Examples of these government signals include HR 1586, which the House of Representatives passed to confiscate legally awarded bonuses via the tax code and even punish those who returned them; HR 1664, which the House subsequently passed to force TARP recipients to break these contracts; and statements by the Administration indicating that it will decide after the fact whether investors made "too much" money.

It was in this setting tha the Administration announced a new Public-Private Investment Program (PPIP), the stated purpose of which was to provide a facility for banks to sell so-called 'toxic assets" and for investors to buy them at fire sale prices. An obvious deterrent to buyer participatin is the Treasury Department's decision to impose on buyers TARP-like restrictions on employee compensation.

Both banks (sellers) and investors (buyers) have declined to participate. As we predicted, buyers are deterred in large part by political risk: they do not trust the government as a business partner.

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21 Apr 2009

The AIG Bonuses, Part 10:
Compensation limits may apply to PPIP investors

by Richard Belzer

in ,

In the seventh in our series of posts on the AIG bonuses and the incentive effects of efforts by the Obama Administration and Congress to forcibly recover them, we predicted that investors in the Treasury Department's "Legacy Loans Program" would be regulated by the same constraints on employee compensation and, ultimately, profits. We said that H.R. 1586, the House-passed bill to impose confiscatory taxes on bonus recipients, would have unintended consequences on the Treasury Department's Public-Private Investment Program (PPIP):

In short, the House's action, which President Obama did not contemporaneously discourage, creates the precedent that the government may choose not to honor the legal commitments it makes to investors who participate in the Treasury Department's new program. If investors earn "too much" in profit -- a term that would be defined subjectively after the fact -- they may be prevented from realizing these earnings. It is reasonable for prudent investors to discount the government's credibility.

The Obama Administration could have included strong language promising to protect these property rights in [the Treasury Department's Public-Private Investment Program], but it did not do so. Such a promise might prove to be unenforceable in fact, but the absence of a promise means there is nothing yet for investors to rely upon. This uncertainty may (or may not) be resolved when the Treasury Department issues implementing regulations. For now, the cleanup of underwater financial assets has entered a zone in which political risk -- uncertainty about the government's reliability -- may be as great or greater than financial risk.

A story in today's Washington Post says that this has come to pass.

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