1. Do you think the benefits of government regulation exceed the costs? In what areas, if any,
do you think the costs exceed the benefits?
Cite an example of a company's efforts to circumvent government regulations. Is the use of
loopholes ethical?
Solution
Costs and Benefits of Government Regulations
Benefits far exceed costs
The draft report estimates that major federal regulations provide benefits of from $135 billion to
$218 billion annually, while costing taxpayers between $38 billion and $44 billion.
Federal regulations enforcing the EPA's clean air and water laws accounted for the majority of
the regulatory benefits to the public estimated over the last decade. Clean water regulations
accounted for benefits of up to $8 billion at a cost of $2.4 to $2.9 billion. Clean air regulations
provided up to $163 billion in benefits, while costing taxpayers only about $21 billion.
Costs and benefits of some other major federal regulatory programs included:
The draft report contains detailed cost and benefit figures on dozens of major federal regulatory
programs, as well as the criteria used in making the estimates.
OMB recommends agencies consider costs of regulations
Also in the report, OMB encourages all federal regulatory agencies to improve their cost-benefit
estimation techniques and to carefully consider costs and benefits to taxpayers when creating
new rules and regulations. Specifically, OMB calls on regulatory agencies to expand use of cost-
effectiveness methods as well as benefit-cost methods in regulatory analysis; to report estimates
using several discount rates in regulatory analysis; and to employ formal probability analysis of
benefits and costs for rules based on uncertain science that will have more than a $1 billion-
dollar impact on the economy.