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Faced with some of the toughest economic challenges in generations, Congress is taking a closer look at the balance between the burden and benefits of regulation and what reforms could embed the principles of good regulatory decision-making in agencies. To aid in that effort, this paper proposes a cornerstone of foundational reforms on which to build comprehensive regulatory reform.

Over the last few decades, Congress and the executive branch have adopted several statutes and executive orders seeking to increase transparency in the rulemaking process and to improve the analytical quality of regulatory decisions. These efforts produced mixed results since they did not address the incentives that Congress and federal agencies face. The pattern of poor regulatory choices persists across administrations, indicating that the problem is institutional, not political. Institutional problems need legislative fixes to change the incentives in the institutions if we want better outcomes.