it should not be balanced that way. It ought to be looked at from a societal point of view.

And the third issue is that we don't have a lot of data on the benefits. You know, we don't collect much of that data and in this Administration they have cut out most of that research. So you are asking an agency to make a decision without much information, without the authority or the money to do that kind of research and to make a numerical cost-benefit, least cost decision.

I think that is not only inappropriate but I think that the public doesn't benefit.

Chairman GLENN. Thank you. Professor Viscusi, in your written testimony you state that, during the Reagan Administration, the regulatory review process has shifted away from "substantive analysis."

You also note that many of the leading career Government economists that came to OMB during the Carter years have since left.

What do you believe to be the predominant basis for the regulatory analysis that OMB performs? Is it correct to infer from your statement that this basis is political or ideological as opposed to the substantive execution of the mandate of Congress?

Mr. VISCUSI. I think there is some ideological component in there in the sense that there is an emphasis on the New Federalism, which is a general belief that States should carry out the regulations as opposed to the Federal Government, irrespective of whether the national benefits are greater than the national cost. I think there has also been a great shift away from doing detailed economic analyses. I believe that there are only two Ph.D. economists left on the staff, and these are holdovers from the Carter Administration. All the other Ph.D economists have left and have been replaced by MBAs or Master's students out of public policy schools. Because they don't have to go public with the detailed analysis, OMB officials have less of an incentive to carry out an analysis, and I liken what they do in analysis with perhaps being similar to what I do when I review an article for publication. You read the article and you try and find five things bad with it, and once you have done that you can stop. And it may be the same kind of thing with regulations. Because you don't have to prepare a detailed analysis, you just keep on examining it until you find a few things to fight about and win a battle in a meeting and once you have gotten that agenda for the meeting, you do not have to prepare an analysis. A better approach would be to place OMB in a more construcive role through comprehensive analysis of regulatory alternatives.

By not requiring them to perform a full-blown benefit-cost analysis at OMB, but instead letrting them just review regulations on more of an ad hoc basis without having to go public with the detailed analysis, we do not really know what they are doing. I do not know that they are abusing their power, but there is no way to ascertain whether they are or to prevent the abuse if it were occurring without having this public check.

Chairman GLENN. I think that when the original legislation was passed to set up OMB, Mr. Wegman would probably agree that we were responding to a lot of areas of potential conflict between dif

ferent agencies of Government. We wanted to gather at one central point the arbiter of those concerns and also to take into account budgetary concerns. These are all legitimate functions to be coordinated some place, whether in a study group or a group out of the White House, as Ms. Claybrook describes, or a group such as you worked on when you were here before. But we wanted to establish one spot where all of that came together.

Now, I think what the concern has been-and this is not just a Democratic concern, I think it has been both a Republican and a Democratic concern-is that perhaps politics and ideologies have crept into OMB decisions more than is needed to just coordinate the different roles of Government.

Congress has set down some mandates in law that are supposed to be carried out-whether it is in the health and safety area at OSHA, pollution at EPA, or whatever. And, then we find that an administration that wants a policy of new federalism-wants to give many duties back to the state-or-wants a policy to let the functions of Government be deregulated-used OMB to do some of those things, quite apart from the mandate of Congress rather than operating through Congress to get the law changed.

So that has been a rising concern, and I would say that is not just a Democratic concern. I have heard Republican Senators discuss exactly the same thing. So I think that is the basic problem; I do not know the answer to it. I wish I did.

I appreciate all of your testimony here. I do have a couple more questions, but that is really the basis of what we are talking about. Mr. WEGMAN. Senator, could I add just another point in addition to the point you were just making?

Chairman GLENN. Certainly.

Mr. WEGMAN. I think there should be some concern about how cumbersome and bureaucratic the process has become. There is no question that is a political judgment. Regulatory decisions cannot be divorced from politics and officials who serve in high positions in any administration serve to further the interest of the President. I think that is natural. That is the way the process was intended to operate. But I do think that once a president nominates and selects an individual to head EPA or to head OSHA or to head the National Highway Traffic Safety Agency and his administration and sends that individual up to the Congress and the Senate confirms that individual for that position, that except for those major decisions that receive a higher level of review, the designated official ought to be left free to fulfill has statutory mandate.

There are plenty of opportunities through the normal course of events to review the way the regulatory official carries out his mission; the President can do so through the annual budget process, and Congress can do so by exercising its oversight functions, and through its appropriation and authorizing Committees.

My concern is that this additional layer of bureaucracy has been imposed through the 12291 and 12498 process on such a regular basis, and affects virtually every significant decision that comes along. I think that is undesirable, and apart from the other questions that have been talked about, it creates excessive bureaucracy and there is no question that it adds to delay.

Chairman GLENN. I can turn my hat right around, though, and say that as far as the ideology goes, we elect a president and a new administration to carry out a certain ideological platform for Government, if you will, and so perhaps they are doing some of that through the OMB process. The question is, to what extent should this be permitted? Should it go to the extent that it does now?

Ms. CLAYBROOK. But do not you think that the cabinet secretary and the agency head, both of whom are selected by the President, supposedly in consonance with his philosophy or her philosophy and that are approved by the Senate-don't you think that they really should be the ones who carry out the President's policy, and if they do not they should be fired? And that is what happens.

Chairman GLENN. Well, where do you coordinate? Also Cabinet Secretaries ability to carry out their functions are determined to a very major extent-if not complete extent-by the budget they get. Ms. CLAYBROOK. That's correct.

Chairman GLENN. Now, somebody has to coordinate that budget. We are not proposing to replace all of OMB, nor would we propose that. Where else do you coordinate things? Every department head is going to be out shooting as hard as he can to get his budget. You can bet on that. And if everyone got their own wish list on the budget, we would be even in more trouble than we are with $1.4 trillion being added to the debt in the last 8 years.

So how do you coordinate such things and make sure there is somebody that balances the budget? There has to be some headknocking some place. Everybody cannot have everything they want in every department.

What OMB must coordinate is all the mandates, the rules, the regulations that determine what the budget is going to be. I guess I do not really question the fact that OMB should be the coordinator, but I do question how that function is being carried out.

Ms. CLAYBROOK. Well, I think they should coordinate the budget, and that is where they have expertise with numbers to do that. But on the issue of substantive regulations, it seems to me that if there is a White House review group, whether it is out of OMB or whether it is a separate one, as in the case of the Carter Administration, that that review group looks at the most important, significant ones and secondly, that they do not make the decision.

They can raise a fuss. If OMB raises a fuss, Senator that fuss spreads throughout the Government and everybody knows it, but why should not it be done on the public record?

Chairman GLENN. Let me take the pendulum over in the other direction. I am sure you would not say that every secretary should get every budget item he wants every year.

Ms. CLAYBROOK. But I am not talking about the budget. I am talking about regulations as opposed to the budget.

Chairman GLENN. But those regulations, though, are what determine much of his budget and the budget determines what regulations he is going to carry out. His budget determines what he is going to be able to do.

Ms. CLAYBROOK. That is right, but we have always acknowledged that OMB should have the final authority and be the decision maker, the final decision maker on budget. But as to how that budget is implemented and how it is carried out in great detail, I

do not think that this works. I think it has been shown in this Administration that it doesn't and that it-

Chairman GLENN. I am not sure I understand, I do not want to get into a lengthy discussion here because we have other witnesses yet to come, but how could you possibly say that we are not discussing the budget, and yet you are saying the secretary is going to carry out all those rules and regulations which cost money? You have to coordinate some place.

Ms. CLAYBROOK. Well, until 1981 OMB had only authority to control budget and it did a very effective job of it. Now it has added a second authority which is to review and decide whether or not we should have passive restraints in cars, whether or not Reye's syndrome ought to be noted on bottles of aspirin and the labeling of aspirin.

Those are not the kinds of decisions that cost the Government a lot of money. They cost industry some money, but not the Government, and they are not the kind of decisions OMB is qualified to make, I do not think.

Mr. VLADECK. And if you look at the history in the last 8 years of how OMB has fared when it has in fact displaced an agency's decisional authority, it has a very poor record.

If you look at what happened to the ethylene oxide standard when OMB required a portion of it deleted, the court set it aside. If you look at what happened to the hazard communication standard, after it was rewritten by OMB, the court set it aside. If you look at what happened to the formaldehyde standard, after OMB insisted that it be delayed and so forth, the court ordered the agency to expedite the rulemaking. If we look at the asbestos standard that was issued after OMB ordered a substantial portion of it deleted, the court set it aside. These decisions were made by judges that are appointed by Reagan.

Chairman GLENN. Okay, I agree with you if you mean regulations in which there is no budgetary cost and which determine what is carcinogenic and what is not, and so on. In fact, I think one of the areas that I disagree most with the way OMB has operated is their second-guessing of the scientists and the experts in the departments when OMB has very little expertise on their own unless they go out and commission a study.

Mr. VLADECK. Even if they got some separate study Senator, one of the astonishing things that came to light today, I litigated the ethylene oxide case for 7 years. Mr. Viscusi in his testimony today suggested that he prepared an analysis for the Office of Management and Budget.

Mr. VISCUSI. That was done for OSHA.

Mr. VLADECK. For OSHA. That was not part of the public record, or the OMB analysis. It was never a part of the public record. To this day we really have no idea what motivated OMB to delete a portion of the standard. There is no reason why that debate took place in secret.

Chairman GLENN. Well, that is an area that I have been critical of OMB, too-where there was no money involved, where it was not a matter of coordinating the dollars that had to be spent on something, but where they took a different tack than expert agencies on some safety standard, on some carcinogenic material, per

haps, like formaldehyde. Maybe there is a reason that they can give us later on in their testimony for that. I would be glad to hear it, if they have one.

We are going to have to move on here, and I appreciate your being with us this afternoon, all of you. We may want you to answer some additional questions. If we submit them to you, we would appreciate a prompt reply so they could be included in the Comittee record.

Thank you all for being here this afternoon.

Our next panel is the Honorable James C. Miller III, Director of the Office of Management and Budget, and the Honorable S. Jay Plager, Administrator, Office of Information and Regulatory Policy, Office of Management and Budget.

Mr. Miller is not here yet but we had a short statement from him and we will enter it in the record. We understand that he may be here for a little bit of the hearing later on; is that correct?

TESTIMONY OF JAY PLAGER, ADMINISTRATOR, OFFICE OF INFORMATION AND REGULATORY POLICY, OFFICE OF MANAGEMENT AND BUDGET 1

Mr. PLAGER. Not quite, sir. Frankly, I thought that we understood that we were to be the first panel and Mr. Miller scheduled his day around that. He has been here but he had to leave for other commitments.

Chairman GLENN. What was the understanding, then? That you would be the first

Mr. PLAGER. That we would be the first panel beginning at 2 o'clock, and apparently that was changed at the last minute as near as we can tell.

Chairman GLENN. Well, if that was the understanding, it was never my understanding, and the staff tells me here that that was not theirs, so perhaps there was some misunderstanding in communications.

Mr. PLAGER. Yes, sir, but he was here and he regrets that he had to go.

Chairman GLENN. Well, I am sorry I did not know he was here because I would have been quite happy to put him on earlier. Was he here in the room? I did not see him come in.

Mr. PLAGER. He was waiting out in the hall for awhile and then he left.

Chairman GLENN. Well, I wish somebody had let me know that because I would have tried to accommodate him.

Senator Roth's staff told us that if we could get him on by 3:15 he would appear personally. That is what the staff tells me.

Well, I am sorry I did not know he was out there because we could have altered the sequence of events here in the hearing, but we look forward to your testimony anyway.

Mr. PLAGER. Yes, sir. My name is Jay Plager. I am Administrator of the Office of Information and Regulatory Affairs, occasionally referred to as Darth Vader with you. At the moment I am feel

1 See p. 412 for Mr. Plager's prepared statement.