Since the Nixon administration, the federal government has been required to justify the use of public resources using benefit-cost analysis. This method, known as BCA, says that a regulation or a spending item should be approved only if the expected benefits exceed the expected costs.
On its own, BCA is not enough to justify a policy. However, it is a useful tool for showing the benefits and costs of government action and to stress-test conclusions by varying assumptions.
Earlier this year, the Biden administration finalized new rules that will allow bureaucrats to juice the results of BCA in favor of privileged identity groups. This risks undermining the integrity of BCA as a tool for rational policy debate and politicizing one of the last non-political areas of government decision-making. Those revisions were all confirmed in the final rules issued on November 9.
The proposed revisions to BCA guidelines for government programs and regulations have many flaws. These include the use of “global” (as opposed to purely domestic) cost and benefit calculations, the inclusion of highly uncertain assumptions about future generations, and the fanning of class warfare against the rich. But few have noticed the proposed green light for the use of identity categories in BCA for “advancing equity.”
Both of the proposed revisions want analysts to consider “the relevant groups of people who gain and lose from policy decisions.” By itself, this is standard practice in BCA when the gainers are poor people whose “marginal utility” from one more dollar will be greater than that of rich people. Otherwise, rebuilding McMansions after a hurricane will always seem a better policy than rebuilding trailer homes.
But the Biden administration wants to add “race” and “ethnicity” as well as other identity categories to the mix on the assumption that some groups are like rich people: they have too much privilege so any additional benefits to them should be discounted. Other groups are like poor people: they don’t have enough privilege, so benefits to them should be given more weight. The result would be to skew BCA in favor of whatever group the administration is currying favor with at the moment, totally apart from whether the individuals affected by a policy are actually underprivileged in an economic sense.
A policy that would bring $50 of benefits to a middle-class Asian community, for instance, could be given priority over a policy that brought $100 of benefits to a poor white community of the same size on the theory that the white community should be penalized for its alleged racial privilege.
This is what the regulatory circular means when it refers ominously to “the distribution of conditions in the baseline.” Like a communist land reform program, the revisions seek to label people based on ascriptive identities and then distribute government largesse based on an ideology. In the anodyne language of the regulatory revision, this approach “may lead an agency to select a regulatory alternative with lower monetized net benefits over another with higher monetized net benefits.”
Since neither revision limits the “demographic groups” or “underserved communities” that analysts can consider, a proliferation of identity categories could be inserted into any BCA. “The proposed revisions would include a list of possible groups to examine,” the regulatory revision explanation notes, but the given list is not “exhaustive of groups that may be affected by rules.”
For instance, the regulatory revision also mentions “gender” as well as “sexual orientation.” Having trouble getting the numbers to sing for a new transportation project? Maybe the target area is a city with a high number of gay people. Presto: just assume that the marginal utility of sexual orientation privilege is higher for gays than for straights (by assuming a “baseline” of rampant homophobia) and you have an “evidence-based” argument.
Another proposed category is “family composition.” Want to derail school upgrades in suburban neighborhoods to steer money to inner-city schools? A solution is now at hand: penalize the stable two-parent families of suburbia for their unearned privilege.
Indeed, the analyst will no longer have to bother justifying such choices. Alongside the proposed revisions, the White House issued new guidance for “participatory” benefit-cost analysis, giving grievance groups an extra loud voice in the proceedings. Regulators are now encouraged to undervalue input from whites—who apparently participate in civic life too much—in order “to facilitate meeting requests” from “underserved communities,” “communities that might not have historically participated,” or those that “may have been systematically denied the opportunity to participate.” Need more clarification? In apparent order of importance, the guidance gives the top three groups as non-whites, non-Christians, and “LGBTQI+ persons,” as well as an uber-privileged caste of “individuals who belong to multiple such communities.”
The revisions prudently avoid laying out the odious implications of the changes. But left-wing lobby groups have been happy to fill the silences.
A coalition led by the National Women’s Law Center commented that “income is not the only characteristic that agencies should consider in a distributional analysis.” The Environmental Defense Fund likewise applauds the “the disaggregation of benefits and costs among racial groups” as “a positive first step” on the road to utopia.
Another cheerleader, the National Partnership for Women & Families, urges the use of extra-heavy bonus weightings for “multiple marginalized identities across lines of gender, race, disability, class, sexual orientation and gender identity.” Likewise, the Urban Institute wants the baseline of grievances to extend to the beginning of American history so that “cumulative burden over time” determines weights. It also wants to extend the privilege to illegal immigrants.
All of these advocates assume that the baseline for grievance groups is mass oppression which will always justify heavier weights for them. A coalition calling itself The Leadership Conference on Civil and Human Rights is confident that the baseline “will help to account for systemic racism.” Since its members include a group called American Atheists, one imagines a federal analyst discounting the interests of people of faith.
The most revealing comment on the proposals comes from Duke law professor Matthew Adler who urges an explicit embrace of “age, health status, race, gender, etc., or some combination of these” in making weighting decisions. By giving different groups heavier weightings based on the “marginal utility of non-income goods,” he promises, federal policymaking would become “more nuanced.” A policy forcing airlines to give the obese two seats, for instance, could be justified as recompense for the unearned privileges of those who diet and exercise.
Similarly, the socialist-leaning Washington Center for Equitable Growth wants “top-down direction and definition” for analysts trying to assign extra weights for grievance groups. The federal government might need to issue updated tables every month on the latest estimates of oppression for each group and the resulting weights to use in analysis.
These ideas reflect a broad push to reconfigure government actions along identity lines irrespective of socio-economic status. The law is sufficiently muddled on the question of when such discrimination is allowed that the Biden administration has simply opted to go ahead and hope no one notices.
Two Berkeley professors (whose work the White House miscited in support of its proposals) argue that such “equity weights” are a bad idea because they impose moral values on the analysis. “We are concerned by the idea that policy analysis, by itself, should mechanically promote any particular kind of policy,” they warned. The administration should pay attention before turning analysis into partisan calculation.