FCC Economics Office a Work in Progress 4 Months After Vote

Creating a new office can take time. The FCC created the Public Safety Bureau in March 2006 under then-Chairman Kevin Martin and it took until September for the bureau to open for business under an acting chief. Martin attributed the delay to the need for congressional appropriators to approve the FCC reorganization. OEA is tasked with completing a “rigorous, economically grounded” cost-benefit analysis for all rulemakings deemed to have an annual effect on the economy of $100 million or more.

Chairman Ajit Pai sought the new office early in his chairmanship, in an April 2017 speech at the Hudson Institute, a free-market think tank (see 1704050047). “I’m very committed to heightening the importance of economic analysis at the FCC,” Pai said then. The commission didn't comment now.

“It doesn’t bother me if it never gets started,” said former Commissioner Michael Copps, now at Common Cause. “Under present FCC leadership, it will be driven by the Pai ideology; and it will pull needed sector expertise out of the bureaus.” It "seems like another example of Chairman Pai and his staff being their own loudest cheerleaders without much real progress,” said Free Press Policy Director Matt Wood. In her dissent, Rosenworcel said cost-benefit analysis has limits. “We want to avoid the risk of relying on numbers masquerading as fact when they simply add up to an effort to champion a desired outcome,” she said.

Supporters of the new office said creation was always going to be slow. “Getting internal clearances, including on labor reassignment issues, and hiring a new director, and whatever else is on the ‘To Do List,’ could easily take this long,” emailed Tom Hazlett, former FCC chief economist now at Clemson University.

Creating a new office “rather than just changing a name like the agency has done in the past will take some time,” said George Ford, chief economist at the Phoenix Center. “You've got people moving out of one division and into another, which requires not only paperwork but a plan as to how the economists will interface with the other bureaus. The OEA has no particular assignment, unlike a standard bureau, but is a type of internal consulting shop. In my experience … bureaus tend to be closed systems and unwelcoming of interlopers, though that depends on the leadership.” Ford said creating OEA is more complicated than it was to create the Public Safety Bureau “with its clear mandate and largely non-conflicting agenda, and that took seven months.”

More important than the office itself is that the FCC is changing how it thinks about economics, Ford said. Will the FCC now “take economics and analysis more seriously and let good economic logic and empirical facts, or some probabilistic assessment of them, drive the policy?” he asked. “I have my reservations, especially across administrations. … The eighth floor, above all, is a political organization. Economists tend not to be too interested in things that don't make sense or conflict with the empirical evidence. Politicians and the special interest groups have no qualms about either, as is evident. At the FCC, many things seem too important to be decided on the merits.” Putting all the economists in a single shop also comes with longer-term risks, he said: “As my high school football coach was fond of saying, ‘You're so close together a grenade would kill all of you.’"

“My impression is that they’re proceeding, doing what needs to be done,” said Tom Lenard, president emeritus of the Technology Policy Institute. “It just takes a while to do things in the bureaucracy.” Creating the office is important, Lenard said. “It’s certainly important to get this institutionalized so that it’s there for the long run.”

“I hope the new office will be fully staffed and up and running soon,” said Brent Skorup of the Mercatus Center. “For decades, economists inside and outside the FCC have provided important insights to the commission. Hopefully, the office will improve the effectiveness of existing programs and be a source of policy ideas for improving competition and broadband deployment.”

Said Randolph May, president of Free State Foundation, "In my experience, including my time at the FCC as associate general counsel, these bureaucratic changes always take longer than you might suspect they should because of the number of hoops you first jump through ... I suspect the FCC must negotiate certain aspects of the creation and staffing of the new office with the union, as well as securing approvals from congressional committees and possibly OMB too. So, while many are eager to see the office get up and running, I wouldn’t read anything into the time it takes."

“It’s common for new offices and bureaus to take months to set up,” said former Commissioner Robert McDowell, now at Cooley. “These are federal bureaucracies, which are designed to have the speed of snails racing across a garden. Not only are there funding issues, but congressional overseers need to approve the creation of new offices. Next, the chairman’s office has to navigate the Byzantine regulations and procedures regarding hiring. So not having an unveiling five months after a commission vote is still on schedule.”