Debt Management, Treasury and Investment Management

A New Premium on Discount Rates

Page from June 2023 GFR

Moments after his inauguration, President Biden signed a document titled, “Memorandum on Modernizing Regulatory Review.” It’s as technocratic, inconspicuous, and inside-the-beltway as the title suggests. But it could reshape the way we think about the costs and benefits of state and local government.

This memorandum set in motion a review of how the federal government evaluates the impact of proposed regulations. That review has several components, including a careful look at how to better incorporate perspectives from those who are affected by regulation but haven’t traditionally had a voice in policymaking. But the component that could affect state and local finance the most is a rethinking of discount rates.