Thumbs, Fingers, and Pushing on String: Legal Accountability in the Use of Federal Financial Incentives

Abstract

The federal government makes extensive use of its spending powers to establish programs intended to influence private behaviour in furtherance of public policy objectives. Incentives are frequently used where more conventional policy instruments would not be appropriate or available. However, in many situations, such programs lack adequate legal structure. The author concludes that the minimal legal structure allows for tremendous administrative flexibility, but detracts from effective accountability, and can negatively affect operational fairness. Taking a functional approach to analysis, the author argues that since incentives are public policy instruments intended to alter behaviour, they are akin (though not identical) to conventional regulatory approaches, and so should be subject to many of the same legal principles and structures as apply to conventional policy instruments. The effect would be more open and accountable frameworks for the creation and operation of incentives, which should result in better designed and more fair and efficiently functioning incentive regimes.