Saturday, February 11, 2017

Trump signs executive order designed to reduce regulations

(January 30) While much media attention is being paid to Trump's executive order on immigration less attention is being focused on another important executive order he issued yesterday on regulations.

During his election campaign Trump complained that the US was overregulated and that he would change the US regulatory regime. His new directive keeps that promise. The directive requires agencies to repeal two regulations for each new regulation they approve. In 2018 a regulatory budget will be imposed. This budget will limit regulatory costs agencies can impose on individuals and businesses each year. No doubt businesses, especially small businesses will be attracted to the bill.
According to Politico the 2 for 1 plan has already been enacted in Canada and the UK. It seems to me a reactionary policy. It could have come in under the previous Conservative Harper government in Canada and kept by the Liberals. There is no link given and I was unable to find one in a brief search for this article. The regulation provides a field day for lobbyists for companies or sectors who want to repeal regulations. Trump's pro-US program could encourage regulations to be adopted against foreign companies while repealing regulations against US companies. Many policy wonks have long advocated a regulatory budget of some sort.
Trump declared: “If there’s a new regulation, they have to knock out two. But it goes far beyond that, we’re cutting regulations massively for small business and for large business.” There is no mention in the order if the regulation experts in the Office of Management and Budget or the Office of Information and Regulatory Affairs had a chance to vet the order or were consulted as it was written. The entire text of the executive order can be found here.
There are a number of problems with the order. There are many different kinds of regulation and it is difficult to present a clear definition. The order describes a regulation as: “an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency.” This is vague. Also, as Lisa Heinzerling, a Gerogetown law professor point out the order also makes reference to a differing definition of a regulation made then-president Bill Clinton in 1993. There is no clear way of counting regulations making it difficult to know how to implement the order. Marcus Peackock, a regulations expert, noted that a narrow definition could involve just a few actions a year but a broad definition would require viewing and offsetting thousands of regulatory actions each year.
The lack of a clear definition is also relevant to considering what agencies are covered by the order. The text says "executive department or agency". Military, national security, or foreign affairs agencies are exempted. However there is no mention of agencies from the legislative branch that would include Library of Congress and the Government Accountability Office. The judiciary are not mentioned either. Some important institutions such as the US Postal Service, Federal Deposit Corporation, and many others are not considered as either executive departments or executive agencies. Are they part of the order? The White House already issued a statement indicating the order does not apply to independent agencies such as the Securities and Exchange Commission.
The order also does not make it clear how you tally the costs of regulations. New incremental costs from regulations must be offset by repealing old regulations. Are benefits to be considered in addition to costs so that incremental costs are "net costs"? The Office of Management and Budget (OMB) will have to decide on answers to these questions before the impact of the order can be determined.
Trump has claimed that he would cut regulations by at least 75 percent but it is not clear how either of the two policy directives could achieve that: There are 171,000 pages of regulations on the books — so even at the rate of one in, two out, a Trump administration would need to issue an astonishing 85,000 pages just to cut that in half.
Trump signed the order surrounded by small business owners and called it "the largest ever cut by far in terms of regulation". For the fiscal 2017 budget there is a budget of $0 dollars for new regulations. Many regulations protect consumers but are costly for corporations. Trump will no doubt cut regulations in order to provide more profits for business. Trump has often been critical of regulations that provide environmental protection. At the White House Trump told reporters: "There will be regulation, there will be control, but it will be a normalized control." Trump picked budget hawk Mick Mulvaney to head the Office of Management and Budget (OMB). The Republican dominated Congress is also planning to repeal a number of Obama-passed regulations at a coming session. While opposition is concentrating on Trump's immigration policy other significant changes appear to be going through with very little discussion or media analysis.


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