Reining in the Regulatory State

February 3, 2017

The federal regulatory state is out of control and the American economy is suffering as a result. Every year, the flurry of rules and regulations emanating from the web of administrative agencies, departments, and bureaus cost the American people between $1 trillion and $2 trillion. Regulations not only inflate the price of goods and services, squeezing the household budgets of middle-class Americans, but they also drive up the cost of doing business, so that only the biggest firms and their armies of lawyers, accountants, and compliance officers can thrive.

But help is on the way. On Monday, January 30, President Trump signed an executive order, “Reducing Regulation and Controlling Regulatory Costs,” that will finally impose some commonsense discipline on the rule-writing agencies of the Executive Branch. The first part of the executive order proposes an elegant solution to a complicated problem. Call it the “one in, two out” rule: for every new regulation that an executive agency issues, at least two old regulations must be identified for elimination. Given that many decades-old laws are still spawning new regulations today, there will be no shortage of outdated rules that are ripe for repeal.

The second part of President Trump’s executive order creates an annual regulatory budgeting process that will require executive agencies to keep the compliance costs of their regulations below a predetermined limit. This is similar to a bill that I introduced last year as part of the Article I Project that would, for the first time, require Congress to vote on the total regulatory burden each federal agency may impose on the American people each year – a budget for federal regulatory costs to mirror Congress’s annual budget for taxes and spending. Whereas the president’s executive order puts the director of the Office of Management and Budget in charge of the regulatory budget, our bill, The Article I Regulatory Budget Act, makes Congress directly responsible for the size and scope of the regulatory state.

Executive agencies could still issue and enforce their rules, but only so long as their impact fits within the regulatory-cost limits established by Congress. This would give regulatory agencies – really for the first time – an incentive to make their regulations cost-effective. Regulators would be made to work for the American people instead of the other way around. And the American people, for their part, would be empowered to make informed judgments at the ballot box about economic regulations.

Ultimately, the only way to put the American people back in charge of Washington is to put the Legislative Branch back in charge of federal policymaking. But President Trump’s executive order is an important first step in this process, and one that I proudly support.