In previous blog posts I saw an abyss in the Trump administration’s attempt at eliminating regulations through the “two-for-one” executive order and subsequent proposed guidance from the Office of Management and Budget on implementing that order. Now, I am less sure of that vision. Where the rubber meets the road is at the agencies that have to identify candidate rules for elimination and do the necessary analyses to undergird rescinding them. Here, Trump’s latest executive order, “Enforcing the Regulatory Reform Agenda,” seems more reasonable. The order creates at each applicable agency a task force and regulatory reform officer who would head it, and charges them with identifying and prioritizing rules for elimination, replacement, or modification that are outdated, unnecessary, or ineffective and where costs exceed benefits. To do so, they are to seek input from affected entities, which encompass the full range of possible stakeholders.
At face value, it’s hard to argue with this. Presumably, the agencies have some discretion in prioritization—so if they want to save a rule with negative net benefits but that can be justified on grounds other than economic efficiency, they can give it a low priority for change or elimination. Another hopeful sign is the use of the term “modification” in the new executive order. Changing rules to make them better (increasing net benefits and effectiveness) is always a good idea, although one that might be less beneficial than issuing a new regulation delivering even greater net benefits. After all, both rulemaking and rule deconstructing have opportunity costs in terms of agency staff time and money.
Yet it is the illogical nature of the two-for-one order—taking it literally to mean requiring elimination of two rules for every one new rule and leading to zero net cost, as well as making no mention of considering benefits—that dogs the new executive order. For instance, consider rule modifications. Do they count in the two-for-one calculus? And if benefits are to be considered under the new order but not the two-for-one order, what is their status?
The focus of the new executive order on rules that eliminate jobs highlights another bit of illogical thinking. Probably every regulation will have some negative effect on jobs, but also a positive effect. The issue is what the net effect is.
Use of the term “ineffective” among the criteria for repeal or modification has some interesting connotations. To know how effective a rule is requires looking back at its effects—in government parlance, doing a retrospective analysis. Far too little of this is currently done by the federal government and more would be a good thing, as long as budgets at the agencies rise to accommodate these analyses and the other added tasks called for in these series of executive orders.
To make the new order more targeted to increasing social welfare, the agencies should be encouraged to take input on rules not only from the aggrieved parties on the cost side but also from those who benefit from the rule and those who represent the benefit side (such as environmental groups and the American Lung Association, for example). In addition, if the Trump administration wants input from parties without direct interests, agencies should also be encouraged to work with academics and others at institutions that regularly perform research on federal rules, such as the Cato Foundation and my institution, Resources for the Future.
Finally, because agencies only make rules that are required by law (at least to a first approximation), there is a real question about how many regulations would even be subject to elimination under these executive orders, as their language is quite emphatic that nothing in the orders is meant to contravene such laws.
Given all this, the real abyss may be regulatory gridlock as a result of so many new requirements for agencies, greater hurdles for issuing new regulations, and likely budgetary cutbacks that will make it very difficult to meet statutory goals.
The views expressed in RFF blog posts are those of the authors and should not be attributed to Resources for the Future.
