Federal regulators issue thousands of rules and regulations every year. Decrees range from the Environmental Protection Agency’s gargantuan Clean Power Plan and “Waters of the United States” directives, down to regulations on breath mint serving sizes and multivitamins with selenium being treated as toxic waste.
All those regulations and commandments take a toll on jobs and businesses in our still sluggish economy. Dealing with today’s regulatory monstrosity should be a priority, as much as addressing the $19 trillion debt and runaway entitlement spending. But what can the next president of the United States really do?
President Obama famously boasted he would use his “pen and phone” to enact his agenda if Congress did not go along, and he’s followed through on that threat. But the next president has a chance to take on the red tape problem. He or she will have major influence and can set the tone for an economic liberalization agenda, signaling to the new 115th Congress a desire for legislative reforms that help consumers and businesses.
First, the next president should use the administrative pen and phone to restrain the regulatory state, starting with reinstating an executive order issued by President Ronald Reagan. Reagan’s 1981 Executive Order 12291 arguably made a big difference in regulatory volume. Under Reagan, federal rules dropped from an all-time high of 7,745 to as low as 4,589.
The Reagan order required that the benefits of new major regulations outweigh the costs. The order also formalized White House Office of Management and Budget “audit” responsibilities. Today, that basic process still exists, but subsequent executive orders “reaffirm(ed) the primacy of Federal agencies in the regulatory decision-making process” — in other words, weakening central White House review. A new president could restore that authority and boost OMB’s oversight resources.
The Reagan order also allowed the OMB director “to order a rule to be treated as a major rule” even when agencies had not done so, and that action would trigger OMB review and scrutiny. The next president could go further. During the 2012 election, Mitt Romney promised an executive order “instructing all agencies that they must invite Congress to vote up or down on their major regulations and forbidding them from putting those regulations into effect without congressional approval.” It’s a provocative idea. Whether or not such a plan would survive court scrutiny, it raises an interesting question as to whether Congress is legally bound to implement decrees from 400-plus unelected agencies.
In any case, reinstituting the Reagan order is not a permanent solution: with the stroke of a pen it could be again weakened by subsequent presidents. But the Reagan order at least offers a measure of regulatory restraint while more permanent legislative reforms are pending.
Second, and in addition to reinstating and expanding the Reagan order, the next president could implement a regulatory moratorium, a temporary freeze on some new regulations. Such a freeze happened under President George H.W. Bush and to a lesser extent when President Barack Obama assumed office; and it’s been mentioned by current Republican standard bearer Donald Trump. The next president should go further and build upon the best of the Bush and Obama moratoria. Namely, he or she should freeze regulation for longer, require a more thorough audit, publish the findings, and seek public comment on which rules should be eliminated.
Third, the next president should champion a reform put forward by the House of Representatives. In Obama’s second term, the House passed legislation to improve cost-benefit analysis of regulations and to require Congress to vote on the biggest, most onerous agency rules. But these great ideas never passed the Senate, and Obama threatened a veto.
Congressional action is important because legislative reforms matter most of all, particularly since independent agencies like the Federal Communications Commission, the Consumer Financial Protection Bureau and the Federal Energy Regulatory Commission are exempt from OMB review, and their influence has only grown.
For regulations already on the books, Congress, with the support of the next president, should put forward an ambitious bipartisan Regulatory Reduction Commission to annually root out harmful and unnecessary regulations for Congress to cut. Such a bipartisan reform plan already exists in the current Congress.
The president should also support legislation setting an expiration or sunset date on regulations, unless reauthorized by Congress. That plan would bring much needed debate and attention to bad regulations.
We also need a report card on regulation transparency, to tally the number of rules, determine if they underwent cost-benefit analysis, and measure their impact on businesses. That would give lawmakers a chance to debate what to do with agencies that fail.
We live in a time of “regulation without representation,” rule by unelected agencies. That needs to change if we want to spur economic growth, expand opportunity, and give people more control over their lives and livelihoods. The next president can and should lead the way for crucial regulatory reforms.
