President Trump fulfilled a significant campaign pledge on Monday when he signed an executive order referred to as a “one in, two out” policy on new federal regulations.
Requiring “that for every new federal regulation proposed, two must be revoked,” this directive is not as simplistic as summarized. The order targets regulatory costs and not merely the number of individual regulations, and would additionally establish a cost cap on new regulatory mandates. Under the order, any new regulation must be “offset by the elimination of existing costs associated with at least two prior regulations.”
The business community, and smaller enterprise in particular, widely cheered this reform measure and welcomed the priority Trump conveyed to it by acting expeditiously. He had promised only to do so within the first 100 days of his administration.
D.C. was represented at the White House ceremony by Casey Patten of Taylor Gourmet, co-founder of the popular local hoagie eatery with multiple locations open in, or planned for, D.C.’s most prominent and newly developing areas. Patten also attended a meeting with Trump and his executive staff detailing the presidential directive prior to its signing.
The Obama administration was notorious for promulgating a bevy of extensive new rulemaking, including a big batch while headed out the door, which businesses decried as costly burdens hindering growth and employment. Trump, however, was quick to point out, “This is a knock on many presidents preceding me. It got particularly bad in the last eight years, but … it’s a knock on many.”
The president’s initiative mirrors regulatory restrictions in both the U.K. and Canada. Canada’s “One-for-One Rule” applies to the direct costs of the administrative burden for businesses, while the U.K.’s “One-in, Three-Out” requirement assesses all new net regulatory cost implications. Australia has also instituted similar cost-weighing accountability.
Implementation will prove complex and complicated. Imposing a required assessment balancing business costs, however, will inject much-needed discipline in government rulemaking. Forcing an evaluation among bureaucrats followed by public analysis of the financial impact of new rules and administrative requirements will lead to more cost-effective policies.
A “pay as you go” philosophy and commonsense attitude factoring for economic effects of the constant churn of red tape will demand guidelines for creating regulatory balance. Benefit-versus-cost review standards and creating specific regulatory reduction targets – across multiple agencies – will be imperative.
An applicability threshold determination, such as any regulation with an economic impact of $100 million or more, is essential. Capturing an overly broad range of regulations could overwhelm any evaluation system, but tackling too small a range of regulations could produce insufficient business burden reduction.
Any offset requirement will itself tend to curtail the current gusher of new regulations to a reasonable and responsible level. To get there, a conscientious true-cost assessment will be required – inevitably prompting reluctance and resistance by anti-enterprise extremists.
Big government types, of course, will conjure up images of planes falling from the sky and gangrenous slabs of meat littering grocery shelves. What they intentionally overlook, and likely don’t understand, is that most government marketplace interventions have little to do with actual public health and safety, and appropriate limited exceptions in those areas are easily accommodated.
The no-regulation-is-ever-too-onerous adherents possess little ability or, worse, willingness to assess the negative business operating implications and deleterious economic effects of over-regulation. Ensuring accurate and independent assessment of regulatory costs, perhaps by non-governmental sources, may become requisite.
As one Washington small business owner operating several long-popular and highly successful neighborhood restaurants recently proffered in retort to a D.C. Council member pushing for more local business restrictions and legislative rules at a community meeting, “the only new job I’ve been able to create is for an office administrator to cope with the mounting pile of reporting requirements for all the new regulations you keep sending our way.”
It’s a lot to hope, but D.C. should likewise adopt this new sensible national standard.