How to Prepare for Administrative State Reform While Stuck in a Progressive Ditch

Would-be regulatory reformers find themselves in a ditch during the Biden administration, which regards Trump deregulatory efforts as “harmful” and overturned reform-related executive orders the prior occupant had issued.  

Not that we can say Trump’s efforts would have led to permanent regulatory streamlining. The nature of the careerist-driven administrative state model does not allow for that, and even its critics tend not to call for its elimination, contenting themselves with “reform” that never materializes. Furthermore, Trump had ample regulatory ambitions of his own that conflicted with his deregulatory agenda.

Biden, however, and progressives generally, seem uninterested in leaving people and free enterprise alone—like Pepé Le Pew intruders here to help whether you want it or not.

So regulation is mounting a surge in various forms, from the propensity to surveil and to mandate under the guise of public health;, to collude with some businesses to control other businesses and markets via antitrust, and to regulate by introducing a disruptive “bill of rights” and bias into artificial intelligence. Those are just a few examples.

All of the COVID-related legislative campaigns and bipartisan government-steered-infrastructure bill are all hyper-regulatory on a grand scale. In infrastructure, for example, the notion of private, competing, overlapping networks is cast aside, with no lessons learned from past garbled and distortionary experimentation in common carriage and public utility models that cost trillions in lost wealth. The same goes for new incursions into science and technology that eject property rights in favor of politicized, regulatory outcomes and helicopter government.

Such government takeovers (sorry, “public-private partnerships”) don’t show up as costs of regulation in the irregular appearances of the Office of Management and Budget’s (OMB) Report to Congress on regulatory costs. Though perhaps that’s unfair—most other costs of federal intervention never appear there either.

Yet, administrations and Congresses come and go, so the present presents an opportunity for deregulatory-minded folks to tee up some of the things that need to be done 

There are numerous steps to take. One I discussed recently at Forbes was the establishment of an “Office of No” to counter bad premises and overregulation and make the case against newly proposed rules and for the purging of existing ones, as well as offer a blueprint for eliminating agencies issuing those rules.

Technology reduces, rather than bolsters, the rationale for old-school market failure arguments to intervene in this or that sector. Furthermore, technology increasingly enables the extension of property rights regimes in complex new areas, removing the public goods rationale for government management. The administrative state, by contrast, insists on preventing the emergence of market disciplines and property rights while offering pretended expertise—itself  a major unacknowledged cost of regulation and intervention. No agency can perform cost-benefit analysis when its very presence is a net cost.

Regulatory experts can harm the things and processes and people they purport to protect. Their “safeguards” are not necessarily “sensible.” Writing a “regulation” is not the same as advancing discipline and safety. Safety itself is a form of wealth and needs market processes to advance and improve. Relatedly, the tendency of policy makers to abuse of crises and economic shocks—and their role in aggravating crises—needs to be addressed.   

Obviously, the executive branch can’t do it alone. But the pen and phone made infamous by Barack Obama, can be used to reduce the contours of the administrative state, expand liberty, and help make eventual Article I restoration possible. There will be no help from academia or constitutional law programs at major universities. Therefore, the pressures for reform and regulatory discipline will have to come from elsewhere.

Here is an outline for rolling back administrative power and establish the “Office of No” watchdog function. 

While be below may seem aimed at a Republican president, that is not necessarily the case, given Republicans’ responsibility for many regulatory excesses and support for quite a few progressive policies. For example, when congressional chatter turns enthusiastically toward reforms like the Regulations from the Executive In Need of Scrutiny (REINS) Act, which would require an expedited congressional vote on significant rules, it seems to always quiet down to prevent rocking the rent-seeking boat. So we might be better off with someone like e Jimmy Carter, who yielded more deregulation back in the day, including some consideration of a “regulatory budget.”

So here are steps for bolstering executive branch review and getting better at saying “no” before a regulatory proposal takes its first breath. To address the existing body of regulations, the president should:

• Implement a regulatory reprieve or moratorium and another rule-in, rule-out requirement, learning the lessons from the Trump effort as well as international ones.
• Walk the walk on the good parts of legacy executive orders with respect to review of regulation. For the time being, Biden has formally cast all the Trump ones aside, and informally the preexisting ones like E.O. 12866 on regulatory review. The latter was accomplished with Biden’s “Modernizing Regulatory Review” and changing of the mission of OMB from acting as regulatory watchdog to actively helping agencies regulate.
• Implemeant an actual “Office of No” (call it what you will) with a bias against expanding regulation and allow it to compile the case for eliminating rules and rulemaking agencies. While the president can theoretically enhance resources at the OMB Office of Information and Regulatory Affairs to better review regulation, that mission now seems to be inverted.
• Boost free market law and economics staff at agencies. The institutionalization of critiques for agency benefit claims has to be imposed, since it cannot exist organically given the nature of the administrative state and its self-preservation instincts.
• Popularize and showcase ongoing reviews of regulations in anticipation of someday Congress getting around to implementing a Regulatory Reduction Commission
• Reduce dollar thresholds that trigger preparation of Regulatory Impact Analyses and assure they get written. Agencies often evade impact analysis and issue “interim final rules” or simply say that the dollar costs of things they want to do are not computable in cost-benefit terms.
• Issue a new and improved executive order to prompt disclosure and review of all agency issuances and guidance documents, not just rules. Biden eliminated the Trump executive order calling for consolidation of all agency guidance on easy-to-find portals, and required them (not that agency officials minded) to eliminate rules committing them to public disclosure of guidance. So far, at least 20 of the guidance rules established under Trump have been eliminated.
• Compile an annual Regulatory Transparency Report Card.
• Designate multiple classes of “major rules” in transparency reporting. Such designations arey convoluted and should be streamlined and simplified.
• Require separate reporting on economic, health and safety, and environmental regulations, and prioritize their disclosure. There are many gaps. As it stands, for example, the replacement of a normal life function such as retirement, health care, or child care with a government spending and regulatory apparatus is rarely recognized as regulation at all (at most, subsequent decrees get called a “budget rule” or “transfer rule). This phenomenon has only grown thank to COVID-related legislation and Biden’s Build Back Better plan, which aims to launch several new Domestic Forever Wars.
• Minimize indirect costs of regulations (more on this later).
• Reinforce the oversight and “Office of No” apparatus by publicly recommending rules and agencies for revision or repeal and explain the need and benefits of shrinking the federal state.

We have discussed some of these notions before. However, even after Trump, none of it has been done. Over the coming months we will revisit many of the elements noted above in more detail. For anything to really stick, there are numerous steps Congress needs to take as well, and we will get to those also. But the emphasis here is on some of the moves a president might make, rather than try to “build back better” by undermining free enterprise.