One great moment in the budget battles: GOP’s ‘Policy Statement on Deregulation’

Today marks the release of the White House’s $7.3 trillion budget proposal for fiscal year 2025, even as policymakers continue their wrangling over the half-done 2024 agreement.

On the day of Biden’s State of the Union Address, the House Budget Committee released its 86-page Concurrent Resolution on the Budget for Fiscal Year 2025 (see my treatment of it and Biden’s new budget at Forbes and RealClearMarkets).

The big-picture takeaway from these rival proposals is that, while Biden somewhat unpersuasively proposes to reduce cumulative deficits $3 trillion over the coming 10 years, the GOP proposes reducing deficits by $14 trillion, and to deliver a $44 billion surplus in 2034. The last budget surplus anyone saw was back during the Clinton administration.

A favorite emphasis of your correspondent is the fusion of spending and regulation in modern America, since the federal government leaves almost no corner of economic and social life alone. So, it was refreshing to see an extended case for regulatory streamlining incorporated into the House budget resolution.

Specifically, the resolution concludes with a four-page “Policy Statement on Deregulation.”

The policy statement highlights the pervasive influence of costly regulation from over 400 departments, agencies and commissions on the nation’s economic and fiscal landscape, and notes how these rules affect small businesses, constrain energy production and influence labor markets (p. 82). While spending and subsides bring regulation, regulation can also affect spending and the perceived need for it. In particular, a stronger economy generated by reduced regulation can favorably affect government budgets.

The GOP resolution points to Biden’s increased spending on unilateral executive actions and regulatory measures, and to his vetoing of congressional resolutions aimed at curbing regulatory expansion. “These regulations impose significant costs on individuals and businesses and increase spending for existing programs without the authorization of Congress or the approval of the American people,” it says.

For specific reforms, the budget resolution “encourages repealing all new regulations created under President Biden, permanently eliminating regulations that

were temporarily waived during the COVID-19 pandemic, exempting small businesses from National Labor Relations Board regulations, addressing the burdens of occupational licensing requirements, and repealing Corporate Average Fuel Economy standards, among other policies” (p 84).

Next, the policy statement invokes the need for broader law that “restores congressional Article I powers, scales back Federal regulations, limits future bureaucratic red tape, and unleashes economic growth.”

These proposals include the Regulations from the Executive in Need of Scrutiny (REINS) Act;

the Article I Regulatory Budget Act; and the Guidance Out of Darkness Act. Numerous other bills aimed at enhancing transparency, accountability, and efficiency are also listed (see p. 85). Some of the bills in play have at least some limited bipartisan support, as we have detailed elsewhere with respect to a comprehensive regulatory reform agenda.

While the Democratic members of the Budget Committee came out against the budget resolution as well as the regulatory policy statement, it’s hard to argue with the call “to examine ways to relieve the burdens of overregulation throughout the Federal Government,” and “to ensure that once harmful and costly regulations are repealed.”

Consumer protections, environmental sustainability, and public health safeguards all matter, but these may not all require $7 trillion in federal spending and a 188,000-page Code of Federal Regulations. The way regulation happens today can even undermine these values.

Commitment to limited government intervention and free-market principles matters, as does empowering Congress to play its proper active role in shaping regulatory policy. The GOP statement is an ambitious one. It even goads congress to “ensure that once harmful and costly regulations are repealed, they cannot be reimposed through executive fiat.”