What Do the Midterms Mean for Regulatory Reform?


A divided Congress probably means the status quo will reign on regulation. This is a mixed bag from a free-market perspective. President Trump made some positive reforms upon taking office, but they were via executive order, and can be easily overturned by a future president—Congress needs to pass legislation to give reforms any staying power. Barring a lame duck miracle, that won’t happen now. Republicans blew a rare opportunity.

President Trump’s executive order reforms include a one-in-two-out rule for new regulations, and a requirement for agencies to add zero net regulatory costs—a de facto regulatory budget, which the Competitive Enterprise Institute has been advocating for more than 20 years. Agencies are not exactly transparent with their data. But based on what we do know, it’s possible that total regulatory burdens have not only stopped growing, but might have even gone down by as much as 1 percent over the last two years.

The main reform priority is the rulemaking process itself. It’s nice to get rid of this or that unfair, obsolete, or burdensome rule, but those are just symptoms. The root problem is the process that allows such regulations through in the first place. Better results require better rules. This cannot be overemphasized.

Congressional Democrats mostly oppose process-level regulatory reforms. Legislation to make recent reforms permanent, or enact further reforms, are unlikely to pass on their watch. But there is one long-running trend that should bring at least some Democrats over to reformers’ side: separation of powers.

Over the last several decades, Congress has slowly but steadily delegated away more and more of its legislative powers to executive branch agencies. Congress will usually pass a little more than 100 bills in a given year; agencies will issue more than 3,000 regulations. Considering who currently runs the executive branch, congressional Democrats are more open than usual to pleas for a more healthy separation of powers, and increased executive branch transparency. This is only a possibility, but well worth pursuing.

At a more concrete level, House Democrats will be unable to legislatively undo President Trump’s executive orders; the GOP Senate won’t allow it. At the same time, if the Senate passed reform legislation, the House wouldn’t let it through. What one hand giveth, the other taketh away.

Even so, it is important to reintroduce reform bills such as the REINS Act, Regulatory Accountability Act, Regulatory Improvement Act, and more. They will almost certainly not pass in the 116th Congress. But keeping the reforms alive in ready legislative form will make them easy to pass if political wins change, and provide opportunities for constructive dialogue about the importance of process reform, transparency, and the separation of powers—concepts which apply to issues far beyond regulatory reform.

In short, when it comes to regulatory reform in the next Congress, not much will happen. But there is much to do.