The White House has issued an Executive Order mandating significant deregulation across the federal government. This order, framed as a way to “unleash prosperity,” directs agencies to eliminate at least ten existing regulations for every new one issued, aiming for a net reduction in regulatory costs. This analysis will examine the key provisions of this Presidential Action, its potential impact, and the political ramifications of this decision.
This Executive Order, titled “Unleashing Prosperity Through Deregulation,” establishes a “regulatory budget” for federal agencies. Its core principle is the “10-for-1” rule: for every new regulation proposed, agencies must identify at least ten existing regulations to repeal. For the current fiscal year (2025), the total incremental cost of all new regulations must be “significantly less than zero.” The Director of the Office of Management and Budget (OMB) is tasked with providing guidance, overseeing implementation, and granting waivers. The order aims to reduce the costs of compliance with federal regulations, stimulate economic growth, and enhance global competitiveness. The order also rolls back a recent update (2023) to OMB Circular A-4 and reinstates the 2003 version, as well as reinstating a 2018 agreement regarding review of tax regulations. This order signifies a strong commitment to reducing government oversight.
The Executive Order builds upon a long-standing conservative critique of federal regulation as burdensome, costly, and stifling to innovation. It resonates with similar deregulatory efforts undertaken by the Trump administration. The action occurs within a broader political context of debates about the appropriate role of government regulation in the economy. It explicitly references the Budget and Accounting Act of 1921, grounding its authority in existing law. It also implicitly criticizes previous administrations’ regulatory policies, suggesting they contributed to an “ever-expanding morass of complicated Federal regulation.” This is a continuation of a long tradition of Executive Orders seeking to reign in federal regulations.
The Executive Order contains several key directives:
- The “10-for-1” Rule: For every new regulation proposed, agencies must identify at least ten existing regulations to be repealed.
- Regulatory Cost Cap: For fiscal year 2025, the total incremental cost of all new regulations, including repealed regulations, must be “significantly less than zero.”
- OMB Oversight: The Director of OMB is responsible for providing guidance, standardizing the measurement of regulatory costs, determining what qualifies as a new or offsetting regulation, and overseeing the implementation of the order. They also have the power to grant waivers.
- Annual Regulatory Cost Submissions: Agencies must submit annual regulatory cost plans to OMB, identifying offsetting regulations and providing cost estimates. Regulations not included in the Unified Regulatory Agenda require advance written approval from the Director of OMB.
- Definition of “Regulation”: The order broadly defines “regulation” to include not only formal rules but also memoranda, administrative orders, guidance documents, policy statements, and interagency agreements. However, it excludes regulations related to national security, agency management, and certain other categories.
- Rollback of OMB Circular A-4: The order revokes the 2023 version of OMB Circular A-4 (Regulatory Analysis) and reinstates the 2003 version. This circular provides guidance on how agencies should conduct cost-benefit analyses of proposed regulations.
Potential Impact
- Federal Agencies: Agencies will face significant pressure to identify and eliminate existing regulations. This could lead to a reduction in staffing dedicated to regulatory enforcement and compliance. It will also be a complex task to determine which regulations to remove while fulfilling their other mandates.
- Businesses: The intended impact is to reduce the compliance costs for businesses, freeing up resources for investment and job creation. However, some businesses may benefit from existing regulations that protect them from unfair competition or ensure a level playing field.
- Consumers and the Public: The potential impact on consumers and the public is more uncertain. While deregulation could lead to lower prices and increased innovation, it could also result in reduced safety standards, environmental protection, and consumer protections.
- Environmental Protection: This EO could see some environmental protection regulations repealed.
- Political Polarization: As with most deregulatory efforts, it would be expected to deepen political polarization and ideological divides.
- The Economy: The hope would be to bolster the American economy.
Legal/Constitutional Considerations
The President has broad authority to direct executive agencies through Executive Orders. However, legal challenges could arise if the implementation of this order leads to violations of existing laws or regulations. Opponents may argue that the “10-for-1” rule is arbitrary and capricious, lacking a rational basis. Furthermore, the rollback of OMB Circular A-4 could be challenged if it undermines the quality of regulatory analysis. The “severability” clause (Sec. 7) is included to protect the rest of the order if a specific provision is struck down in court.
Political Implications
- Republican Support: Republicans will likely praise the President for taking action to reduce regulatory burdens and stimulate economic growth.
- Democratic Opposition: Democrats will likely criticize the order as a reckless attack on consumer protections, environmental safeguards, and worker safety.
- Interest Groups: Business groups will generally support the order, while consumer and environmental groups will likely oppose it.
- Presidential Approval: The order could boost the President’s approval rating among conservatives and business owners, but it could alienate liberals and those concerned about consumer and environmental protection.
Comparison to Previous Actions
This Executive Order is reminiscent of deregulatory efforts undertaken by the Reagan, and Trump administrations. Like the Trump administration’s “one-in, two-out” rule, this order seeks to significantly reduce the number and cost of federal regulations. However, the “10-for-1” rule is even more aggressive, suggesting a stronger commitment to deregulation than previous administrations.
White House Rationale
The White House rationale, as articulated in the Executive Order, centers on the need to reduce the costs of compliance with federal regulations, stimulate economic growth, and enhance global competitiveness. The order argues that excessive regulation stifles innovation, hinders job creation, and reduces the quality of life for Americans. While this rationale resonates with many business owners and conservatives, critics may argue that it ignores the benefits of regulation, such as protecting consumers, workers, and the environment. Unstated motives may include a desire to shrink the size and scope of government and to appeal to a business-friendly constituency.
Alternative Perspectives
Critics argue that federal regulations are necessary to protect public health, safety, and the environment. They contend that deregulation can lead to increased pollution, unsafe products, and exploitation of workers. Some argue that the “10-for-1” rule is a simplistic and arbitrary approach that does not account for the complexity of regulatory issues. Others suggest that the benefits of regulation outweigh the costs.
The Executive Order on deregulation represents a significant shift in federal regulatory policy. It reflects a strong commitment to reducing the size and scope of government and to stimulating economic growth. However, it also raises concerns about potential negative consequences for consumer protection, environmental safeguards, and worker safety. The most important questions that remain unanswered include: How will the “10-for-1” rule be implemented in practice? What specific regulations will be targeted for repeal? And what will be the long-term impact of this order on the economy and society? Only time will tell whether the President’s deregulatory efforts will “unleash prosperity” or undermine essential protections.