Biden’s executive order makes regulators even less accountable

Last week, while Washington and the media were consumed with former President Trump’s indictment, White House progressives focused on policy.

President Biden issued an executive order to make the largest alterations to America’s regulatory system in years. Biden had already reversed Trump’s deregulatory efforts. Now he’s implementing system-level changes to make progressive policies permanent.

Transparency and disclosure will take a hit, with fewer rules receiving cost-benefit analysis. And regulatory review will abandon objective analysis in favor of motivated reasoning, to salute rather than supervise progressive overreach in areas such as climate change and environmental, social and governance (ESG) investing.

The executive order’s most visible change is a doubled threshold for classifying “economically significant” regulations, from $100 million of annual economic impact to $200 million. Significant regulations get reviewed at the Office of Management and Budget (OMB)’s Office of Information and Regulatory Affairs (OIRA), while smaller rules typically do not.

While a new threshold is somewhat understandable as a reaction to inflation, inflation itself is a gift of the government. The baseline for significance would adjust every three years, indexed to GDP. 

The practical effect is less transparency. Regulations not officially deemed significant may still be crippling to the people bearing their burdens.

Less than 1 percent of the over 3,000 new regulations annually get any cost analysis from OIRA. Doubling the economic significance threshold would further reduce oversight. The government at least gives the public information on how much it taxes and spends. It should do the same for its regulations.

Even more troubling is the apparent change in OIRA’s mission. Biden’s executive order states that OIRA’s “regulatory analysis should facilitate agency efforts to develop regulations that serve the public interest,” which effectively changes OIRA’s role from supervisor to cheerleader.

In Biden’s “whole-of-government” (his term) management philosophy, agencies are encouraged to go beyond the old Obama “pen and phone” approach and go beyond Congress to use every available tool to achieve progressive priorities on climate policy, equity, antitrust and even digital currencies. Infusing ESG principles into pensions is one example.

An agency may be able to do one thing reasonably well, or many things poorly. Whole-of-government initiatives all but require every agency to do many things poorly. Regardless of one’s views on climate change or equity, this is bad management. This rejection of Adam Smith’s division of labor is now built into the rulemaking process.

Instead of reducing transparency and inflating bureaucracy, Congress must quickly force regulators to provide more information to the public.

OMB last issued its annual Regulatory Report to Congress, which summarizes some costs and benefits, on the day before Christmas Eve in 2019. The twice-yearly Unified Agenda, which lists agencies’ regulatory priorities, is chronically late. Even OMB’s Information Collection Budget on paperwork burdens has no data past 2018. Getting these reports up to date and strengthening regulatory review is imperative. Without proper oversight, agencies will continue to engage in unilateral lawmaking.

Biden’s project ignores longstanding transparency shortcomings while adding new hindrances. OIRA typically does not review regulations from independent agencies, which are technically outside the executive branch. These include heavy hitters like the Consumer Financial Protection Bureau and the Securities and Exchange Commission. Their regulations need transparency safeguards, too.

As the federal government has surged, many influential sub-regulatory decrees avoid the formal rulemaking process altogether and instead appear in guidance documents, memoranda and even press releases.

The Guidance Out of Darkness Act, or GOOD Act (H.R. 890), introduced by Rep. James Comer (R-Ky.) and Sen. Ron Johnson (R-Wisc.), would re-establish an online portal for such “regulatory dark matter.” Trump established one during his presidency via executive order, but Biden rescinded it when he took office.

Technical details about the regulatory process do not give conservatives the same emotional rush they get from waging debt-limit and culture war combat on cable news. But if they want to effectively oppose Biden’s agenda, they better start paying attention to regulation, because that is where the real action is.

Clyde Wayne Crews is the Fred L. Smith Fellow in Regulatory Studies at the Competitive Enterprise Institute (CEI). Ryan Young is a senior economist at CEI.