The Administration

The tortoise, not the hare, will win the deregulation race

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We all know Aesop’s fable about the tortoise and the hare. They decide to race. The hare bolts out to a quick lead, but stops to take a nap. While he sleeps, the tortoise creeps ahead. As the hare wakes, the tortoise is crossing the finish line and wins.

The Trump administration has started a deregulatory race like the hare, but it will only win if it starts acting like the tortoise. Last week, President Trump said he plans to decrease business regulations by 75 percent. Following years of increased regulation during the Obama administration, we are overdue for a reassessment to determine whether their costs have exceeded their benefits. To reduce regulatory burden, the first step is to ensure that new or proposed regulations do not make matters worse.

{mosads}I therefore agree that President Trump’s regulatory moratorium on the executive branch and other agencies provides a much-needed pause to make sure they are not advanced without adequate inquiry. While the moratorium is limited because it does not apply to independent agencies like the Federal Trade Commission, Consumer Financial Protection Bureau, Federal Communications Commission, and the Securities Exchange Commission, it is a good start. However, just halting or invalidating new regulations will not provide the regulatory relief President Trump has promised industry.


On Capitol Hill, House Majority Leader Kevin McCarthy (R-Calif.) has announced that the House this week will begin using the Congressional Review Act as part of an effort to invalidate some final rules. While Congress can take direct action to eliminate specific regulations or revoke the authority of regulators to issue regulations, it is very difficult to enacting such legislation. Hill Republicans face the challenge of getting such legislation through the Senate, where Democrats can block it.

Departments and agencies are the most likely source for deregulation. This week, President Trump signed an executive order requiring that executive branch departments and agencies must propose to delete two rules for every new rule they propose. This “one-in, two-out rule” approach is on balance deregulatory, but it only has an effect if departments and agencies propose new regulations. If they do not, it simply preserves the regulatory status quo. Moreover, like President Trump’s regulatory moratorium, it does not apply to independent agencies, which will limit its impact.

The lion’s share of deregulation is likely to commence once President Trump’s appointees assume their leadership roles throughout the federal government. When they arrive and as they seek to deregulate, they will generally have to follow the same procedures under the Administrative Procedures Act to revoke and amend regulation as they would to promulgate regulations. At a minimum, agencies also have to submit changes for public comment, make decisions based on the information gathered, and explain the facts, laws, and policies supporting their decisions so that they survive judicial review.

It is true that some deregulation can occur quickly even using this process. For example, in the 1990s, I was part of a deregulatory effort at the FTC in which the agency quickly dispatch its Frosted Cocktail Glass Rule and its Nuclear Fallout Shelter Guide, because they clearly were no longer relevant.

But the regulations which impose the greatest costs are not likely to be such low hanging fruit. Many of these regulations are incredibly long and complicated. Just as it can take years to promulgate these regulations, it can take years to revoke or amend them. A Bavarian family in Robertson Davies’s novel What’s Bred in the Bone had emblazoned on its coat of arms the motto, “We Will Outlast You.” This would be an apt motto for many at federal agencies: to preserve regulations they only need to outlast Trump administration deregulators.

President Trump’s appointees undoubtedly will move as quickly as they can, and they are going to need help. Industry can assist in identifying rules that are the most important to change. Think tanks, academics, and others can do the same. Even other agencies can help pare back regulations. The FTC, for example, has a long-standing advocacy program (and one that is likely to remain very active under acting FTC Chairman Maureen Ohlhausen) that files public comments to assist other agencies in understanding how proposed changes in their rules affect consumers and competition.

Deregulation clearly is on the way. President Trump’s fast start has pleased both his base and U.S. business. However, much like the hare’s quick start in Aesop’s fable, to win the deregulatory race, President Trump, his appointees, and his allies now need to act like the tortoise.

Thomas B. Pahl served as a managing counsel at the Consumer Financial Protection Bureau during the Obama administration. He spent more than 20 years working on financial services and consumer protection issues at the Federal Trade Commission and is now a partner in Arnall Golden Gregory’s privacy and consumer regulatory practice in Washington.

The views of contributors are their own and are not the views of The Hill.

Tags Congress Donald Trump Federal Trade Commission Regulation Securities and Exchange Commission

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