Question

Upon inauguration, the Trump administration implemented a regulatory budget such that in net new regulations should add zero additional cost of compliance to the economy. They also added to this a 2-out, 1-in approach which requires two regulations be eliminated for every new regulation. The early analyses of this program are starting to be published. Throughout the semester I will ask you to start researching them. But lets add these questions for now.

Why have both both a 2-out, 1-in approach in addition to a low budgetary target for costs?

The defenders of this approach believe it to be consistent with cost-benefit analysis and the

current OMB operates an interagency approach such that the regulatory budget applies for the gov’t as a whole rather than on an agency-by-agency basis. What additional assumptions do you believe are necessary for these regulatory requirements to be consistent with the outcomes from a pure cost-benefit rule?

Answer 1

In addition to the cost benefit rule, few of the other critical assumptions which are necessary for the regulatory requirements are foregoing the sense of pre-determined safety. There has been a sense among the regulators that since they have followed all the norms of business, they are safe from any information breach. It is critical here to note that, information security is a critical requirement of the regulatory authorities. Another critical requirement is the nature of openness. It is very important that the general people are kept updated about the changes in the regulatory process. Sometimes ignorance on the part of the people leads to a complete breakdown of a regulatory system. Again, keeping national interest in target is another critical requirement. Saving the cost could be important, however, it should not be at the cost of national importance or national security. If a certain regulation in necessary for national interest, it must be taken up, even if it is not falling under he cost benefit rule.