How The Big Beautiful Budget Bill Can Deliver Decisive Deregulation

Forbes

2 days ago

Media coverage of the House-passed One Big Beautiful Bill (BBB; see committee report) naturally focuses on the spending. And that makes sense, with COVID-level deficits of $2 trillion on $7 trillion in outlays now entrenched. Action now moves to the Senate.
But regulatory compliance costs and suppressed productivity can affect the economy and our lives every bit as much as on-budget spending. So over the past decade we've seen House budget resolutions explicitly address regulation, as in this year's 'Policy Statement on Government Deregulation.'
This elevation of regulatory streamlining as a policy priority in part shaped BBB reconciliation negotiations in anticipation of simple-majority passage. This year, the House Judiciary Committee's component included four important federal administrative state reforms—not just for rules, but also for more slippery guidance documents and policy statements. Unfortunately, these were yanked at the last moment. Senate negotiations offer an opportunity to revive them. Recaps of deregulatory provisions follow:
The proposed REINS Act (Regulations from the Executive In Need of Scrutiny) has long called for congressional affirmation of costly rules, building upon the resolution of disapproval process contained in the Congressional Review Act (CRA). The BBB would have borrowed from REINS to require legislative approval for any 'major rule that increases revenue'—as opposed to all major rules—to comply with parliamentary requirements for spending legislation. These presumably include the likes of user fees for services, leasing fees, licensing fees, or penalties collected by the federal government.
Even 'REINS-Lite,' though, wound up regarded as a parliamentary fatality. Besides, there was arguably potential for backfiring here, such as perverse use of 'REINS-Lite's' deregulation-intent to block deregulation. For example, an Interior Department rule reducing permitting fees for mining and accelerating project approvals could trigger more taxable economic activity, increasing federal revenue. My Competitive Enterprise Institute colleague James Broughel suggested narrowing the language to 'major rules that 'directly' increase revenue, such as through a 'new fee, tax, levy, or surcharge,'
Parliamentary hurdles on the Senate side for non-fiscal measures are high, with reconciliation provisions limited to those directly affecting the federal budget. Deregulatory provisions were, and remain, vulnerable in this context until changes happen. Celebratory proclamations about REINS-Lite continued right up to the bitter end, but only Amelia Davidson at Politicopicked up on the fact these were actually withdrawn from the final BBB.
Also lost were enhancements to the CRA-required reports to both houses of Congress and to the Government Accountability Office (GAO), covering whether rules are major or not, job effects, But here's a bright side. While the specific reform parts are gone, the BBB now infuses OMB with $100 million through 2028. This may work out for the best, as the amended language under 'Use of Funds' specifies that the Director of OMB shall 'use amounts made available' to 'pay expenses associated with improving regulatory processes and analyzing and reviewing rules issued by a covered agency.' 'Covered agency' refers to the Departments of Education, Energy, Health and Human Services, Homeland Security, Justice, the Consumer Financial Protection Bureau, and the Environmental Protection Agency.direct and indirect cost assessments, and affirmation of constitutional authority. But even the existing, less-detailed reports are nearly impossible to track. That parallels the problem with guidance documents—there's no centralized, publicly accessible repository for easy access.
Congress has used the CRA to strike down fewer than 30 rules since its 1996 enactment, nullifying one at a time. The BBB included provisions to ease the bundling of 'midnight rules' for CRA joint resolutions of disapproval—particularly useful during changes in presidential administrations when the CRA's limited window of opportunity applies.
The BBB also contained provisions requiring agencies to submit their existing body of rules over a five-year period for congressional approval—without which unapproved rules would expire.
Another provision called for the GAO to produce an aggregate estimate of regulatory costs. The GAO may not be the best source for such an estimate, though, given some bad blood between it and the GOP; but the sentiment is right. For years the Regulatory Right-to-Know Act has required aggregate cost assessments, but is ignored.
Concerns that the Senate parliamentarian would reject regulatory provisions led to all the forgoing getting stricken by amendment at the last moment. With the simple directive, "Page 533, strike line 12 and all that follows through line 16 on page 542," all the regulatory reform provisions were deleted and replaced with a scaled-down 'Deregulatory Initiative' increasing Office of Management and Budget (OMB) funding.
Now, the job is to seek acceptably drafted regulatory reforms on the Senate side. 'I'm going to fight like heck to get it in there' before the BBB goes to Donald Trump for signature, Sen. Mike Lee said.
Some regrouping is necessary anyway: the original House language would have left the OMB hopelessly underfunded to carry out all the foregoing actions. OMB was slated for just $10 million through 2034, which never made sense.
But here's a bright side. While the specific reform parts are gone, the BBB now infuses OMB with $100 million through 2028. This may work out for the best, as the amended language under 'Use of Funds' specifies that the Director of OMB shall 'use amounts made available' to 'pay expenses associated with improving regulatory processes and analyzing and reviewing rules issued by a covered agency.' 'Covered agency," refers to the Departments of Education, Energy, Health and Human Services, Homeland Security, Justice and the Consumer Financial Protection Bureau and Environmental Protection Agency.
It is unfortunate that the public may not yet seeing detailed reporting, congressional approvals and sunsetting mechanisms for rules to which it's entitled. And a strike against the new language is the omission of bodies like the Department of Defense and Department of Transportation, as well as the broad exclusion of interpretive rules, policy statements, and guidance documents that the earlier BBB version addressed.
Still, there's wide discretion and latitude for OMB to review and streamline with this generous fiscal endowment. Numerous Trump executive orders already target overregulation and beef up OMB—even more so than they empower the Department of Government Efficiency (DOGE). No matter what, a battle in the Senate to restore and build upon these innovations is warranted and expected, whether it happens in a Big Beautiful way or in some other incarnation this summer. It's been over two decades since major regulatory reforms were enacted—that's far too long.
Where there now-discarded provisions in the BBB would have modified the CRA, legislation like a regulatory cost budget with bipartisan pedigree might be a better fit. The 'Renewing Efficiency in Government by Budgeting' (REG Budget) bill, for instance, would modify the Unfunded Mandates Reform Act (UMRA), which falls under shared House Budget Committee jurisdiction. Reforms in that vein might be a stronger match for future Budget Committee engagement to secure parliamentary approval for treating regulatory effects on fiscal budgetary matters with more precision.
And those bipartisan roots run deep. Before President Jimmy Carter's 1980 Economic Report of the President invoked regulatory budgeting, Democratic Sen. Lloyd Bentsen of Texas—later Treasury Secretary under Clinton—proposed an 'annual cap on the compliance costs each agency could impose on the private sector' to 'make it possible to coordinate the regulatory and fiscal budgets.' Given the fusion of spending and regulation in governance, regulations influence macroeconomic variables, including government revenue, and merit explicit incorporation into reconciliation in a replacement to the governing Byrd Rule.
Some basic cost-benefit machinery for a regulatory budget already exists within the same OMB boosted by the BBB. President Trump implemented a version of a regulatory budget via executive order during his first term with a 'one-in, two-out' framework, now boosted to ten-for-one.
Cutting spending and regulation both require congressional action for permanence. Senate reconciliation negotiations still present an opportunity identify and target the heaviest burdens on society—be they fiscal or regulatory.