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Analysis

How to implement regulatory reform

Executive order 13771

President Trump’s regulatory reform initiatives aim to make it less costly to do business in the United States. Government agencies will need to comply with President Trump’s “One In, Two Out” rule where “for every one new regulation, two must be eliminated.” He also mandated that the net additional cost of regulation be zero. This study provides guidance on how this can be possible for the government as a whole, and for individual agencies.

Implementing regulatory reform

How we regulate, not just what we regulate, will be critical to success or failure. With new approaches and advanced technologies pursuing regulatory reform does not necessarily mean sacrificing protections. Skillfully applying new digital technologies and using innovative techniques allows government to streamline red tape. The new executive order also focuses on modifying existing regulations to achieve the desired policy outcomes while reducing costs.

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Costs matter

President Trump’s Executive Order 13771 includes the “one in, two out” mandate, but it won’t be enough to simply cross regulations off a list—cost reduction matters more than the total number of regulations. The second part of the order requires agencies to have net zero increases in costs of regulations over a fiscal year. This will do more to reduce the financial burden on businesses and citizens.

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Focus on how you regulate

It is possible to achieve regulatory cost reductions without removing protections. Some outdated or superseded regulations can be eliminated with no impact on actual protections—as examples in the report demonstrate. Also, simple changes such as speeding up a process, simplifying a form or moving transactions online all reduce time and costs without compromising protections.

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Everyone participates

There can be no special cases. If parts of government are exempt from regulatory reform, then incentives to other agencies are muted. All areas of government, and all areas within each agency, must find ways to achieve regulatory protections in more effective ways–reducing burdens while maintaining essential protections.

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Focus on small business

Small businesses face 36 percent higher costs than large firms, and they have fewer resources to analyze and comply with regulation. It makes sense for agencies to achieve regulatory reforms where the largest number of businesses will be helped. Often small business owners act as their own compliance officer. Make their life easier by finding ways to effectively inform them of how to comply with regulations.

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Culture change

Regulators and enforcers can effect deeper change by reimagining their roles. Regulators need to look not only at new regulations, but also at the stock of current regulations for the ones that are obsolete, and overlaps that can be eliminated. Enforcement personnel must switch their focus from catching bad behavior to teaching better compliance.

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Use a four-step approach to regulatory reform

Access where the burdens lie at the agency and identify cost saving opportunities. Build a portfolio of possible reductions to show political leaders, starting with the easiest. Find new ways to reduce the cost of inspections and enforcement—think data analytics. Embrace a coaching and empowerment mindset with incentives, and in recruiting and training. In addition, always empower agency employees to find new ideas and put them to work.

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