Jessica Fino 31 Jan 2017 04:08pm

Trump signs new order to cut business regulations

US president Donald Trump has signed an executive order aiming to reduce regulation and control regulatory costs for businesses

The executive order seeks to manage the costs of private expenditures required to comply with federal regulations.

It states that every proposal for agency regulation must also identify two regulations to be repealed, and says that the cost of planned regulations must be “prudently managed and controlled” through a budgeting process.

This means that the White House will introduce an annual cost cap from 2018 for new regulations. For the remainder of 2017, all agencies have been instructed to not spend any more money on new regulations.

Trump said the new rule was aimed at "cutting regulations massively" for small businesses, though the order itself does not refer to small firms in particular.

He tweeted shortly after, “The American dream is back. We’re going to create an environment for small business like we haven’t had in many, many decades!”

The US president said the order was “biggest such act that our country has ever seen” and claimed the Dodd-Frank financial regulatory law is a “disaster”.

“We’re going to be doing a big number on Dodd-Frank. The American dream is back,” he told reporters in the Oval Office.

According to Douglas Holtz-Eakin, president of the American Action Forum, the “real meat” in the order is the fact that the Office of Management and Budget will develop a single, uniform standard for measuring regulatory costs.

Holtz-Eakin said that this could “stop a lot of agencies from gaming the system”.

Todd McCracken, president and chief executive of the National Small Business Association (NSBA), said, “President Trump’s executive order to rein-in the massive federal regulatory web is a very welcome first step.

“We look forward to working with the administration as the many remaining details and decisions are worked through, to ensure that reducing regulations on smaller businesses will be a top priority and that regulatory policy moving forward is maximally effective for small businesses.”

However, Jody Freeman, a professor at Harvard Law School, said, “This idea of ‘two-for-one’ regulations is arbitrary, not implementable, and a terrible idea. The purpose of an order like this is to strangle even the most beneficial rules under the guise of cutting red tape.”

Freeman added, “Even if it is fairly toothless in the end, the order will be a weapon that OMB can use to harass agencies and slow regulation. Delaying important new rules that are necessary to protect public health and welfare can have severe, even disastrous, consequences: think of tainted food, toxic spills, unavailable medicines, unsafe trains and planes.”