President Donald Trump took a significant step forward in consolidating his administration’s control over executive-branch policy by issuing a Feb. 18 executive order titled “Ensuring Accountability for All Agencies.”
The accountability order extends direct presidential oversight beyond the “core” executive-branch departments to federal “independent agencies,” including multi-member commissions, such as the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), and the Federal Communications Commission (FCC). In tandem with a Jan. 31 Trump executive order on deregulation, the accountability order could significantly advance economically beneficial regulatory reform and promote much-needed consistency and coherence in executive-branch policymaking.
The accountability order seeks to strengthen two key aspects of presidential administration: regulatory review and executive-branch policy supervision.
Regulatory Review
Various presidential executive orders since the 1970s have directed the Office of Management (OMB) to conduct cost-benefit analysis of proposed executive-branch agency rules having a major economic effect. Section 3 of the accountability order extends OMB review of major rules to independent agencies.
Under the accountability order, independent agencies will be necessarily subject to President Trump’s Jan. 31 “Executive Order on Unleashing Prosperity Through Deregulation.” The “prosperity” order imposes a “regulatory cap” requiring each agency to identify for repeal 10 existing regulations whenever it proposes one new regulation. In addition, it “will also set a total incremental cost allowance for each agency – in essence, a regulatory budget – that will dictate the permissible regulatory costs for each fiscal year.”
Taken together, the two recent Trump orders:
- greatly expand required agency-specific deregulatory cost- savings requirements; and
- extend the new cost-savings plan to encompass independent agencies.
These deregulatory changes should bode well for the U.S. economy.
Numerous economic studies (described by me in a 2024 Forbes article) document the enormous costs federal overregulation imposes on businesses, workers, households, and the overall American economy.
The prosperity order’s institution of agency regulatory budgets addresses the overregulation problem by seeking directly to choke off regulatory excesses agency-by-agency. This approach has been adopted successfully by many jurisdictions. It also showed some promising results when adopted in a 2017 Trump executive order (subsequently rescinded under Biden). The order also seeks to lower regulatory burdens by simply reducing the number of costly regulations (the “10 for 1” regulatory-reduction directive given to agencies).
The accountability order will apply these cost-saving approaches to the independent agencies, whose rules have great economic impact on all segments of the economy. Banking and other financial transactions, communications, wide-ranging business practices (affecting consumers and firms), shipping, and energy all are affected by independent-agency pronouncements. The order could significantly enhance the economic growth and efficiency of these sectors, to the extent that it succeeds in cutting back on regulatory excesses at the independent agencies.
There is reason for optimism that the two new regulatory-reform orders will achieve tangible positive results, based on the economic impact of the first Trump administration’s regulatory-reform initiatives. In 2023 congressional testimony, Casey Mulligan of the University of Chicago explained that regulations often generate serious market distortions far in excess of their simple paperwork costs, adding that:
President Trump’s approach not only avoided adding [regulatory] costs, but subtracted them. The cost savings from eight years of President Trump’s approach compared to President Biden’s is up to $80,000 per household.
Executive-Branch Policy Supervision
The accountability order breaks new ground by providing specifically for direct presidential policy supervision of the independent agencies. Such supervision should, of course, help ensure that regulatory reforms are actually implemented. Furthermore, it should promote consistency in policy application throughout the federal government, to the benefit of the American public.
Specifically, the accountability order orders that independent agency heads periodically report to the president on their performance and efficiency in attaining standards and management objectives set by OMB. The OMB director shall consult with agency leadership and adjust the application of agency funds “by activity, function, project, or object, as necessary and appropriate, to advance the President’s policies and priorities.” What’s more, agency heads shall consult regularly with White House officials and “submit agency strategic to the Director of OMB for clearance prior to finalization.”
Finally, the accountability order clarifies that the “President and the Attorney General, subject to the President’s supervision and control, shall provide authoritative interpretations of law for [all of] the executive branch”—including the independent agencies.
This requirement provides for uniformity of federal law in application. It promotes the rule of law and tends to reduce costly uncertainty experienced by private actors regarding how the law applies to them. Under this provision, for example, an independent agency presumably would not be authorized to pursue a lawsuit at odds with the U.S. Justice Department’s (DOJ) interpretation of the law (as happened when the Trump DOJ intervened in a federal court proceeding in 2019 to oppose an FTC prosecution of Qualcomm).
Efforts to challenge in court the accountability order’s supervision provisions would almost certainly fail. It is unlikely that a party could establish “legal standing” (legally recognized injury justifying the right to sue) to challenge the order. Most fundamentally, the Constitution vests all executive power in the President and charges him with faithfully executing the laws. “Leading constitutional scholarship supports the proposition that this means the president possesses strong directive authority over decisions made by subordinate agencies.” This includes the meaning of a statute, and the regulations required to give it effect.
Looking Forward
The accountability order holds out the promise of enhancing American economic growth and vitality by extending application of the prosperity order to the entire federal government. True to its name, the accountability could also make the federal government more answerable to the American people. It would do this by helping ensure that all of the many federal bureaucratic entities act in a manner consistent with the policies of the one individual the public has elected—the president.
Finally, courts are likely to uphold the accountability order’s legality as within the president’s broad authority to supervise the faithful execution of the laws.
