Obama Endorses Innovation as Regulatory Principle

Today President Obama took a big step towards improving the federal regulatory process. In particular, he came out with an executive order that addresses two of my big concerns: The cumulative effect of regulations, and bringing innovation as a key goal in the regulatory process.

Sec. 3.  Integration and Innovation.  Some sectors and industries face a significant number of regulatory requirements, some of which may be redundant, inconsistent, or overlapping.  Greater coordination across agencies could reduce these requirements, thus reducing costs and simplifying and harmonizing rules.  In developing regulatory actions and identifying appropriate approaches, each agency shall attempt to promote such coordination, simplification, and harmonization.  Each agency shall also seek to identify, as appropriate, means to achieve regulatory goals that are designed to promote innovation.

This is very important.  Up to this point, innovation has just not been part of the regulatory assessment process at all. Similarly, the cumulative impact of regulation has not been taken into account at all. I applaud the Obama Administration for this change.

However, the Obama initiative doesn’t go far enough to set out the principle of countercyclical regulatory policy–that is, stressing the importance of encouraging  growing and innovating industries during this period of economic weakness, and only regulating if necessary.

In addition, at the Progressive Policy Institute, we’ve been working on a proposal for  a Regulatory Improvement Commission. The RIC,  modeled on the BRAC commission, will provide a transparent and systematic process for identifying regulations that can be improved or pruned, while  maintaining important social values. Stay tuned.


  1. How will you keep the special interests from dominating this process, or is that a feature instead of a bug?


  2. I have no regulations experience to relate, but I can tell you that I’ve occasionally seen bureaucracy beaten back, when bright, knowledgeable people are put onto it. It takes a certain mindset. I’m not talking about throwing internal controls out of the window or otherwise exposing people to temptation.

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