President Trump’s deregulatory push will strain benefit-cost analysis.
For over 40 years, U.S. agencies have been required to conduct benefit-cost analyses to support development of their major regulations. The flurry of executive orders issued during the first 100 days of the Trump Administration includes some orders with significant implications for the conduct of these analyses. In addition, reductions in the federal workforce and budget will make completion of these analyses increasingly challenging.
Benefit-cost analysis is a well-established framework that promotes systematic investigation of the positive and negative impacts of policy options. If well-conducted, it synthesizes the available evidence and associated uncertainties, including impacts that are difficult to quantify or value. It uncovers impacts that otherwise may be unanticipated and identifies potential sources of support and opposition. As a result, decision-makers and other stakeholders are better informed about the effects of the policy. The importance of this investigation is illustrated by the longevity of executive orders requiring benefit-cost analysis of major U.S. regulations. These orders include President Ronald Reagan’s 1981 Executive Order 12,291, which was replaced by President Bill Clinton’s 1993 Executive Order 12,866, which remains in force today.
These requirements have persisted through Republican and Democratic administrations with only occasional additions and modifications. The regulatory philosophy is clear. As directed by Executive Order 12,866, federal agencies should issue regulations only when “required by law,” needed to interpret the law, or justified by a by “compelling public need.” Before regulating, agencies should “assess all costs and benefits of available regulatory alternatives, including the alternative of not regulating.”
During the first 100 days of his Administration, President Donald J. Trump issued several executive orders that will affect regulatory development. Three major changes have particularly important implications for the analyses that support these regulations: the recission of revised guidance for conducting benefit-cost analyses; the implementation of new requirements for deregulation; and the extension of benefit-cost analysis requirements to independent agencies.
First, the Trump Administration rescinded new Biden Administration guidance for best practices for regulatory analysis. Under Executive Order 12,866, the U.S. Office of Management and Budget (OMB) in the Executive Office of the President is responsible for reviewing major regulations and supporting analyses developed by executive branch agencies. In addition to addressing the quality of the analysis, this review ensures that both the regulation and the analysis align with the priorities of the current administration.
As part of this role, in 2003, OMB developed a best-practice guidance document, Circular A-4, which has been supplemented by more detailed agency guidelines, including those issued by the U.S. Department of Health and Human Services and the U.S. Environmental Protection Agency. The Biden Administration updated the 2003 guidance in November of 2023; President Trump then rescinded that update in January of 2025 in Executive Order 14,192.
The 2023 update reflected substantial review and consultation. OMB requested comments on the proposed revisions from federal agency staff, the general public, and nine invited peer reviewers. The Administration’s broad outreach ensured the receipt of feedback from numerous experts in diverse disciplines. Researchers found that nearly 4,500 public comments were submitted on the proposed Circular A-4 revisions, 185 of which provided unique, substantive content. Many commenters applauded the proposed updates while also raising concerns about some provisions. The range and volume of the comments meant that significant disagreements about the proposed revisions were left to OMB to resolve, which it addressed in its explanation of the changes it adopted.
With the recission of the Biden Administration’s Circular A-4 revision, the 2003 version of Circular A-4 is back in force. It is unclear, however, whether the Trump Administration will subsequently issue its own revision of Circular A-4. An update seems long overdue, given that both the data and methods for conducting benefit-cost analysis have evolved significantly over the past 20 years.
More importantly, there is substantial agency noncompliance with Circular A-4’s analytic requirements, which neither the 2003 nor the 2023 version of the Circular would likely resolve. This noncompliance is documented in the reports OMB has issued since 1997 to the U.S. Congress that summarize agencies’ analyses of the costs and benefits of federal regulations. The most recent report was issued in early 2025 and covers the 2022-2023 federal fiscal year. These reports suggest that only about half of the major regulations subject to the analytic requirements in each year are accompanied by analysis of both benefits and costs. The OMB reports discuss some of the reasons for incomplete compliance, indicating that quantitative analysis of benefits is particularly difficult and infrequent. The requirements for distributional analysis are also largely ignored.
This lack of full compliance suggests that OMB enforcement of Executive Order 12,866 and Circular A-4 requirements is inconsistent. Although uneven enforcement may result in part from analytic challenges, it likely also reflects political concerns. If an agency conducts an analysis, it risks finding problems that it lacks the authority or political will to address. For example, if an agency issues a regulation consistent with the administration’s ideology or policy goals, but the analysis suggests that a different option would lead to substantially greater net benefits, the analysis will feed opposition to the administration’s preferred policy.
As I noted in my comments on the 2023 draft revisions of Circular A-4, such analysis also requires well-trained staff and adequate resources, including access to data and to scholarly research. With the recent massive layoffs of government staff, reductions in agency budgets, reduced collection of statistical data, and decreased funding for academic research, conducting sound analysis will be increasingly difficult.
Second, the Administration’s deregulatory focus may provide additional disincentives for full compliance with the benefit-cost analysis requirements. Historically, agencies have found it more difficult to estimate benefits than costs, as OMB has documented in its reports to Congress. The focus on costs is likely to increase given recent Trump Administration initiatives aimed at reducing regulatory burden. In his first term, President Trump issued Executive Order 13,771, which required that two regulations be eliminated for each one new regulation issued and established a cap on regulatory costs that decreased over time. OMB subsequently issued detailed guidance that addressed requirements for the associated analyses, among other issues. While research suggests that Executive Order 13,771 had limited impact, unsurprisingly it was withdrawn when the Biden Administration took office in 2021.
President Trump recently issued Executive Order 14,192, a more ambitious version of Executive Order 13,771. Executive Order 14,192 requires that 10 regulations be eliminated for each new regulation issued and establishes a more stringent cap on regulatory costs, discussed in detail in associated guidance. Under both the 2017 and the 2025 Trump Administration executive orders, elimination of a range of regulatory and nonregulatory actions may be used to offset new regulations. Many of these actions are not covered by the benefit-cost analysis requirements in Executive Order 12,866.
Thus, although the requirements in Executive Order 12,866 remain in force, they apply to only a subset of the deregulatory and regulatory actions likely to be considered. More importantly, as noted earlier, historically only about half of the major regulations covered by Executive Order 12,866 were accompanied by estimates of both benefits and costs. Given the Trump Administration’s focus on reducing costs, and the significant cuts to regulatory agencies’ staffing and budgets, it is reasonable to expect that the assessment of benefits will decline even further.
Finally, another important initiative is the expansion of requirements for regulatory analysis to independent agencies. In Executive Order 14,215, President Trump expanded the reach of President Clinton’s Executive Order 12,866 to include regulatory agencies that were historically considered independent from White House oversight. Several of these agencies routinely conduct benefit-cost analyses of their regulations, as summarized in OMB’s Annual Reports to Congress, despite not being covered previously by Executive Order 12,866.
In April, OMB issued a memorandum that provides guidance on implementing Executive Order 14,215. It is too early to tell how these requirements will affect the practices of independent agencies, especially considering that they will likely face the same barriers and challenges as the agencies that have long been subject to Executive Order 12,866.
In conclusion, for over 40 years, both Republican and Democratic administrations have subscribed to a cautious approach to regulation, indicating that regulations should only be issued when there is a demonstrated need and when the costs exceed the benefits. But how this philosophy is interpreted and the extent to which it is implemented has varied.
Importantly, as Circular A-4 underscores, agencies “cannot conduct a good regulatory analysis according to a formula;” “conducting high-quality analysis requires competent professional judgment.” The challenge is supporting the development of that judgment. Good analysis demands people, money, and time—all of which will likely be in short supply moving forward.
This essay is part of a series, titled “President Trump’s First 100 Days of Deregulation.”
