Trump Administration Finds That Deregulation Is Getting Harder and Harder
Writing at the Washington Post, economics columnist Robert J. Samuelson considers the president’s track record on his deregulatory agenda and sees slower progress ahead. First, though, he notes several successes of deregulation:
Some regulatory cutbacks are well-known. The administration decided to pull out of the Paris climate accord; Congress modified the Dodd-Frank financial services legislation (one change: The definition of “systemically important” bank, subject to more scrutiny, was raised from $50 billion in assets to $250 billion, exempting 32 banks); the Methane and Waste Prevention Rule, which set limits on gas flaring, was repealed.
It’s also true that the number of new economically significant regulations has slowed appreciably, according to a new study by Andrew Hunter of Capital Economics, a forecasting and consulting firm. In Trump’s first term, 98 have been finalized, well below President Barack Obama’s 175 total for the same period of his administration. (An economically significant change is judged to have an annual effect on the economy of at least $100 million.)
There were some apparent successes. The National Federation of Independent Business (NFIB), a lobbying group for small and medium-size firms, reported that the share of its members “saying red tape is the single biggest problem” dropped from about 20 percent, when Trump was elected, to 12 percent now.
That’s a big change in public perception within a group that pays close attention to the burdens of government regulation, which is perhaps President Trump’s biggest achievement to date. Samuelson observes, however, that by at least one measure, the federal government’s regulatory regime hasn’t diminished all that much:
For starters, the size of the regulatory complex stayed roughly the same, Hunter reported. The number of pages in the Code of Federal Regulations — one standard indicator of the size of the regulatory state — barely budged. It was 185,434 in 2018, down less than 1 percent from the 186,374 in 2017.
That meager result is a consequence of the administration’s strategy of focusing first on the regulation tree’s low-hanging fruit. By focusing on restricting the growth of new regulations, the administration has not been able to dismantle the much larger body of existing regulations. Addressing those regulations will require considerably more effort, as Samuelson notes, which will also require building up public support for the regulatory reforms:
Where there does seem to be consensus is the difficulty of abolishing existing regulations. The stability of the regulatory state reflects many factors. One is the law. “The process for repealing or amending federal regulations is lengthy, requiring detailed analysis, reviews and public comment periods,” Hunter noted. Another is popularity. Despite much anti-regulatory rhetoric, there is broad support for agencies overseeing the environment, securities markets, drugs, new vehicles — and much more. Americans don’t want “free market” forces to settle all controversial questions; but neither do they want the economy to be paralyzed by waves of bureaucratic reports and mandates.
Those aren’t necessarily unreasonable concerns on the part of the public, large portions of which will be happy if President Trump’s deregulatory efforts going forward strike a balance among all interests, rather than becoming some kind of free-wheeling exercise in deregulation that benefits only a handful of the president’s political supporters.
The latter path, we must keep in mind, is how we got so many costly and burdensome rules and restrictions on the books in the first place, as previous administrations let the regulatory pendulum swung too far in favor of special interests who benefited from the imposition of restrictions that help them, such as by disproportionately harming their competitive rivals in the marketplace.
If you need an example of a regulation having this type of disproportionate, anti-competitive impact, consider that California’s controversial AB5 law was cut from exactly that sort of regulatory heavy cloth.