The Trump administration’s efforts to relieve American businesses of regulatory burden that can stifle economic growth have led to a year of record-breaking deregulation, while experts say there is more to be done.
According to Clyde Wayne Crews, a regulation expert and policy vice president at the Competitive Enterprise Institute, the Federal Register published 2,964 final rules.
“This is the lowest count since records started being kept in the mid-1970s,” he wrote in Forbes.
“It is a notable achievement that all three of the lowest-ever annual rule counts belong to Trump. This an even more significant development given that some of Trump’s ‘rules’ are rules written to get rid of or replace other rules,” he noted.
Key to President Donald Trump’s drive to slash red tape was Executive Order 13771, which forces agencies to cut two old regulations for every new one issued. The order, issued on Jan. 30, 2017, also imposed a regulatory budget requiring that each agency impose zero or negative new net costs.
“It is important that for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process,” Trump noted in the order.
Philip Wallach, a senior fellow at the R Street Institute, argued in an op-ed for the National Review that despite the deregulatory efforts of the administration, more remains to be done.
“The old order has proven itself more than capable of withstanding this president’s antiregulatory efforts,” Wallach wrote. “Given three years of experience under Trump, those of us who wish to see America’s administrative state brought to heel must recognize what a long and difficult slog awaits us.”
Some of the gains from the early aggressive efforts on the part of the administration to cut red tape have seen a slight reversal, which experts blame on trade barriers.
Ryan Young of the Competitive Enterprise Institute said that there were 2,106 proposed regulations in 2019, which, while close to the 2,072 proposed regulations in 2018, is nearly 15 percent higher than the Trump administration’s first-year figure of 1,837 proposed regulations in 2017.
“The general story the numbers tell is that the Trump administration has been steadily increasing its pace of regulatory activity,” Young said, blaming the rise on regulations imposed by trade agreements.
“Deregulatory efforts will likely continue in 2020, but will likely to be more than offset by regulatory increases elsewhere,” Crews said. “Trade barriers have more than doubled since 2017. While the USMCA trade agreement will keep tariffs against Canada and Mexico in check, it contains substantial new regulatory burdens and non-tariff trade barriers. Upcoming agreements with China, the United Kingdom, and the European Union, if these happen, due to USMCA’s precedent, they will also likely contain substantial new regulatory burdens.”
‘Ten Thousand Commandments’
Crews compiles Ten Thousand Commandments, an annual review of the size, scope, and cost of federal regulations, which he calls a “large and unappreciated hidden tax.”
“The estimated $1.9 trillion “hidden tax” of regulation is greater than the corporate and personal income taxes combined,” Crews noted in an introduction to the 2019 edition of the review. “If the cost of federal regulations were a country, it would be the ninth largest, behind India and just ahead of Canada.”
The survey also aims to asses the regulatory impact on American businesses and consumers, as well as the overall U.S. economy.
“Each U.S. household’s estimated regulatory burden is at least $14,615 annually on average. That amounts to 20 percent of the average pre-tax household budget and exceeds every item in that budget, except housing,” Crews writes in the report.
The policy expert called Trump’s deregulation drive “the most aggressive effort at regulatory reform in over a quarter century.”
“Policymakers frequently propose spending stimulus as a way to grow economies,” he says in the report. “It rarely goes well. A regulatory liberalization stimulus, on the other hand, can offer confidence and certainty for businesses and entrepreneurs.”
‘One of the Four Points of the Economic Compass’
White House trade adviser Peter Navarro argues the administration’s deregulation drive is one of the factors propelling stock markets to record highs.
The Dow Jones closed at 28,538.44 points on Dec. 31, according to Yahoo Finance figures, which is 53.3 percent higher than on Nov. 9, 2016, the day after Trump was elected.
On Dec. 31, on CNBC’s Squawkbox, Navarro reiterated the reasoning behind his predictions for a bullish stock market run in the wake of Trump’s election.
“With your prediction back then, you gave four main tenets of what was going to cause that on Nov. 9. Do you remember the four that you said?” the host asked Navarro.
“Indeed I do. Four points of the economic compass: deregulation, tax cuts, the unleashing of our energy sector, and fair and reciprocal trade. And bingo, the president did it,” the trade adviser said.
Navarro then went on to predict that the Dow would hit 32,000 in 2020.
“It’s going to be the roaring 2020s next year,” he said.
‘Cut 8-and-a-Half Regulations for Every New Rule’
In remarks on Dec. 6 at a Roundtable on Small Business and Red Tape Reduction Accomplishments, Trump credited the deregulation drive for stock market expansion.
“And very big, I think, is the regulation cuts,” Trump said. “Because even before we were able to get the tax cuts so successfully from Congress, we started cutting regulations immediately, and that had a big impact. And that’s why we went up so much between the election victory. So you’d say, really, from Nov. 9, the day after the election, up until Jan. 20, the Inauguration, the stock markets and jobs went—literally, went through the roof.”
“Under the president’s leadership, the administration has cut eight-and-a-half regulations for every new rule, far exceeding his promise to cut two regulations for every new one,” the White House said in a statement.
“We are now reducing the size, scope, and cost of federal regulations for the first time in decades, and we are already seeing the incredible results,” Trump said.