Trump Brags About Deregulation, but a Huge Number of His Deregulatory Actions Were Started Under Obama
Trump has slowed new regulations to a trickle, but has largely failed to cut back the regulatory state.
President Donald Trump likes to brag about his record of cutting regulations. Yet new data from his own administration suggest that the rules he's managed to eliminate have had a minor impact at best—and many began under the Obama administration.
That doesn't mean that Trump's deregulatory agenda is a myth, as some critics have claimed, but it does show the limitations of what any one administration can do unilaterally to pare back the administrative state.
"No president has ever cut so many regulations in their entire term, O.K., as we have cut in less than a year," said Trump at the Conservative Political Action Conference in February.
"Regulatory reform is a cornerstone of President Trump's agenda for economic growth," wrote his regulatory czar Neomi Rao in October 2018. "The first two years of the Administration have produced unparalleled reform, and we project even more significant results in the coming year."
Reports from the administration tout its success repealing 22 rules for every regulation passed, or its elimination of thousands of pages from the federal register. Reason has reported on the number of libertarian-friendly policy wonks the president has appointed to prominent positions.
Yet according to Stuart Shapiro, a professor at Rutgers University and regulatory policy analyst in the Clinton and Bush administrations, this all doesn't amount to much of a policy change.
"Claims of both extensive deregulation and a major impact on the economy weaken considerably upon closer scrutiny," Shapiro wrote in Regulatory Review yesterday.
In Fiscal Year 2018, the Trump administration chalked up 176 deregulatory actions. This includes everything from allowing more telemedicine at the Veterans Administration to repealing animal welfare regulations for organically farmed cows and chickens.
Of these, 57 were rated significant—meaning their repeal saved the economy over $100 million, or was a major change from previous policy.
On the flip side, the administration took 14 regulatory actions, all of which were significant. That gives Trump a 12-1 ratio of deregulatory to regulatory actions, or a 4-1 ratio of significant deregulatory actions compared to regulatory actions.
On paper that sounds pretty good. But as Shapiro points out, the numbers obscure the middling impact a lot of these rule changes have had.
Of the 57 significant rules Trump eliminated, 11 were merely delayed, and another five were withdrawn—meaning the rules were not in effect in the first place. Four deregulatory actions were initiated by the Obama administration.
Of the remaining 37 regulations, Shapiro notes, the cost savings are either negligible or unreported. The 21 deregulatory actions that did come with measurable cost savings saved some $23 billion in net regulatory costs, or about $1.6 billion in regulatory costs per year. That's something, but, notes Shapiro, not much when compared to the $20 trillion U.S. economy.
Looking back at past tallies of Trump's deregulatory actions shows a similar pattern.
The federal government releases a report on regulatory actions twice yearly, one for the spring and fall. Looking at the 142 deregulatory actions taken from the Spring 2017 report up through the Spring 2018 report, Reason found that 44—or nearly a third—were initiated by the Obama administration.
Interestingly, a good chunk of these Obama-initiated rule changes involved loosening restrictions on imported fruits and vegetables, something at odds with Trump's more protectionist trade agenda, which has imposed tarrifs on a whole host of imported foods.
Another 41 rules were either delays or withdrawals of pending rules, meaning while some rules were stopped from going into effect, no existing rules were taken off the books.
Of the deregulatory actions Trump did initiate that were changes to existing rules, many were minor.
One deregulatory action counted by the Trump administration was the elimination of Department of Education rules governing the Troops-to-Teachers grant program, which subsidizes veterans who are pursuing teacher's certification. The program still exists, but now it is administered by the Department of Defense.
The story is similar with the administration's repeal of rules for a Department of Commerce program that gave grants to local governments setting up TV and radio stations. The Trump administration axed these rules in September 2017, about six years after funding for the program had been discontinued.
In one interesting example from earlier this year, the Department of Labor counted as a deregulatory action the changing of the mailing address for its Benefits Review Board.
In another supposedly deregulatory move, the Trump administration compiled all the Department of Agriculture's import restrictions on plants into one "Plants for Planting" manual, without changing any of the underlying rules.
Even some of the truly significant changes the administration likes to talk up are not the result of Trump's deregulatory drive, but were rather policies that had been in the works for years, and that the Trump administration just happened to be in office for when they came into effect.
Take fishing regulations. In its Fiscal Year 2018 regulatory report, "Cutting Red Tape, Unleashing Economic Freedom," the administration included a whole section on "freeing America's fisherman" which notes that "large areas off the coast of New England have been opened to commercial sea scalloping for the first time in year," a move that is supposed to produce $654 million in economic benefits.
The change the report is referring to is known as the Omnibus Habitat Amendment 2 (OHA 2), which did indeed open up new fishing grounds for the commercial fishing industry.
Missing from the "Cutting Red Tape" report is the fact that most of the deregulatory changes included in OHA 2 had actually been recommendations from the New England Fisheries Management Council, which had been working on an update to federal law since at least 2004.
"As thrilled as we were that OHA was implemented, I think that was more of a staff determination after years of review. I don't think I could call that something that came from the oval office or from the cabinet," says Bob Vanasse, executive director for Saving Seafood, the media relations arm of the commercial fishing industry.
This kind of puffery has led Shapiro to treat Trump's deregulatory drive as essentially meaningless. He's been joined by other critics of the administration like Washington Post's columnist Jennifer Rubin, who has called Trump's deregulation "a myth."
As much as the administration deserves criticism for its inflated stats however, writing off Trump's deregulation is a bit premature.
For starters, it misses the more informal character of relations between federal regulators and the industries they are tasked with creating rules for.
"There's no question that the people that President Trump has appointed are far more business friendly, and far more willing to listen to the concerns of people in industry," Vanasse tells Reason, which he says is a significant when it comes to developing and implementing policy.
The Obama administration he says, was far more interested in going it alone: "[Their] ideas were cooked up at the Center for American Progress and they were going to happen no matter what. It was a roadshow."
When assessing the Trump administration's record on deregulation, it's important to look at the rules that are not getting proposed, in addition to those being repealed or replaced.
"There are a few elements to trying to deregulate. One is just slowing down what is happening. The second is getting rid of what's come before," says Clyde Wayne Crews, a regulatory scholar with the Competitive Enterprise Institute. "In terms of stopping the flow, Trump, I thought did a magnificent job."
In its final year, the Obama administration issued 83 economically significant regulations. In its first year, the Trump administration issued just four.
Crews says that there are limits to how much regulation any president can repeal unilaterally. Going after bigger regulatory fish inevitably leads to litigation from supporters of the old rules.
"For the rules that were in place and subject to rapid modification, Trump has done that," Crews tells Reason. "Now that he tries to go after the larger items like the Clean Power Plan or the Waters of the United States rules… it gets tougher and you have to go through brand new regulatory proceedings. And then what happens is all of the lawsuit flurries start."
There are some Congressional regulatory reform efforts that would give the president more power to unilaterally get rid of more rules, or restrict the powers of agencies to issue new rules.
Some of these, like the Regulatory Accountability Act—which would allow parties affected by major new regulations to propose alternatives, and then require agencies to adopt the most cost-effective alternatives—managed to pass the House but has stalled in the Senate.
There is almost no legislative appetite for deeper reform, like eliminating the federal departments all these rules are coming out of.
The Trump administration is definitely inflating the count of its deregulatory actions—taking credit for rule changes it did not start, or which have minimal effect at best—in order to promote itself as some sort of red tape-slashing, bold reformer.
That said, those who feel the brunt of federal regulation do report a far better working relationship with the federal government, and the flow of new rules has slowed to a trickle.
In short, there are few significant wins for human freedom or economic liberalization in Trump's deregulation record. But his administration has gotten rid of a few dumb rules, made compliance with a few others more managable, and limited the pace at which the regulatory state is adding new restrictions. That ultimately adds up to the economy getting less free at a slower pace. In this political climate, that is probably the best we can hope for.