No, Donald Trump Did Not 'Shrink' Government
Annual federal spending grew by $940 billion under his signature, even before the coronavirus.
Early in Wednesday night's Republican National Convention broadcast, South Dakota Gov. Kristi Noem reeled off a list of reasons she thinks voters should reward President Donald Trump with a second term. Among them: "He shrunk government."
Alas, that statement isn't close to being true.
The most traditional way to measure the size of government is to count how much money it spends. In Barack Obama's last full fiscal year of 2016 (covering, as fiscal years do, the period from October 1 the previous year to September 30 of the annum in question), the federal government spent $3.85 trillion—$2.43 trillion on "mandatory" items (Social Security, Medicare, Medicaid, etc.), $1.16 trillion on discretionary outlays (more than half of which went to the Pentagon), and $230 billion on debt service. (I'm using here numbers compiled by The Balance, which differ slightly from those of the Congressional Budget Office but are broken out in more detail.)
In fiscal year 2020, before the coronavirus pandemic triggered a record amount of spending, the federal government was on course to cough up $4.79 trillion—$2.98 trillion mandatory, $1.44 trillion discretionary, and $380 billion in interest.
So under Trump's signature, before any true crisis hit, the annual price tag of government went up by $937 billion in less than four years—more than the $870 billion price hike Obama produced in an eight-year span that included a massive federal response to a financial meltdown.
Ah, comes the inevitable rejoinder, but it's Congress that has the power of the purse! Quite so. And that Congress was controlled by the president's political party for 54 percent of his tenure, during which time Republicans jointly agreed through a series of continuing resolutions and must-pass, little-read "omnibus" packages to lift Obama-era spending caps, wave away the debt ceiling limit on federal borrowing, and fulfill Trump's campaign pledge to "save," rather than reform, old-age entitlement programs.
Trump came into office promising to "prime the pump" at the tail end of a historically long economic expansion and stock market bull run, rather than use the opportunity of comparative prosperity to prepare for a rainy day and/or address the long-term fiscal unsustainability that the government's own economists have been warning about for well over a decade. Any case that he has been shrinking government must lie elsewhere.
So how about executive branch employment? According to the St. Louis Fed, crunching numbers from the Bureau of Labor Statistics, Trump inherited a civilian workforce of 2.815 million and kept that basically flat until it started rising around last July, presumably because the 2020 Census started to jack the number northward. No cuts.
In a March report, the Office of Personnel Management (OPM) and Office of Management and Budget (OMB) produced similar numbers—essentially flat executive branch employment, very mild growth, and expected 2020 uptick. No cuts.
That leaves us with Trump's best case: Did he cut the regulatory state?
Not according to our friends at the Competitive Enterprise Institute (CEI), a free-market think tank that seeks the reform of the administrative state. CEI produces a valuable annual survey each spring titled Ten Thousand Commandments, which attempts to measure the number, scope, trajectory, and economic impact of Washington's regulatory apparatus.
Here are that report's estimates over the past five years across five categories: overall cost of regulations on the economy, amount of money spent by the federal government to administer the regulatory state, number of new economically significant regulations (with an annual impact of $100 million-plus), the ratio of regulations made to laws enacted (dubbed the "Unconstitutionality Index"), and the number of final rules in the Federal Register.
2015: $1.885 trillion economic impact ($14,832 per household), $63 billion in administration costs, 3,410 final new rules, 30 regulatory rules per law, 61 economically significant rules, 80,260 pages in the Federal Register.
2016: $1.9 trillion impact ($14,809 per household), $63 billion administration, 3,853 new rules, 18 rules per law, 83 economically significant rules, 95,894 Federal Register pages.
2017: $1.9 trillion impact ($14,666 per household), $66 billion administration, 3,281 new rules, 34 rules per law, 68 economically significant rules, 61,308 Federal Register pages.
2018: $1.9 trillion impact (now called a "placeholder estimate," due to the "limited available federal government data and reports…and the illegal neglect on the part of the federal government to provide a regularly updated estimate of the aggregate costs of regulation"), $71 billion administration, 3,368 rules, 11 rules per law, 35 economically significant rules, 63,645 Federal Register pages.
2019: $1.9 trillion placeholder estimated impact, 2,964 new rules ("the lowest count since records began being kept in the 1970s"), $72 billion administration, 28 rules per law, 70 economically significant rules, 70,938 Federal Register pages.
So: Estimated regulatory costs are flat, not shrunk (though the per capita amount is slightly lower), and administrative costs are slightly higher. The two metrics that are noticeably down are the number of pages in the Federal Register (a somewhat symbolic measure) and the annual growth in regulations.
The aggregate total of regulations issued since 1976 (when the Federal Register began itemizing them) has increased from 195,189 at the end of Obama's tenure to 204,802 now.
The Trump administration, as I have documented in the past, has taken more concrete deregulatory steps than any presidency since Ronald Reagan's. But that doesn't mean he has "shrunk" the regulatory state.
More worrying, there have been many signs in the past two years that the president is going to overwhelm any modest deregulatory victories with an increasingly interventionist industrial policy. CEI, which has been somewhat rosier toward the 45th president than I have, sounded some ominous warnings in its annual report this May. "Trump cuts," the authors observe. "But Trump also adds":
Trump sports regulatory impulses of his own that could derail or even eclipse the rollback agenda not just in 2020 but for years beyond….Trump's proclivity for trade restrictions and his ad hoc zeal for antitrust and media regulation (such as swipes at Amazon and the AT&T–Time Warner merger) are well known. There are additional less well-known warning signs of regulatory initiatives that have emerged or heightened during the Trump tenure, such as the president's approval of a permanent reauthorization of the Land and Water Conservation Fund, and his boasting of "the largest public lands package in a decade, designating 1.3 million acres…of new wilderness" for a federal government that already owns a large portion of the continent….
Trump's own regulatory impulses have become the most pertinent concern, particularly where he exhibits substantial agreement with regulatory advocates on issues such as antitrust policy, regulatory action against tech firms and traditional media companies, and industrial and social policy.
Much more in that vein at this link.
You can argue plausibly that Joe Biden and the Democratic Party will grow the government more. But the fact is, the guy railing against socialism night after night this week has grown spending faster than his predecessor and shown considerably less interest in confronting the entitlement bomb, all while cutting neither the federal workforce nor the size of the regulatory state.
There's only one presidential candidate campaigning every day to shrink government. It's certainly not the Republican.