Every new president, dating back to Jimmy Carter, has promised to cut regulations. Even President Obama’s executive orders on improving the regulatory process and cutting red tape sounded impressive when they were issued. That was before six of the seven all-time-high years for pages of federal regulations occurred during his tenure.
Four decades of nonstop growth in federal regulation show that tackling Washington’s bureaucracy is tougher than it sounds. The U.S. Code of Federal Regulations is more than 175,000 pages long, having grown steadily since the 1970s. Federal regulations aren’t just words on a page; these pages contain more than one million commandments from Washington in the form of restrictive words such as “must,” “cannot,” or “shall.”
But based on President Trump’s first 100 days, there is reason for optimism that this trend is about to change.
President Trump has already issued two executive orders on regulatory reform. They sent a message to executive agencies: Regulatory restrictions on businesses will not be able to keep growing on autopilot.
Trump’s hiring freeze will also help lower the rate of new regulations. As research from the Mercatus Center has shown, there is a high correlation between the number of employees at an agency and the number of regulations issued by that agency. President Trump has also taken advantage of the Congressional Review Act, which gives Congress the power to overturn recently finalized regulations through a simple majority vote. So far, he has signed at least 13 such repeals. Previously, this tool had been successfully used only once in its 20-year history.
Though President Trump’s lofty promise to cut regulation by “by 75 percent, maybe more” is likely unattainable, simply halting the growth in federal regulations would be a massive achievement. And the president has many methods available to him to accomplish this.
Moving into the next phase of his first term, there are three main legislative solutions that President Trump can use to follow through on his promises to cut regulation. These solutions address the accumulation of old regulations, the creation of costly new regulations, and the lack of public participation in the regulatory process.
First, the Trump Administration needs to get rid of outdated, ineffective regulations.
If President Trump decides to capitalize on his reputation as a deal maker, an innovative idea from the center-left Progressive Policy Institute would address regulatory accumulation. Both the Regulatory Improvement Act and the SCRUB Act create a “Regulatory Improvement Commission” to come up with a package of older regulations to eliminate that would then go through Congress for an up-or-down vote. Focusing on older regulations would take some of the politics out of regulatory reform, and voting on a large package in this way would limit the ability of established interests to interfere with the process.
Because figuring out what regulations to cut requires weighing costs and benefits, addressing regulatory accumulation also requires that proposed federal regulations undergo basic cost-benefit analyses. Currently, most regulations coming from Washington are never subjected to this commonsense test.
For example, in 2014, only 16 of the more than 3,500 rules published in the Federal Register had cost analyses. This problem is not a recent phenomenon — since 2001, fewer than three out of every 1,000 regulations have had an accompanying cost-benefit analysis. The resulting lack of information creates an incomplete picture of the total regulatory burden on the economy.
In 2014, only 16 of the more than 3,500 rules published in the Federal Register had cost analyses.
Second, the Trump administration must slow the nonstop growth in new, costly regulations.
While a regulatory improvement commission would help lower the economic drag from decades of regulatory accumulation, more needs to be done to reverse the destructive effects that the autopilot nature of federal regulation has on the economy. The Competitive Enterprise Institute’s Wayne Crews estimates that federal regulations cost the economy $1.9 trillion each year, which is larger than Canada’s entire economy and comes out to about $15,000 per U.S. household. The Trump administration could begin to turn the tide by supporting the REINS Act.
Under the REINS Act, Congress would have to voice approval within 70 days if a major regulation with more than $100 million in annual economic costs is to take effect. This would invert the current system, under which regulations take effect unless Congress takes the time to stop them. Because of this dynamic, there have been 29 times more regulations issued by agencies than laws passed by Congress since 2009. The REINS Act has overwhelming support from Republicans, and it has already passed the House. President Trump could have a chance to sign it into law before the year is over.
Finally, the Trump administration can infuse unprecedented transparency into the regulatory process.
To further strengthen his opposition to runaway executive-agency powers, President Trump can encourage Congress to consider legislation such as the Regulatory Predictability for Business Growth Act, which was introduced in 2015 but did not pass. This bill would require agency interpretations that are in effect for longer than a year to go through the general notice and comment provisions required under the Administrative Procedure Act.
Administrators’ interpretations are meant only to provide guidance for complying with existing regulations. For this reason, they are exempt from the full regulatory-review process required under the Administrative Procedure Act. Yet agencies have increasingly used blog posts, press conferences, and guidance documents to substantially alter the meaning of existing regulations.
Returning agency interpretation to its proper role as guidance rather than lawmaking would help reintroduce public participation and openness into the regulatory process. And, as with the other legislative reforms, this change will last long after Trump’s presidency is over, cemented as part of his legacy.
Excessive regulation holds back the United States’ economic potential. President Trump understands that dramatic reforms to the regulatory state are needed to overcome the era of 2 percent economic growth that he inherited. Thankfully, there are many legislative and executive options that he can take to fulfill his promise to restore sanity to the federal regulatory process. Lasting success will take far longer than 100 days, but President Trump is off to a promising start.
— Jared Meyer is a senior research fellow at the Foundation for Government Accountability.