On Balance: Trump’s Deregulatory Record

Keith Belton,Manufacturing Policy Initiative in the School of Public and Environmental Affairs (SPEA), Indiana University John Graham, Indiana University School of Public and Environmental Affairs

May 15, 2019

By: Keith B. Belton and John D. Graham

In his campaign for the US presidency, candidate Donald Trump advocated widespread deregulation of the US economy. Upon taking office, President Trump quickly issued policies to fulfill his campaign promises. Midway through his term, it is fair to ask: Is deregulation being accomplished?

To answer this question, we recently completed a study of the Trump deregulatory record at the two-year mark (Belton and Graham 2019). We interviewed dozens of regulatory experts, reviewed the literature, searched regulatory databases, and conducted original analysis. We deliberately chose not to take a position on whether deregulation is in itself good or bad, but rather to focus on whether the Trump Administration has been effective in deregulation.

Our final report, “Trump’s Deregulatory Record,” which was sponsored by the American Council for Capital Formation, includes several findings, including the following:

  • The flow of new regulations under the Donald Trump administration has been much smaller than observed during the Barack Obama and George W. Bush administrations after 23 months in office. The total number of regulations is 40% less than that under his two predecessors. For major rules, the Trump Administration issued 81 compared to Bush’s 102 and Obama’s 173.
  • The Trump administration has been somewhat effective in working with Congress on legislative acts of deregulation. This includes (1) sixteen enacted resolutions of disapproval of particular rules and (2) deregulatory efforts within major pieces of legislation (e.g., repeal of the ACA individual mandate as part of the tax reform law).
  • Progress toward reviewing and removing the huge body of existing regulations has been slow, though there are 243 completed deregulatory rulemakings. 

Most relevant to cost-benefit analysis is (1) our finding on judicial review and (2) our discussion of the Trump “2 for 1” executive order, a novel reform idea (Belton, Krutilla, and Graham 2017) that requires the elimination of two rules for every issuance of a new rule.

New regulations, including deregulatory actions, are often challenged for their legality, requiring judicial review. On judicial review, there are early signs that Trump’s deregulatory agenda is in trouble. The proportion of judicial losses (28 out of 30 cases according to one database) is much higher than what would otherwise be expected, according to legal experts.

After reviewing these judicial decisions, we identified three overarching legal vulnerabilities for Trump’s deregulatory initiatives—including insufficient attention to the construction of an administrative record with factual findings that can support deregulation. Weaknesses in the administrative record may be particularly serious in some of the deregulatory rulemakings related to energy and the environment. Like smart regulation, smart deregulation includes careful consideration of the societal consequences on both sides of the cost-benefit ledger.

When he became President, Donald Trump issued Executive Order 13771, which required each covered federal agency to eliminate two existing regulations for every new regulation, known as the “2 for 1” executive order. This policy, in our opinion, may have much less impact than proponents hoped for (reducing the stock of existing regulations), but also much less impact than opponents feared (the elimination of rules with large net benefits). That is because the political appointees in the Trump Administration are not eager to adopt new regulations, especially ones that would impose additional costs on businesses, non-profit organizations, and state and local governments.

Unless new regulations are envisioned, the new process does not generate much incentive for agencies to seek out and find regulations that can be eliminated. The concept of regulatory budgeting is more likely to have impact when an administration has substantial ambitions for new regulations but also recognizes the need for some housekeeping with the existing body of regulations, as the Cameron government did in the United Kingdom (Rosen and Callanan 2014).

Our report is consistent with the view that benefit-cost analysis should continue to play a critical role in the management of federal regulation, and that those who favor deregulation ought to be particularly supportive of retrospective review. Deregulatory actions should be scrutinized ex ante from a cost-benefit perspective, and should be evaluated ex post to determine what the results were.

Keith B. Belton is Director of the Manufacturing Policy Initiative at Indiana University’s School of Public and Environmental Affairs. Previously, he served as a government relations executive in the manufacturing sector and as a policy analyst with the Office of Management and Budget. He holds a Ph.D. in public policy from the George Washington University.
 
John Graham is Dean of the Indiana University School of Public and Environmental Affairs (SPEA), from 2001 to 2006 Dr. Graham served as the Senate-confirmed administrator of the Office of Information and Regulatory Affairs in the U.S. Office of Management and Budget. In this capacity, he was responsible for federal regulatory, information and statistical policies. He holds a BA degree (politics and economics) from Wake Forest University, an MA degree (public affairs) from Duke University and a Ph.D. degree (public affairs) from Carnegie-Mellon University.
 
References
  • Keith B. Belton and John D. Graham. Trump’s Deregulatory Record: An Assessment at the Two-Year Mark. American Council for Capital Formation. Washington, DC. March 2019.
  • Keith B. Belton, Kerry Krutilla, John D. Graham. Regulatory Reform in the Trump Era. Public Administration Review. 77(5). September/October 2017, 643-644.
  • Jeffrey A. Rosen and Brian Callanan, The Regulatory Budget Revisited, Administrative Law Review, 66 (4). Fall 2014. 835-860.