On Deregulation, Trump Has Achieved Little
It wasn’t just bluster, either. On January 30, President Trump had issued Executive Order 13771, which requires agencies to remove two old regulations for every new one they issue and, more demandingly, institutes a regulatory budget requiring that each agency impose zero or negative new net costs over the course of the year, with targets set annually. A follow-up order required agencies to have designated regulatory-reform officers charged with ensuring that deregulatory action proceeded. With Trump’s encouragement, Congress used the Congressional Review Act to reverse a smattering of regulations issued at the end of Barack Obama’s second term. And in June, Trump announced that the United States would withdraw from the Paris Climate Agreement.
Regulation became one area where conservatives wary of Trump allowed themselves high hopes. Trump’s experiences as a developer left him with a bone-deep skepticism of regulations. He appointed true believers in the deregulatory cause: Mick Mulvaney at the Office of Management and Budget, Neomi Rao at the Office of Information and Regulatory Affairs (OIRA), Scott Pruitt at the EPA, Ryan Zinke at Interior, and, at Energy, Rick Perry, who had once called for the department’s abolition. Maybe, at least in this one area, the Trump administration could mount a genuine counterrevolution in the name of liberty and common sense.
There have been some real bright spots for deregulators. Many of the Obama administration’s aggressive and legally dubious environmental rules have been stalled or rolled back, including the Waters of the United States rule, Corporate Average Fuel Economy standards for tailpipe emissions, and the Clean Power Plan, which regulated greenhouse-gas emissions from existing power plants. The Endangered Species Act will be interpreted so as to make it less burdensome. Promises to scrap Obamacare may have gone unfulfilled, but the administration has quietly and constructively made the program more flexible for states and individuals. The FDA has sped up its drug-approval process, especially for generics. Agencies’ abuse of regulatory guidance will be better policed, thanks to two recent executive orders.
These triumphs notwithstanding, three years in, hopes of a thoroughgoing overhaul have been dashed. Not because the Trump administration has manifested any unexpected taste for its own regulating — to an unprecedented degree, it has abstained, issuing far fewer new regulations than any of its predecessors. But hitting the pause button, however unusual, does not a revolution make. The hoped-for transformation of the administrative state is nowhere to be found. The administration has continued to speak of its deregulatory efforts as revolutionary, but it has never really pushed a positive vision of what a reformed regulatory system should look like.
The regulatory-budget system coming out of Executive Order 13771 represents the administration’s best try. Certainly, in its own reckoning, OIRA has accomplished a great deal, “unleashing economic freedom” (as a White House press release puts it) by cutting $51 billion in regulatory costs over the program’s first three years. That sounds impressive, until you remember that U.S. gross domestic product is now over $20 trillion annually. Nor does the $51 billion represent cost savings realized annually — it is “net savings” calculated over an indefinite time horizon, with annual savings amounting to a few billion dollars. In 2018, the administration sought to show its relative merit by noting that, through its first two years, the Obama administration had imposed $245 billion in regulatory costs. The Trump administration’s negative $33 billion in costs imposed at that point certainly was a lot less than $245 billion. But the comparison cuts harder in the other direction: The administration is admitting that it is coming nowhere close to reversing the costs imposed even by the Obama administration — let alone the decades of regulatory burdens built up previously.
And the situation is even worse than that, because the administration’s math allows it to take credit for deregulatory policies as soon as they are promulgated, without paying any attention to whether they are carried through. In a great many cases they will not be, since Trump-administration agencies have seen their actions reversed in court at unheard-of levels — by one count, they have prevailed in just four out of 59 cases. Too much winning? Not so much.
Contrary to administration claims, then, it is just not credible to think of the deregulatory activity under Executive Order 13771 as fundamentally transforming anything. The fairest assessment is that America’s regulatory budget is a misbranded good-government reform — not the kind of action often credited to this administration. Numerous European countries and Canada have embarked on their own exercises in clearing out regulatory underbrush and reducing paperwork, and they, too, have made some admirable incremental progress. But none of these efforts is a game-changer. In the United States’ case, given the way that the system established by Trump’s executive order has been advertised as a scourge of the regulatory state, there is a good chance that the next Democratic administration will simply scrap it rather than adjust it to its own needs. That would be politically understandable, if regrettable on the policy merits.
Beyond the regulatory budget, it gets extremely difficult to see in the Trump administration any coherent vision for rolling back or transforming the regulatory state. Whereas enthusiasm for market-based regulation drove efforts during the George W. Bush administration, it is difficult to pick out a unifying strand under Trump. Some might squint and try to discern a kind of industrial policy to go along with the administration’s notably more confident reorientation of American trade policy, but it has been without a signature success in the regulatory realm.
The clearest thrust in this vein was an initiative championed by Rick Perry that ended in utter failure. One of Trump’s clearest campaign promises was to help the beleaguered coal industry. Stalling Obama’s climate policies certainly didn’t hurt, but it quickly became apparent that coal was still losing ground because of market forces and the continued rise of natural gas. Invoking vague national-security concerns about the resilience of America’s power grid, Perry proposed to intervene directly in electricity markets to require purchasing coal and nuclear power at the expense of renewables and natural gas. The first version of that plan was unanimously voted down by the five members of the Federal Energy Regulatory Commission — four of whom were appointed by Trump. A second version was withdrawn in the face of legal and political opposition. The best that can be said of these plans, in retrospect, is that they were abandoned in a timely manner.
Perry, Pruitt, and Zinke were all heralded as swamp-drainers upon their confirmation. But Pruitt will be remembered for his $43,000 soundproof phone booth, Zinke for his questionable land deal with the chairman of Haliburton, and Perry for his foray into Ukrainian shadow diplomacy. Despite official presidential budgets that called for deep cuts for their agencies, the Interior and Energy departments remain just as large as they were in President Obama’s last years. (Perry must have forgotten he meant to axe Energy.) Under Pruitt’s successor, Andrew Wheeler, the EPA’s outlays have been cut back by roughly a tenth, which is impressive. But it is easy enough to imagine each of these departments under the next Democratic administration picking up pretty much where it left off. On the whole, the administrative state remains unbowed.
That shouldn’t be too surprising, considering the Trump administration’s most glaring failure when it comes to deregulating or refashioning the regulatory apparatus: It has made no serious attempt to pass any laws that would keep the next president’s pen and phone in check. The administration was pleased to sign disapproval resolutions passed under the Congressional Review Act, each of which knocked out an Obama-administration rule. But, given that statute’s time limits, that strategy could affect only a limited number of rules of secondary importance. It cheered when a bipartisan coalition managed to reverse some of the Dodd-Frank Act’s most obnoxious features, especially for community banks. But the administration has seldom been a driver of regulatory-reform laws on Capitol Hill.
The 115th Congress took up two major reform statutes. The Regulatory Accountability Act and the Regulations from the Executive in Need of Scrutiny (REINS) Act both passed the Republican House on near-party-line votes. The former would have significantly modified the Administrative Procedure Act (APA), by, among other ways, forcing agencies to develop alternative regulatory strategies and then pursue the least costly one. The latter would have forced Congress to assent to significant regulations before they could become effective, thereby bringing democratic accountability to the closed loop of the bureaucracy.
But neither the administration nor Republican leaders in the Senate made advancing such legislation a priority, and the bills never came anywhere near becoming law. It might have been possible to assemble a coalition of 60 senators by adding red-state Democrats to Republicans, but there was little effort to do so. Deputy Attorney General Jeffrey A. Rosen has recently announced an effort to refocus energy on “modernizing” the APA. But now there is a Democratic House whose focus is, well, elsewhere. It seems vanishingly improbable that 2020 will bring important bipartisan reforms.
And so the administrative state has been more discomfited than deconstructed by the Trump administration. The old order has proven itself more than capable of withstanding this president’s antiregulatory efforts.
Would things be different in a second Trump administration? Attrition of career civil servants unwilling to put in eight years of service under President Trump would certainly be a factor, perhaps making transformation somewhat easier. But outside groups would not stop hauling the administration into court, and there is little reason to think that future Congresses are any more likely to pass far-reaching reform legislation than were the Republican majorities in Trump’s first two years. 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.