When he was running for president in 2016, Donald Trump promised he would be “cutting regulation at a tremendous clip. I would say 70 percent of regulations can go.” Did he do it?
My short piece in the current issue of Regulation compares two series of aggregate data on the total stock of federal regulations. They give very a similar picture (see the actual article for a revealing chart). My conclusion (in which the “restrictions” are those found in the Code of Federal Regulations by QuantGov):
These data help us evaluate Trump’s claim to be a deregulator. Both indicators show a rough plateauing of the upward trend, with a very small increase between the last year of Barack Obama’s administration (2016) and the last year of Trump’s (2020). Between these landmark years, the number of pages in the CFR increased 0.8 percent (to 186,645), as did the number of restrictions (to 1,083,001). According to both series, then, the net effect (new regulations, including deregulatory rules, minus abrogated or simplified ones) of the Trump administration has not been deregulation but, at best, a plateau in the upward historical trend. At best, 0 percent of federal regulation did “go,” to use Trump’s expression.
READER COMMENTS
Andrew_FL
Jan 9 2024 at 1:09pm
It seems that the pace of “economically significant” regulations picked up dramatically in Trump’s last year as President. Of course anyone who remembers 2020 will not find this surprising.
Pierre Lemieux
Jan 9 2024 at 2:52pm
Andrew: Do you mean that the federal government was not powerful enough in 2020 and that it obviously needed more power? Or that many people including Trump thought so?
Andrew_FL
Jan 9 2024 at 4:08pm
The latter, but I meant that it was quite apparent in 2020 even if you weren’t paying attention very closely that new regulations were exploding.
steve
Jan 9 2024 at 5:49pm
Your article is interesting. It shows that with every president back to Reagan they all pass more “economically significant” regs in their last year of office, even Reagan though his increase was less. It looks as though Trump had a larger increase than normal but about half of that would just be putting him in line with others. The article cites the actual number of new rule going into the Register each year. Of note, that number has dropped steadily since 1995. It is lower for Trump but just on trend and not a big drop.
It’s harder to do but I wish people would look at what rules/regs are done away with. I think Pethoukis (sp?) did this early in Trump’s presidency and found that what was being deregulated was stuff that would most benefit his large financial supporters.
Steve
Vivian Darkbloom
Jan 10 2024 at 7:43am
I don’t think that the number of pages in the Federal Register or the number of “wills” and “shalls” are very accurate indicators as to whether the “regulatory state” has increased or decreased in impact. There is probably not any methodology that is going to capture the overall regulatory effect with any precision; however, I think this Congressional Research Service paper is quite useful for anyone wanting to try:
https://sgp.fas.org/crs/misc/R43056.pdf
For what it’s worth, it appears from the various statistics mentioned in the Tables of that paper suggest that there was indeed a significant difference between Trump and his predecesors during the first two years of the former’s term of office.
From my own experience, not all “regulations” pose additional restrictions or burdens. Many, if not most, are interpretive rather than legislative in nature (that distinction is often difficult to parse in some cases). For example, if the IRS issues a new or proposed “regulation” that contains numerous practical examples as to how they interpret the Internal Revenue Code, that additional guidance is usually more helpful than harmful even if it adds a few more pages to the Federal Register.
Pierre Lemieux
Jan 12 2024 at 10:42am
Vivian: Note that the two series I used give an estimate of the stock, not the flow, of regulation every year (from the Code of Federal Regulations, not the Federal Register).
Craig
Jan 11 2024 at 10:55am
This article got me to thinking about how much of the economy is simply doing things that are required by regulation but which wouldn’t be done but for the regulations. My thoughts turned to South FL where hurricane insurance premiums are rising because inflation has made the cost of buildings thing nominally much more expensive. I am not at 9k per year and to a certain extent that makes sense because its not a question of if it really is a question of when with respect to when the hurricane comes, I suppose.
In any event the story of the three little pigs comes to mind because the prepared pig buys a brick home and the wolf blows away the straw and wood homes. Of course the story is presented in a way that the pig who chose brick made the correct decision. Indeed, that could be, but Dade County regulations demand that structures are built as little cinder block bunkers, complete with expensive terra cotta roofs (which might be local zoning), etc.
And the premiums still increase so my thoughts turned to whether it might actually make more sense, not to build it better, but to build more cheaply built disposable homes that you don’t even bother to insure at all. That option doesn’t exist.
Craig
Jan 12 2024 at 10:48am
Oh, those halcyon days of the 1950s! Indeed, many do have nostalgia for that era. If a car lasted 100k miles, you were lucky. If YOU lasted 70 years you were lucky. Indeed we’ll overlook the 3 recessions from 1949-1960 and the Korean War. Check out the Honeymooners sometime. My grandparents grew up in those kinds of buildings, indeed I lived in one as an infant. Its when one looks at pictures from the past, then all of a sudden things look alot better. There’s been more progress in the last 80 years than many might realize.
robc
Jan 12 2024 at 12:55pm
The Seen and the unseen.
We see the progress since the 50s. We see the regulations added since the 50s.
What we don’t see is the progress that we would have had if it hadn’t been for the regulations. Maybe it would have even been less? Or maybe a lot more?
Either way, Bastiat was a genius.
Pierre Lemieux
Jan 12 2024 at 2:58pm
Craig (and robc): Recall my post “Some Questions on the Intriguing Twentieth Century,” to which you actually contributed.
Craig
Jan 12 2024 at 4:13pm
Sorry meant to pist this to Sumner’s artucle. I apologize!
robc
Jan 12 2024 at 6:08pm
That makes more sense, as I was trying to connect your comment to this article.
Warren Platts
Jan 12 2024 at 4:53pm
Pierre, your article if very unfair. The proper measure should be regulatory cost increases or decreases. Under Trump, regulatory costs decreased significantly. If you want to get mad at someone, get mad at Biden who has vastly increased regulatory costs. From Casey Mulligan’s latest report:
Pierre Lemieux
Jan 12 2024 at 9:18pm
Warren: I don’t think you are right. Although Mulligan is a credible economist (or was before he chose to work for an ignorant populist, thinking no doubt that he could make things less bad), you can see reading his paper how it is complicated to prove that Trump deregulated. The economic-cost-of-regulation method requires to believe either the agencies’ evaluations of the costs of some of their regulations or to believe Mulligan’s estimates. These “social costs”exclude “social benefits”–which governments, whatever color they are, always claim to be higher than the costs (it’s called cost-benefit analysis when it is done and done correctly). Moreover, the cost-of-regulation figures don’t include the net economic cost of tariffs, which was quite obviously much higher than their benefit (including pushing Europe towards protectionism).
Moreover, note that despite two years during which Trump controlled the two Houses of Congress, much (if not most) of his deregulatory baby steps were done by Executive Orders, many of which Biden canceled… by Executive Order.
So it is less controversial to try to measure whether the NET STOCK of federal regulation has increased, decreased, or not budged, by estimating, every year, (1) how many net pages remain on the book (the CFR); and (2) how many indications of net prohibitions or mandates remain. The fact that both estimates portray very similar trends gives us some confidence that we are measuring something like “net regulation.”
As for my criticism of Biden, who is Trump 2.0, you may like to read my Regulation article “Is ‘Bidenonomics’ Just ‘Bidenology’ or ‘Trumpology’?”
Warren Platts
Jan 13 2024 at 7:39am
That’s been the main problem: the government agencies do cost-benefit analysis about 1% of the time when creating new rules. That’s what Trump was trying to get them to do. As for Trump’s executive orders, at least he was an elected official. The vast majority of rules are instigated by unelected bureaucrats the vast majority of whom in turn vote Democratic of course and hate Trump. Such reform as Trump managed is a miracle.
As for Casey’s cost estimates, they no doubt have some pretty big error bars on them, as do the tariff studies that estimate the costs & benefits of Trump’s tariffs. If we accept all these studies at face value, including Casey’s, however, the economic effects of Trump’s tariffs, whether you like them or not, are miniscule compared to the savings resulting from Trump’s deregulation efforts that are on the order of a trillion dollars. Thus the tariffs are something of a red herring when assessing the economic performance of the Trump administration. (Anyways, if you’re going to have trade barriers, at all, better to have tariffs than the voluntary export quotas that conservative icon Reagan imposed.)
I like your idea of measuring the size of the CFR as an indicator, but that’s a pretty blunt instrument, you must admit. I guess the hypothesis is that if Trump had kept his two-for-one campaign promise, the number of pages would have decreased. Instead they flat-lined. Well, even if Trump only achieved a one-for-one reduction, I call that pretty good.
To understand what really happened, though, you’ve really got to enter the weeds, as Mulligan did: (from You’re Hired p. 120):
He then goes on of course listing all these industries. Note the savings tend to accrue disproportionately to lower income workers. Anyways, bottom line is if regulation or deregulation is an issue worth voting over, Trump beats Biden hands down! Not even close..
Jon Murphy
Jan 13 2024 at 8:47am
The net costs of the trade war are conservatively estimated at about 17% of the cost savings in Mulligan’s report. I’m not sure I’d call that “miniscule.” And, I stress, this estimation is the low end. Given recent research that finds the tariffs significantly increased costs during Covid by disrupting supply chains, causing shortages, and preventing the production and consumption of needed goods/services, the costs are almost significantly higher.
Indeed, think how much higher American wealth could be if Trump didn’t engage in those destructive tariffs!
Warren Platts
Jan 13 2024 at 9:42am
“17%”
How did you arrive at that figure?
Jon Murphy
Jan 13 2024 at 10:31am
By taking the net costs of the tariffs per household and dividing it by the cost savings of the regulatory changes. Since you specified taking the studies “at face value,” I didn’t make any adjustments. I used the most conservative estimate of costs of tariffs so there can be a baseline. There are some other studies with higher costs but I excluded those because the range was very big. They may be more accurate, but not more precise.
With this quick back-of-the-envelope calculation, I feel fairly confident in this estimation. However, I’m traveling and don’t have access to my computer right now. So, I’m not sure if Mulligan’s report includes the net costs of tariffs or not. I don’t think he does, but hard to check on my phone (screen is small and I have bad eyes).
Jon Murphy
Jan 13 2024 at 10:35am
I should also note that the costs of the tariffs are ongoing. The cost savings of the regulations in many cases were reversed by the Biden Administration, and thus no longer being incurred. So, that figure will steadily grow over time until the tariffs are repealed.
Jon Murphy
Jan 13 2024 at 11:02am
Two other quick comments:
First, understanding the full costs of the tariffs are likely to take a long time. Again, I used a conservative estimate, but I’d be willing to bet that when further analysis is done (by people with more resources and more intelligence than me), the figure of net costs will be higher. As I documented the other day, most of the estimated benefits of the tariffs never materialized. Further, we have seen substantial Lerner Symmetry problems, and the tariffs were contradictory (the steel tariffs cost jobs in the washer industry, for example). Estimated of the tariffs effects on pandemic are not encouraging. And so on. Not many reasons to think the tariffs are going to be net benefits.
Second, interpretation will always be subjective. Even if I’m wrong and I misplaced a decimal while running figures on my phone, I would consider 1.7%, or even 0.17% substantial. Others may disagree. Both positions are reasonable.
Warren Platts
Jan 13 2024 at 12:48pm
Well, this is the top Google search on the damage from Trump’s tariffs from the Tax Foundation, and it says there was about $53.6 billion in lost GDP, but collected $73.9 billion in tariff revenues. However, I guess the latter just counts as a transfer payment. Meantime, Casey Mulligan’s working paper says, “Four years of President Trump reduced regulatory costs by about $11,000 per household,” and that there are 123 million households (p. 18). That adds up to $1.353 trillion, but doesn’t include the savings from Operation Warp Speed. According to the paper (p.16), “Warp Speed reduced the opportunity costs of regulation – months without a vaccination opportunity – by a trillion dollars or more. ” Thus, $2.353 trillion in economic savings thanks to Trump’s deregulation. Thus the “damage” from Trump’s tariffs amounts to 2.3% of the deregulation savings; calling that miniscule is not a stretch. I guess $50 billion is worth complaining about, but that has to be placed in the context of the Trump administration’s overall economic performance, and that’s a heck of a lot better than either Obama or Biden.
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