Earlier this week, President Trump and his administration had planned speeches and events to tout ongoing deregulation efforts.
The mass shooting in Las Vegas on Oct. 2 forced an abrupt change of plans and dialing back the bombast. Rather than a major policy speech by Trump, the deregulatory message was spread throughout the week.
The overarching message hammered home by the "Cut the Red Tape" initiative: regulatory revisions, recisions, and delays have saved businesses and taxpayers an estimated $300 million in annual costs (detailed data on how that number was calculated has yet to be released).
On Oct. 3, Treasury Secretary Steven Mnuchin convened a forum with academics, policymakers, advocates and industry stakeholders to the Treasury Department to discuss these efforts.
According to the Treasury Department, a common theme emerged from both attendees and the speakers: “efficiency and certainty in regulatory regimes will stimulate growth and level the playing field to position American businesses to succeed in the global economy.”
Among his deregulatory initiatives, Trump has issued several executive orders aimed at reducing regulatory burdens.
Executive Order 13772 instructs the Treasury Secretary to report to the President the extent to which the existing financial regulatory system promotes the Administration's "Core Principles" of financial regulation. Executive Order 13789 instructs Treasury to review all "significant tax regulations" issued on or after Jan. 1, 2016, and take concrete action to alleviate the burdens of regulations that impose an undue financial burden on U.S. taxpayers or add undue complexity.
Trump’s Council on Economic Advisors (CEA) has also issued a report on deregulation.
Among the talking points is that regulation “is a tax on the economy, costing the U.S. an average of 0.8 percent of GDP growth per year since 1980.”
“This taxation by regulation has increased sharply in recent years, with approximately 500 new economically significant regulations created over the last eight years alone,” the report adds, with a conclusion that “deregulation will stimulate U.S. GDP growth. “If we held fixed the number of industry-relevant regulations at levels observed in 1980, the U.S. economy would have been about 25 percent larger (roughly $4 trillion) in 2012.”
Other claims, conclusions, and factoids from the report:
The U.S. ranks 27th out of 35 countries in product market regulation behind France, Chile, and the Czech Republic (according to OECD calculations).
Business’ costs on compliances officers’ salaries have increased 171 percent since 2000 accounting for inflation, an annual growth of 6.9 percent each year on average, or more than twice the rate of growth of the economy.
In 2000, completing paperwork for Federal regulation cost an estimated $236 billion (up from $143 billion in 1980). Assuming the same proportion of compliance officers’ salaries out of total paperwork cost, the cost of paperwork increased to $881 billion in 2015.
Regulation is especially burdensome for small businesses: the cost per employee of complying with regulations was higher for small firms ($11,724) than it was for firms with over 100 employees ($9,083)
Burdensome regulations are easier for larger firms to shoulder, and drive small firms out of business or prevent them from entering in the first place.
There were approximately 45,000 more pages in the Federal Register than 40 years prior, an increase of roughly 90 percent.
The Code of Federal Regulations (CFR), which measures the existing stock of regulations on the books, has increased over time, rising 160 percent from 1975 to 2016.
Counting the prevalence of the words “shall,” “must,” “may not,” “required,” and “prohibited” in the CFR, the number of restrictions measured using this dataset increased 107 percent from 1975 to 2016.
“Federal regulatory activity in the U.S. may have proliferated with the best of intentions, but the negative consequences of excessive, duplicative, or badly designed regulation are a tax on the U.S. economy,” the CEA report says. “Past instances of deregulation have shown substantial gains to consumers and businesses in the economy. Deregulation can unleash the greater potential of the U.S. economy, spurring the innovation and economic growth necessary to keep the United States prosperous, and to empower its citizens with greater opportunities.”
Concurrent to White House touting deregulation efforts, a new business group, the Coalition for Regulatory Innovation, was launched this week.
The group bills itself as a bipartisan coalition that “shares the common mission of examining the impact of regulations on our small businesses, communities and overall economy to create a smart path forward for a transparent, efficient and accountable regulatory system.”
“Excessive regulations stifle American businesses to the tune of $2 trillion annually, a figure that would make up more than half of the entire federal budget,” the group’s website says. “As a result, the U.S. productivity growth rate has dropped by half the historical rate.”
The total cost burden on the typical U.S. business is $232,182, about $10,000 annually per employee, the coalition claims, demanding that “the time is now to modernize our regulatory system.”
“Congress needs to establish basic parameters to modernize federal rule-making,” the group says. “In our view, there are three pillars of effective, bipartisan regulatory reform: transparency, scientific integrity and accountability. Rulemaking should be conducted out in the open and back up by objective, unimpeachable science, while being overseen by officials who are held accountable to the voters.”
Members of the coalition include the National Association of Manufacturers, North America’s Building Trades Unions, American Fuel & Petrochemical Manufacturers, Data Coalition, American Chemistry Council, and the National Automobile Dealers Association.