The government-by-mood-ring fluctuations of the Trump presidency have corrected the myth that politicians conjure up devious plans to manipulate the public years in advance. It’s beyond clear that Trump’s grand strategy carries only the forethought it takes to randomly bang out 140 characters on a smartphone. However, amid the wild lane changes, there is actually one well-oiled machine operating in Washington: the bulldozer scooping up government regulations and tossing them into the dumpster.
The New York Times offered a definitive account of this Monday, identifying over 90 rules that have been delayed or overturned in just the first month and a half of the new presidency. This earth-moving falls into a few buckets. First, dozens of rules that had been moving through the Obama administration bureaucracy but hadn’t reached completion were halted. Second, under the Congressional Review Act, rules finalized after June 2016 can be reversed by a majority vote in both houses of Congress, with agencies barred from making substantially similar rulemakings in the future without legislative consent.
Already, three CRA resolutions have become law, blocking anti-corruption disclosures by oil and gas companies, protection for waterways from mining waste, and the Social Security Administration’s delivery of mental health information to the gun background check system. Nearly 30 other CRA resolutions have been introduced; more are scheduled for votes this week.
Specific rules have also been targeted for removal, like the Labor Department directive that investment advisors act in the best interest of their clients, the requirement that automakers average 54 miles per gallon in their vehicle fleets by 2025 and the EPA’s expansion of rivers and streams protected under the Clean Water Act. Trump has suspended a proposal to force disclosure of all airline passenger fees and stopped a reduction in mortgage insurance fees through the Federal Housing Administration. Industry executives and their lobbyists have written up wish lists for which rules they want taken down, and the administration is dutifully following through.
This mainly pushes the regulatory state back to where it was last year; the lion’s share of Obama-era rules remain on the books. But if the books sit on a shelf, nobody has to care about the contents. The way you really gut regulations is by hiring people who have no interest in enforcing them. Instead of writing a rule to overhaul the H1-B visa program for high-skilled workers, you merely stop processing expedited applications. Instead of rolling back Securities and Exchange Commission rules, you just don’t send SEC investigators to major bond conferences; traders get the implicit message. Simply hiring Scott Pruitt, whose political career has been dedicated to working with industry to undermine the EPA, to oversee that very agency, cripples environmental regulation overnight.
Relatedly, a government-wide hiring freeze and devastating budget cuts at specific agencies provides an excuse to maintain yawning gaps in oversight. Unfilled positions throughout the government have been left vacant seemingly by design, to overburden the regulators into laissez-faire non-compliance. The White House even put moles inside every agency to search for more rules to neutralize. And what about dissident, independent regulators like the Consumer Financial Protection Bureau, whose budget Congress cannot touch? The administration is building a case to decapitate its leadership.
Deregulation has been so successful because the White House and Republicans in Congress agree on its importance. But what is the actual purpose of all this clear-cutting? More limited government is a conservative end in itself, but ask any Republican and they’ll call deregulation a jobs program. Does that hold up?
No. Just thinking back to 2008, when a concerted effort to neglect mortgage and securities regulations led to the largest job loss in nearly a century, should disabuse anyone of this notion. Former Fed Chair Alan Greenspan admitted to Congress that year that “voluntary regulation does not work,” a flaw in his thinking that he somehow only figured out after Wall Street nearly blew up the economy.
Conservatives characterize regulations as “job-killing” through a cock-eyed viewpoint I’d call “cost-cost analysis.” They tally up the financial burdens of complying with federal regulations — $1.9 trillion in 2016, per the Competitive Enterprise Institute — while ignoring any of the public benefits to stopping pollution or hazardous workplaces or self-dealing on Wall Street. A 2011 retrospective study of the Clean Air Act found the benefits outweighed the costs by 25-1. But the ability to breathe freely isn’t a part of the deregulators’ calculations.
In reality, virtually every independent study on the subject finds that regulations do not affect the overall level of jobs in the economy. Certain sectors might see a reduction, while others rise. Some jobs become obsolete, while others flourish. Lack of demand has a much larger impact on job loss than regulations ever will. The yoke of regulations has become a convenient excuse for industries destined to fail. For example, Republicans claim regulators have waged a “war on coal.” However, market forces, like the cost of natural gas and other energy sources dropping well below that of coal, are far more to blame for the industry’s demise.
Undeniably, deregulation saves companies lots of money in compliance and legal costs. But you need only look at one indicator, the stock market, to understand to whom that money ultimately flows. Trump’s election has coincided with a boom in equity prices. And what do stocks measure? Expected future profits, not capital investment or job creation. Soaring stocks, particularly in industries to which the market believes Trump will hand a lifeline, tell you what gets done with all of the savings on compliance. It goes to the executives and the shareholders, not to workers or consumers. The benefits, in short, don’t get passed on; they stay in the C-suites and the stock portfolios.
In essence, deregulation represents a giant tax cut for corporate America. The idea that it unleashes corporations only so they can share their newfound fortunes borders on the ridiculous. While America chokes, drinks water with more dirt in it, handles unsafe chemicals on the job and allows financiers to reopen their gambling parlors, corporate executives celebrate, not by hiring more employees but by counting their money.
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