Trump’s Burdensome and Costly Deregulatory Agenda
This column contains a correction.
Today, the White House will hold an event discussing the steps the Trump administration has taken to eliminate commonsense protections for consumers, workers, and the environment, as well as its plans to continue these efforts in the coming year.* The Trump administration has touted lower regulatory costs, but it has ignored the effects of its policies on regulatory benefits. Discussing regulatory costs without benefits is like a business making decisions about what to produce without considering the profit from each sale: It makes no sense and leads to bad outcomes.
Despite the Trump administration’s claims that deregulation will lead to economic growth, an analysis of three of his most significant proposed deregulatory efforts shows that they will result in tremendous societal cost. In Executive Order 13778, Trump directed agencies to review the Waters of the United States rule, which provides protections for streams and wetlands. In Executive Order 13783, Trump directed the U.S. Environmental Protection Agency to review the Clean Power Plan, which reduces carbon pollution from power plants. And in a presidential memorandum on February 3, 2017, he directed the Department of Labor to examine the fiduciary rule, which prohibits financial advisers from cheating their clients.
The Trump administration has claimed that its regulatory actions, including pending efforts to undo regulations that will take multiple years, will save businesses $18 billion a year in compliance costs. But it has ignored the lost benefits from these deregulatory actions. Eliminating just these three regulations alone would result in $28.3 billion in lost benefits, which is more than the entirety of the supposed regulatory cost savings from all the administration’s actions.
If the Trump administration eliminates these three rules, it would have an annual cost of $22.1 billion, in addition to significant negative effects on people’s health, their financial well-being, and the environment.
This analysis captures only a portion of the full damage that would result from Trump’s efforts to roll back important safeguards. For example, Trump issued an executive order instructing agencies to look to undo protections issued in the wake of the last financial crisis, a catastrophic event that resulted in 8.7 million lost jobs, 10 percent unemployment, and $19 trillion in lost wealth. He is trying to strip millions of Americans of overtime protections, which would reduce wages by $12 billion over the next 10 years. Furthermore, his Department of Education is looking to undo protections for student borrowers who were cheated by for-profit colleges. And the Trump administration has illegally delayed a wide range of important safeguards while it seeks to eliminate them.
But while it does not capture the full price of Trump’s dangerous deregulatory agenda, even this narrow analysis makes clear: Trump’s willful blindness to the benefits of commonsense safeguards will lead to tremendous costs for the American people.
Sam Berger is the senior policy adviser at the Center for American Progress.
Determinations of the costs and benefits of rescinding a rule are based on the regulatory impact analyses produced by agencies when issuing the rule and assume that rescinding a rule will have the opposite effect of promulgating that rule.
For purposes of calculating the costs and benefits of the Waters of the United States rule, the high and low estimates from both scenarios were averaged together to arrive at one number for both costs and benefits.
For purposes of calculating the costs and benefits of the Clean Power Plan, the calculations of the Illustrative Plan Approach at 3 percent discount rate were used. The range of costs and benefits from 2020, 2025, and 2030 were averaged to obtain one number for each year, and then the three years were averaged together to estimate an annualized number.
For purposes of calculating the costs and benefits of the fiduciary rule, the primary estimate of monetized gains to investors using a 3 percent discount rate were compared with the primary estimate of monetized compliance costs at a 3 percent discount rate.
*Correction, October 2, 2017: This column has been revised to reflect updates provided by the White House.