Trump hit the regulatory brakes, but hasn’t found reverse gear

Trump hit the regulatory brakes, but hasn’t found reverse gear
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The president and the GOP-controlled Congress emphasize three main accomplishments of the Trump administration’s first year: deregulation, tax cuts and judicial appointments.

With the first 18 months behind us, we can evaluate the administration’s deregulatory activity. The record shows a major slowdown in new rules and a thin but growing roster of new, significant deregulatory steps.

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Nevertheless, in regulatory terms, the president is already running out of time to make his mark.

The first 18 months of the Trump administration shows a steep decline in significant regulatory activity — down by 70 percent compared to the Obama administration and 66 percent compared to the Bush administration, in that same 18-month window.

In the first six months of its second year, the Trump administration picked up the pace, recording almost as many significant actions as in its entire first year. Even with that increase, however, the Trump administration’s activity was down 63 percent and 59 percent compared to the same six-month period in the Obama and Bush administrations, respectively.

This decline matters for two main reasons. First, it shows that the Trump administration has largely turned off the regulatory spigot for new, discretionary rules. Required rules, like the annual adjustments to Medicare payment rates, have gone forward, but not very much else. This radical shift is the subject of litigation in the U.S. District Court of the District of Columbia, where President TrumpDonald John TrumpTrump rallies in Nevada amid Supreme Court flurry: 'We're gonna get Brett' Trump: 'Good news' that Obama is campaigning again Trump boosts Heller, hammers 'Wacky Jacky' opponent in Nevada MORE’s regulatory “Two-for-One” executive order is being challenged by advocacy groups alleging that his directive is an unlawful check on agencies’ ability to carry out their statutory duties.

Second, although it’s somewhat counterintuitive, it takes a rule to undo a rule. Deregulatory actions go through the same steps as brand new rules: They must be proposed for public comment and then finalized. And, just as they do for new rules, agencies have to articulate a reasoned basis for their proposed deregulatory changes.

All of this takes time and agencies have incentives to be careful because their actions are subject to review in the courts. Congress has a shortcut to reject new rules using the Congressional Review Act (CRA), in which case the agency can remove disapproved rules without much effort.

In this administration, Congress has used its CRA short-cut an unprecedented 16 times — but we’re past the deadline to use it to undo the prior administration’s rules.

The concepts of regulatory “stock” and “flow” help explain why less regulatory activity doesn’t necessarily add up to much deregulation. These terms are borrowed from the United Kingdom, which implemented a “One-in, One-out” policy for new regulations in 2005. If that sounds like Trump’s regulatory “Two-for-One” policy — that’s because it is. Although there are differences, both policies take aim at the flow of new regulations, requiring deregulation to offset any new regulation. The existing stock of regulations is reduced through policies like this, but only incrementally.

There were thousands of regulations on the books before Trump took office, so a policy that chips away at one or two rules at a time is unlikely to make a big dent in the somewhat astonishing mass of regulation that surrounds our lives.

In the UK, they had a separate initiative to tackle regulatory stock called “the Red Tape Challenge.” That initiative led to revisions or reductions to over 3,000 regulations, according to then-Prime Minister David Cameron. In a second regulatory executive order, Trump directed agencies to designate an agency official to be a “regulatory reform officer” who oversees deregulatory activity. This is perhaps the closest U.S. analog to the British effort, with one major drawback.

The UK’s Red Tape Challenge was coordinated out of the Cabinet Office, which has a cross-cutting role somewhat akin to the U.S. Office of Management and Budget (OMB). Placing the regulatory reform officers in agencies might not give them enough distance from their agency and its associated stakeholders to make recommendations grounded in the public’s overall interest.

As Susan Dudley observed shortly after her tenure as the head of the Bush administration’s Office of Information and Regulatory Affairs (OIRA), which is part of OMB, “regulatory agencies tend to shape their decisions to accommodate the interest groups that are most directly affected by them.” If this administration wants to make big dents in the stock of regulations, it might need to consider a stronger role for OIRA.

It might also have missed its window. Presidents are constrained by time; a term is only four years and a second term is not guaranteed. Although it’s possible to start and finish a new rule in less than a year, high-stakes rules can take many years. The longer Trump waits to produce his significant deregulatory proposals, the less time he will have to complete and defend them.

Bridget C.E. Dooling is a research professor at the George Washington University Regulatory Studies Center. She served as deputy chief and analyst in the Office of Information and Regulatory Affairs at OMB from 2007 to 2018. Follow her on Twitter at @BridgetDooling.