INSIGHTS: HOW PRESIDENT-ELECT DONALD TRUMP CAN FAST-TRACK DEREGULATION AND WEALTH CREATION
By Guest Columnist Clyde Wayne Crews, Jr.:
Policy Director at the Competitive Enterprise Institute. Reprinted with permission.
On this, the day after the election of Donald J. Trump as the 45th president (yes, he has already updated his Twitter profile), President Barack Obama’s 2016 Federal Register page count stands at a record-level 78,898.
The Federal Register, so emblematic of Washington excess, is where the hundreds of Washington bureaucracies post their proposed and final rules and regulations each day.
Obama will break his own all-time record of 81,405 pages even before December gets here. Of the ten highest-ever Federal Register page counts, the incumbent president will own seven of them.
Within those pages, several thousand rules get issued annually, no matter which party holds the Oval Office. Big government is bipartisan.
This all matters because, in reaction to expanding regulation, president-elect Trump called for a moratorium and for a 70 percent reduction in regulations during the campaign.
He’ll need to work with Congress to do anything close to the latter ambition (toned down some by an aide), especially since many crony types like regulations just the way they are, let alone progressives who like to rule above all else. But there are a number of things he can do on his own in the meantime.
That is to say, the “pen and phone” made famous by Obama can be used to advance liberty rather than curtail it (and, within the rule of law, no less)
A quick lesson can be learned from Ronald Reagan. Via executive order (E.O. 12291), he set up the still-existing procedure whereby regulations are reviewed by the White House, and in some cases (alas, too few then and now) receive cost-benefit analysis.
The process has been weakened in the decades since. But a fast reduction in Federal Register page counts and in number of rules is possible simply by having a president concerned about regulatory excess, who expects sanity.
In Reagan’s case, his 1981 version of the administrative pen and phone to restrain the regulatory state arguably made a big difference in regulatory volume, at least for a few years.
Federal rules dropped from the all-time high of 7,745 to as low as 4,589, while Federal Register pages that stood at 73,258 in 1980 hit a low of 44,812. (For details and charts, see ” Channeling Reagan by Executive Order: How the Next President Can Begin Rolling Back the Obama Regulation Rampage.”)
Now, executive actions cannot suffice and more permanent, legislatively instituted reforms are needed. President-elect Trump can easily collaborate with the new 115th Congress on these. Abusive and alarmist agencies themselves need to be legislatively targeted, and we need an advanced program of eliminating agencies and rolling back their powers, if legitimate in the first place, securing authority with the states and the people. That’s the forgotten principle of federalism.
The entire process and institution of the modern out-of-control “administrative state” has got to be reined in. There should be no costly or controversial rule allowed to be issued without Congress’ affirmation (examples go on but include recent bureaucratic forays such as the overtime rule, net neutrality and Environmental Protection Agency excesses like the Waters of the United States rule and the Clean Power Plan).
Unelected bureaucrats making sweeping rules governing (and wrecking) entire sectors of the economy needs to be a thing of the past. Conservatives seeking to rationalize delegation or who’ve made peace with it are not helpful to the cause of substantial reestablishment of constitutional bounds on the state. They are playing in a sandbox on the progressives’ administrative-state beach.
We can revive the separation of powers, and enshrine checks and balances that restrain. We need an executive, legislature, and judiciary, not today’s rock, paper, scissors. Special, new emphasis and care must be brought to bear on agencies’ back door rulemaking, whereby agencies use guidance, memoranda, bulletins, circulars and other regulatory dark matter to implement policy, as highlighted by Sen. Heidi Heitkamp (D-North Dakota) and James Lankford (R-Oklahoma). Note the bipartisan concern.
President-elect Trump may also appreciate that some in Congress appear very eager to implement a regulatory budget. Rep. Tom Price (R-Georgia), Budget Committee Chairman, has held hearings on the idea (which has bipartisan roots) and released a working paper. A statement of principles on regulatory budgeting was incorporated into the fiscal 2017 Budget Resolution; Sen. Mike Lee (R-Utah) introduced legislation to implement a regulatory budget, while also incorporating regulatory dark matter, in the 114th Congress, and will likely reintroduce it; and Rep. Paul Ryan, the Speaker of the House, included it in his widely touted BetterWay task force recommendations. Part of the interest in a regulatory budget likely stems from the parallel, related campaign for dynamic scoring, since regulations have macroeconomic effect. To work properly and to be manageable, agencies need to be downsized ahead of time.
As the 115th Congress contemplates broad economic liberalization, Trump can jumpstart things with executive orders and oversight. Reagan showed that the president, within the rule of law, can do a lot. Trump promised action, and there are significant things he can do while permanent legislative reforms are pending. Below is a list, with links to more detail.
How the New President Can Roll Back Bureaucracy:
Part 1: Freeze Regulations
Part 2: Boost Regulatory Review Resources and Free Market Law and Economics Staff at Agencies
Part 3: Professionalize Review, Revision, Repeal and Sunsetting of Regulations
Part 4: Expand Number of Rules Receiving Cost Analysis
Part 5: Scrutinize All Agency Decrees That Affect the Public (Dark Matter), Not Just Formal “Rules”
Part 6: Enhance Rule Disclosure In the Unified Agenda of Federal Regulations
Part 7: Track the Accumulation of Federal Regulations as Businesses Sectors Grow
Part 8: Compile an Annual Regulatory Transparency Report Card
Part 9: Improve the Classification of Major Rules
Part 10: Account Separately for Economic, Health & Safety, and Environmental Regulations
Part 11: Analyze “Transfer” Costs And Recognize Deadweight Costs of Government
Part 12: Acknowledge and Minimize Indirect Costs of Regulations
Part 13: Establish the “Office of No.”
ON THE ECONOMY: THE REAL THING
By John Dunham:
Managing Partner, John Dunham & Associates
I’d like to buy the world a home and furnish it with love. Grow apple trees and honey bees, and snow white turtle doves. I’d like to teach the world to sing in perfect harmony. I’d like to buy the world a Coke, and keep it company. That’s the real thing.This is the beginning of a jingle that became a song that became an anthem in the mid 1970s. Written by the team of Bill Backer, creative director on the Coca-Cola account for the McCann Erickson
advertising agency, Billy Davis, the music director on the Coca-Cola account, and two British songwriters, Roger Cook and Roger Greenaway, the song was recorded by the five hundred young people on a hilltop near Rome.
While it is unlikely that anyone is going to buy the world a home or grow snow white turtle doves, open economies do help improve the lives of everyone in the world – including countries that are net importers. This is all basic economics. Its simple math and based on theories that have been verified over centuries of observation. Free trade and immigration benefit the country and American citizens in a number of ways including:
Making products available: Concepts like buying local and autarky (no trade) make little sense to people who want to eat a banana, or a mango or tea or maybe have strawberries in winter. Not even 30 years ago these were luxuries available only to the wealthiest individuals. A few hundred years ago even kings and popes could not get fruit out of season. Today, because of free and extensive trading networks, a wide range of products are available and are available year round.
Reducing prices: Not only are once exotic products available, but they are available at a lower cost to consumers than our grandparents could have even imagined. Sugar used to be kept under lock and key. Trinity church paid its rent (and actually still does) to the Monarch of England in peppercorns. People did not have closets because clothing was so expensive that even the wealthy had only a few items. Today, all of these products are available for very little cost in thousands of stores across America. These lower prices are for a large part, due to trade. David Ricardo showed how trade benefitted all countries because each could specialize on what then did best. It’s the same thing as me hiring a plumber rather than screwing up my pipes, or hiring an accountant rather than taking weeks to figure out my taxes. Simply put, international trade is no different than local trade.
Overcoming regulations: One thing that may be considered both a benefit and a curse of free trade – and something that is leading to more and more offshoring of industrial processes from the US, is the ability of overcome onerous regulations. Really since the 1970s it has become more and more difficult to produce in America because of expensive environmental, labor, legal, safety and financial regulations. This has encouraged manufacturers to move parts of their production process to other countries with more lax regulatory environments. In other words, the low cost of labor abroad is just one factor encouraging offshoring. In effect, America is exporting its pollution and its injury costs to other countries.
Creating new opportunities at home: One thing that most people examining trade do not consider is that imports create jobs at home. This is because they are looking at trade data in a vacuum. If a company assembles something abroad from components made in a third country, it is still creating a huge amount of value in the domestic economy. This value comes from design, marketing, advertising, wholesaling, retailing and servicing the product. For example, work that we have done with one industry (where virtually 80 percent of the product is manufactured abroad) shows that as much as 70 or 80 percent of the value at retail is created in America.
Creating new investment opportunities: With an aging population, American pension funds (most of which are government pension funds) need to have investment opportunities with returns large enough to cover their expenses. This is difficult to do in America, where the tax and regulatory environment has discouraged companies from opening new factories. Opportunities to invest worldwide help to increase overall returns in America, opportunities that would not exist without free trade.
But what about Immigration? The whole debate about immigration has been confused by language, particularly that used by proponents of more open borders. Immigration as a whole is a very good thing for the American economy. One thing that helps keep an economy healthy is a growing population, and without immigration, the population in America would be stagnating, just like in Japan, Italy and some other wealthy countries. Demand to be in America and to be an American has always been strong, and the value of living here encourages many of the world’s best and brightest people to want to immigrate. It also encourages foreign families to invest in order to help secure visas for their children. All of this is good for the economy. Even lower skilled immigrants tend to be more entrepreneurial and to do better economically over time than domestically born people of the same demographic background.
I would add to this that immigration allows a society to create opportunities that are new and can benefit everyone. This has traditionally been the case in America, a country founded by immigrants and for the most part peopled by immigrants. Not since Imperial Rome has a society as diverse and as strong as the United States of America existed, and the same diversity that helped Rome survive for thousands of years helps charge the dynamism of the American economy.
All of that said, unfettered, illegal immigration can be extremely harmful to the economy. Not only does illegal immigration feed the underground economy, but by definition it created a criminal class of people. Simply calling an illegal alien an undocumented immigrant does not make this go away. In addition, in an age of terrorism, it is impossible to ensure that illegal aliens are not a physical threat to the country. So while most economists can tick off dozens of ways that immigration can benefit a country, few can demonstrate a benefit of encouraging the development of a criminal underclass. And while finding a way to deal with the existing criminal aliens is a political question, stopping immigration altogether would neither solve that problem nor would it help legal citizens of the country to get jobs or improve their lives.
The bottom line is that we live in a world divided artificially into nation states. Some of these countries have labor intensive economies, some capital intensive ones. Some countries are resource rich, some resource poor. Some in the Northern Hemisphere, and some in the Southern. These differences open up not only the possibility but the need to trade and the need for some people to move from one country to another. That’s not a bad thing, it simply the real thing.
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