Donald Trump hopes to become a one-man deregulator
Few Republican politicians dare criticise Donald Trump publicly, but many harbour doubts about the president’s violations of party orthodoxy on economics and foreign policy. One issue, however, can still unite Trumpian populists and Reaganites: deregulation. Early on the president has brought the same enthusiasm for paring back the administrative state as in his first term, but this time he is defying norms to get the work done faster.
The laws passed by Congress can be vague, sometimes deliberately so to reflect political compromise. The details are filled in by regulatory agencies, within boundaries set by the Administrative Procedures Act (APA). If agencies don’t adhere to the act then their regulation (or deregulation) can be struck down by courts. This can be a slow process. The president has pledged to go even harder and faster on deregulation than he did in his first term—by going around the APA.
Some of Mr Trump’s methods resemble those of his first presidency. The Office of Management and Budget (OMB) is co-ordinating across the government to oversee deregulatory action. In February the president ordered aides to work with the Department of Government Efficiency (DOGE) and the OMB to rescind “unlawful regulations…that impose significant costs upon private parties that are not outweighed by public benefits”.
Mr Trump took this much further on April 9th, when he issued a directive undermining the APA. Passed in 1946, the law created a structure for adopting and rescinding regulations, notably requiring a lengthy “notice and comment” period before rules can be enacted or overturned. Citing recent Supreme Court cases, the administration says it plans to overlook these procedures and immediately repeal regulations it doesn’t like.
Energy and environmental regulation will be two areas where Mr Trump will test this method. He is particularly happy with Lee Zeldin, the Environmental Protection Agency (EPA) administrator, for moving quickly to dismantle Biden-era regulations, including climate rules that affect energy production and vehicle emissions. And the administration has set a goal to increase energy production.
The downsizing at federal departments such as the EPA and the Internal Revenue Service inspired by DOGE aims to loosen the government’s grip on most businesses (while tightening it on some of those that incur the president’s displeasure). During the presidential transition, Mr Musk and Vivek Ramaswamy, then a co-leader of the effort, argued that deregulation would mean the government needed far fewer civil servants. So far, though, reductions in headcount have come faster than reductions in regulation. And lasting deregulation typically requires expert personnel to write effective new rules that will withstand scrutiny by the courts.
While administration officials express confidence in their strategy, the legality of Mr Trump’s plan to swiftly jettison federal rules is untested. “Courts probably won’t go along with the administration’s sweeping interpretation of its powers to ignore the APA, but they could look favourably at revoking regulations” that lack a direct connection to a law passed by Congress, says Susan Dudley, who was head of the Office of Information and Regulatory Affairs under President George W. Bush.
The administration says it will take out ten existing regulations for every new one introduced, an increase over the 2:1 ratio Mr Trump promised in his first term. That was already inflated: it is easy to cut regulations for obsolete products, say, without doing anything to boost growth.
Mr Trump’s team sees things differently. “Economists always underappreciate the role of regulations,” argues Stephen Miran, chairman of the Council of Economic Advisers. “When you look at what determines productive capacity, what determines the ability of firms to produce, to meet consumer demand, the regulatory side is just so important.”
Yet some of the president’s early deregulatory actions smack of self-dealing and corruption and may provoke a political backlash. “It’s clear that industries or people close to Trump are benefiting. Crypto is seeing rules loosen while safeguards for self-driving cars are being removed, something that benefits Elon Musk and Tesla,” notes David Super, a law professor at Georgetown University.
A cut above
Don’t expect much deregulation from Congress, the ultimate source of most of the rules in the first place. Some members still believe that bipartisan permitting reform is still possible, but it has been discussed for years without yielding a law.
There is a perennial debate in American politics about whether deregulation will unleash growth by removing unnecessary red tape, or will merely jeopardise citizens’ safety to little economic benefit. The effects of financial regulation, with its unanticipated second-order consequences, can be even harder to judge. Mr Trump’s efforts to deregulate, constantly evolving, will be difficult to evaluate in the short run. But the direction of travel is clear. ■
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