One In, Two Out
President Obama has released the details of his “midnight” regulations, meaning those created between the election and the swearing-in of the next president. If implemented, they will cost about $44 billion, according to Sam Batkins of the conservative American Action Forum. They include everything from environmental standards for vehicles to new rules for educational programs.
As strange as it may sound, in the grand scheme of things, $44 billion isn’t that much money. This is the “net present value” of a cost that will be spread out over many years—and we’re a nation of 320 million people, so crude division suggests a burden of around $140 per person. We’re also a nation that already regulates itself to the tune of $6,000 per person per year, so Obama is adding a tiny fraction to the total.
But the midnight package doesn’t come out of nowhere. It is a capstone to eight years of aggressive regulation. And Donald Trump has a much-ridiculed—but actually tested and proven—way of rolling all this back.
To be sure, regulations have been accumulating for decades, under both Republican and Democratic presidents. But even relative to his predecessors, Obama has been particularly happy to add fresh limitations on business and even personal activity.
The libertarian Mercatus Center maintains a system called RegData, containing statistics on decades’ worth of regulatory text. Last year, two of its scholars tallied the total number of restrictions added under each president since Carter. In his first four years, Obama was second only to Carter himself, and by his sixth year Obama had added more restrictions than any other president had in eight. No president, of course, reduced regulation on net.
Similarly, the Regulatory Studies Center at George Washington University has documented that Obama far outpaced Clinton and Bush II when it comes to regulations deemed “economically significant,” creating about 500 when neither of his predecessors came close to 400. (A complication is that the cost cutoff for “economically significant,” $100 million, was established more than 20 years ago and never adjusted for inflation, though most of these regulations are far above the cutoff anyway.)
Obama was able to do this in part because Congress and the courts have given the executive branch wide latitude to interpret the laws that authorize regulations. He also pushed the limits of those laws, however, spurring pushback from conservatives and numerous lawsuits from regulated parties. Two examples: interpreting the term “navigable waters” to include every body of water that in any way affects waters you can actually navigate, and leveraging an obscure provision of the Clean Air Act to demand states reduce power plants’ carbon emissions by a third.
Enter Donald Trump. As TAC publisher Jon Basil Utley spelled out in the context of the EPA last week, the president-elect has his work cut out for him. Just on a practical level, he’ll have to rein in rogue agencies with long-established bureaucracies and work with Congress to handle reforms he can’t enact himself. And for all the freedom the executive branch has, even when it acts alone it often has to at least go through the motions of performing cost-benefit analyses and giving the public time to comment.
On a policy level, the difficulties are even greater. From a bird’s-eye view it may be obvious we have too much regulation: the last president added new rules at an unprecedented rate, there has been little attempt to clear out old regulations that are no longer needed, and there are plenty of rules that seem to serve no logical purpose at all. But down on the ground, it will be a monumental task to sort out which rules are needed and which aren’t.
Trump plans to deploy a major weapon in this fight, however: he has promised to sign an executive order instructing agencies to repeal two regulations for every one they enact. At first blush, this seems like one of those wild-eyed Trump ideas that scare liberals and cause informed conservatives to shake their heads in embarrassment.
But it isn’t. In fact, this idea has been tested before—in both Canada and the UK.
The Canadian province of British Columbia had spectacular success with a similar rule starting in 2001, cutting regulation by more than one-third and then switching to a one-in/one-out policy, as Laura Jones of Mercatus documented in a paper last year. Inspired by this success, Canada enacted a federal one-in/one-out policy last year. The UK, meanwhile, enacted one-in/one-out in 2010—and literally doubled down on it in 2012, replacing it with Trump’s formula of one-in/two-out.
In an ideal world, of course, we wouldn’t resort to such a blunt instrument. We’d evaluate each individual policy on its own merits. But in reality, federal agencies always seem to think their regulations are valuable enough to keep. One-in/two-out forces the agencies to reduce regulation while harnessing their expertise, allowing them to choose which regulations stay and which go to make room for new ones.
There are plenty of wrinkles to iron out, as Cass Sunstein explained in a recent Bloomberg View column. Trump will need to decide which types of regulation to exempt, such as technical clarifications of prior rules. And he’ll have to decide what role costs will play; it wouldn’t make sense to let agencies repeal two $10,000 regulations to “pay for” a new $100 million rule.
It also might be a good idea to have Congress pass the rule, as some have alleged it’s unconstitutional to do this by executive order. Their argument: Congress has instructed the executive agencies to regulate as needed in specific areas, and the two-for-one rule prevents them from doing so. This is a bit of a long shot, considering how much Congress has deferred to the executive on these matters, the inherent authority of the president to set priorities for his branch of the government, and courts’ hesitancy to exercise any oversight. But conservatives have long said that Congress, not the president, should take the lead on regulation—and writing the policy into law would make it harder for a future administration to go back on it.
For decades now, executive agencies have been piling new regulations atop old, with little attention paid to the damage done. The Obama administration has been worse than most in this regard, if hardly an outlier. Starting from this elevated baseline, a policy of killing two regulations for each new one isn’t nearly as crazy as it may sound—and other countries that have tried it have liked the results.
Robert VerBruggen is managing editor of The American Conservative.Follow @RAVerBruggen