One In, Two Out: Trump’s Ambitious Regulatory Regime

Public perception, especially among liberals and critics, is that the Trump administration has been blundering about, focused more on rhetoric and theatrics than policymaking. This view is not without merit: The first version of the travel ban, a core Trump campaign promise, was struck down by multiple district courts after the administration failed to anticipate some basic legal objections. Trump’s tax plan, another high-priority issue for the president, took months to develop into something substantive. Perhaps most notably, after railing against the Affordable Care Act throughout his campaign, Trump himself has proposed no significant healthcare legislation, instead signing on to congressional Republicans’ ill-fated efforts.

But in the vastness of the executive branch, there’s plenty of room for ambitious policy work that often flies under the radar. Even if the president himself isn’t tuned in to every initiative going on in his administration, that doesn’t mean they aren’t happening—especially in more obscure policy arenas like deregulation. Trump railed on the campaign trail against burdensome regulation, and now that he’s in office, he, or perhaps more accurately, his appointed director of the Office of Management and Budget (OMB), is getting to work. On January 30, just 10 days after he took office, Trump signed an executive order enacting a ‘One In, Two Out’ deregulatory policy. Based on a guidance memo issued by the OMB on April 5, Trump’s plan appears to be more far-reaching than any comparable policy enacted abroad. This ambitious two-for-one deregulatory policy illustrates how even if the president himself has little interest in policy details, his administration is taking big—if not often well-publicized—steps to implement his agenda.

Before analyzing the merits of the policy, it’s important to understand what it actually does. The principle is this: For every new regulation that is introduced, two existing regulations must be removed. To ensure the program both decreases the number of regulations and saves the country money, the two regulations being removed to counteract the new one must also cost twice as much as the new one.

While the policy is certainly soundbite-ready, implementation proves to be more complicated. The text of the executive order reads as a jargon-filled, and at times inscrutable, government document. The two-for-one policy only applies to what are defined as “significant regulations”—the biggest category of which is those with greater than $100 million in annual economic impact. Military and national security regulations, however, are expressly exempted and regulations addressing emergencies or those required by statute qualify for a temporary exemption. Furthermore, according to an OMB memorandum, the Trump administration intends to measure the costs of regulation using the full opportunity cost to society. Calculating this is incredibly complicated and unique among countries with similar policies.

In the seven other countries that have implemented a version of this policy, four have done a post-implementation review of their programs: Australia, Canada, Germany, and the United Kingdom. At first glance, this policy seems to have worked well. Canada reported annual savings of $10 million between 2013 and 2015. The most successful country, Australia, recorded more than $1 billion per year in that same three-year period.

Given these impressive savings, it’s no surprise that Trump is seeking to emulate the approach; few would argue against regulatory savings to the tune of billions per year, and cutting costs is at least a rhetorical priority for Trump. But the problem in emulation is one of comparison: all seven countries implementing the policy use a much narrower definition of cost than Trump. While the Trump administration measures the cost of a regulation by its opportunity cost to society, each of the countries uses a narrowly tailored definition of costs focused on time spent on paperwork and compliance. This doesn’t mean that Trump shouldn’t borrow this policy innovation; however, he should be aware that the results of this policy might look different when measuring regulations by their opportunity costs rather than the red tape.

Trump should also remember that the best regulatory policy is not necessarily the cheapest. Cost is an important factor, as taxpayer money ought to be spent carefully and effectively, but putting public safety, for instance, at risk, simply to save a few dollars relative to the government’s budget might not be worth it. These conflicts often come up: Ronnie King, a former chief fire officer in the UK, believes that the devastating Grenfell Tower fire in London this June could have been prevented if the government’s One In, Three Out policy hadn’t discouraged adding new regulations. Being cognizant of regulatory cost burdens is a good idea, but that cognizance shouldn’t deter policymakers from prioritizing the public good.

Even considering these problems, it’s hard to overestimate the significance of the Trump administration’s attempt to measure opportunity costs for its bureaucracy. Regulation might not be a sexy topic, but it is one of the most significant ways government affects the everyday lives of Americans, whether by regulating air pollution, issuing occupational licenses, or requiring businesses to comply with workplace safety rules. And even though deregulation might be scoffed at by those on the left as just a conservative excuse to shrink the government, the reality is that regulation is an expensive endeavor. If there are ways to responsibly cut costs, policymakers ought to explore them. The only way to know whether these cuts help the economy is by measuring them carefully, and by using the metric of opportunity cost, Trump’s policy intends to do just that.

To be clear, the fact that the plan is notable does not mean it will have a monumental impact on the country. In fact, many experts contend that this policy sounds like it will have a bigger impact than it actually will. The sizeable list of exemptions include a section stating that a regulatory action made in compliance with a statute does not need to be accompanied by two deregulatory actions immediately, but rather “as soon as practicable thereafter,” a timeline that is meaningless without a strong enforcement mechanism. These details, along with the mathematical and personnel challenges of measuring opportunity cost, place an important cap on how impactful the policy can be.

Regardless of this cap, the policy is worth taking seriously. Though Trump’s method of cost measurement raises questions, the level of detail included in the plan illustrates how seriously the administration takes the idea. Americans, especially liberals, should be wary of assuming that the Trump administration is pursing nothing of substance. Those who take solace in the belief that Trump’s incompetence prevents him from successfully implementing policy would be wise to read this multipage executive order radically overhauling the US regulatory system. Behind the bluster of Trump’s words stand officials like OMB Director Mick Mulvaney, who benefit from both the power to enact their ideological agenda and the cover of a media-hogging president to distract the sights of the press.

Fortunately, certain aspects of this situation might be in the country’s best interest. Plenty of American liberals instinctively reject anything Trump does, but these people do a disservice to themselves and their country. Even if they disagree vehemently with most of Trump’s plans, the preponderance of some bad policies doesn’t preclude the existence of some good or neutral ones. In the case of regulation, the international experience suggests that, at the very least, Trump is on a path that could save the American taxpayer money, if accomplishing little else. At best, his agenda could revolutionize the way regulatory impact is understood, allowing the government to be much more precise and cost-efficient when evaluating new and old regulations alike.

Whether or not it’s comforting, it’s worth keeping in mind that no matter how much time Trump spends tweeting or watching Fox News, his legions of bureaucrats are working around the clock to implement substantive policy. And regardless of how many Americans are watching, Mick Mulvaney will keep on tinkering with the administrative state, one verbose OMB memorandum at a time.

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