Tuesday, August 8, 2017

How Can Trump Make America's Economy Great Again? By Deregulating It

Regulation: If you wonder why President Trump's promise to "drain the swamp" and roll back needless regulations is so important, a simple glance at the Competitive Enterprise Institute's annual report on regulation will leave you with no doubt. Excessive regulation is strangling our economy.

The CEI's "Ten Thousand Commandments" report for 2017 covers President Obama's final year in office and, as the report's author Clyde Wayne Crews reminds us, the 2016 data will serve as a kind of baseline for Trump's time in office.

So what did we discover? That Obama's last year was one for the record books. His regulatory onslaught pushed the total number of pages in the Federal Register — the government's regulatory bible — to 95,894 total pages, the highest level in history and a 19% gain from 2015's 80,260 pages.

And it's even worse than it seems. During his tenure, Obama imposed 685 "major" rules, or rules that have a significant impact and cost at least $100 million, 36% higher than President Bush's 505 major rules.

The cost of this is immense. For all of 2016, federal regulations cost the economy some $1.963 trillion, or about 10% of U.S. GDP, which CEI calls a "hidden tax" on citizens amounting to $15,000 per household per year. In case you don't know, you pay this tax each and every year, whether the rules benefit you or not.

Of course, not all regulations are bad. But many are. And many are passed with little or no input from Congress. Congress often passes laws and then lets agencies — that is, bureaucrats — write the specific regulations that will be used to enforce the law.

But bureaucracies are unaccountable to either the people or, really, even to Congress. So it's extremely difficult to limit them. As the study notes, Congress enacted 214 laws last year, while bureaucratic agencies issued 3,853 new rules for those laws. That's an average of 18 rules per law.

They're adding up. If U.S. regulation were a country, it would be the world's seventh-largest economy. Americans indirectly spend more on regulation than they do on health care, food, transportation, entertainment, clothing, services, and savings. The regulatory tax is almost as big as all personal income taxes and corporate taxes we pay, combined. That's how big it is. And people don't even know it.

With so many regulations and so many rules, it's not unreasonable to think that many if not most of them are entirely unnecessary. How do you tell? Well, if a regulation costs more than it saves, it's unnecessary, pretty much by definition. But the federal government doesn't systematically measure the cost-benefit of its regulations.

A study by the Mercatus Center at George Mason University, however, found that regulation has a major negative impact on the economy by distorting investment decisions of firms. That study estimated that if the regulatory burden had remained unchanged from 1980 to 2012, the U.S. economy would have been 25% larger, a difference of $4 trillion a year in output.

To paraphrase former Vice President Biden, that's a big freakin' deal — for both businesses and households.

President Trump, a businessperson who also happens to be chief executive of the U.S., understands all this. During his first 100 days, he issued five Executive Orders and one Presidential Memorandum that got the ball rolling on his regulatory reforms. He's already getting rid of unneeded regulations, and we wish him good luck in getting rid of thousands more.

"Reducing overspending and relieving regulatory burdens are vital to the nation's economic health," writes Crews in CEI's report.

We would hope Congress would join him by reasserting its constitutional authority over the nation's laws and their regulations — instead of deferring the job to unaccountable and unelected bureaucrats. Congress should understand that deregulation is one of the biggest bang-for-the-buck things it can do to get our moribund economy moving again and to achieve Trump's goal of 3% growth.

If it continues, Trump's deregulation will pay off big in future years when households and businesses suddenly discover they're spending less on the things that clueless bureaucrats force them to and more on the things they want. That's called economic freedom.




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