If you have been near a TV over the past decade, undoubtedly you have heard some Republican, somewhere, say something like this: “It’s time to take the regulatory boot off the neck of the private sector.”
Now that they have unified control of Washington, Republicans are making good on their campaign promise to roll back the unprecedented regulatory push undertaken by the Obama administration.
Regulations, as we all know, are how federal agencies turn the laws passed by Congress into directives to the private sector. They are the rules of the road.
While President Obama had relatively little legislative success in his two terms, especially in his final six years, he tried to impose his vision on the country through executive authority rather than legislation. It worked in the short term, but it has also allowed President Trump and Republicans on Capitol Hill to undo much of Mr. Obama’s legacy, rescinding existing regulations and utilizing the Congressional Review Act to undo them.
To provide some context, in 2016, Mr. Obama’s final year in office, his administration finalized 3,853 rules — the most in any single year since 2005.
An analysis by the Competitive Enterprise Institute found that Mr. Obama’s regulations were costing the economy more than $2 trillion a year. Just administering and enforcing the 2016 regulations alone cost taxpayers $63 billion.
As Clyde Crews, Jr. wrote in that report, “The federal government’s reach extends far beyond its taxes, deficits and borrowing. Federal environmental, safety and health and economic regulations affect the economy by hundreds of billions — even trillions — of dollars annually.”
This is the regulatory state that Mr. Trump inherited, and it was a mess.
He recruited a stellar cabinet of business leaders who personally understood why regulatory overreach was limiting private sector growth. And they got to work.
As a candidate, Mr. Trump promised to remove two regulations for every one new regulation put in place. He has gone above and beyond that promise.
A new report from the American Action Forum reviewed what the administration has done so far. Trump administration actions, the analysis found, have saved the economy $686.6 million in net savings. Instead of a 2-to-1 ratio of regulations removed, it’s been closer to 3.75 regulations removed for every new one issued.
Here is one way to think about the power of the regulatory rollback, courtesy of the recently released Economic Report of the President: “If the United States achieved the same level of product market regulation as the Netherlands from structural reform, U.S. real GDP would increase 2.2 percent over 10 years, assuming a constant population growth rate and constant inflation. If the United States instead implemented the typically observed reform — decreasing its index by 0.31 — U.S. real GDP would increase by 1.0 percent over 10 years. And if the U.S. moved up the ranking a few places to achieve Canada’s level of product market regulation, U.S. real GDP would increase by 0.5 percent over the same time frame.”
The regulatory rollback is leading to higher economic growth, higher capital investment, soaring consumer confidence and rising employment. Businesses have the regulatory certainty and confidence they need to invest and expand.
It’s a virtuous cycle, that, combined with the large tax cut passed at the end of the last year, is ending the “new normal” of 1.8 percent annual economic growth under Mr. Obama and ushering a new era of over 3 percent annual economic growth.
That same White House report include this paragraph: “As we knew when we set out to reform taxes and rein in the regulatory state, when America’s enterprises are optimistic about where the economy is heading, they will expand their operations; invest more in plant and equipment, which raises workers’ productivity; and, as a result, raise wages. We have recently seen capital spending again contribute to rising productivity, after holding productivity growth back under the previous administration, and have also once again started to observe economic growth above the 3 percent level — which many claimed was impossible. The stock market reached record highs, creating trillions of dollars in wealth — reflecting consumers’ and investors’ confidence.”
This is exactly what is happening, and the Trump administration is just getting started.
Matt Mackowiak is president of Austin, Texas, and Washington, D.C.-based Potomac Strategy Group. He’s a Republican consultant, a Bush administration and Bush-Cheney re-election campaign veteran and former press secretary to two U.S. senators. His “Mack on Politics” podcast is available on iTunes, Google Play, Stitcher and on WashingtonTimes.com.