Regulatory reform was a big part of Donald Trump’s major economic address yesterday, which offered three proposals to reduce excessive regulation. The problem is serious. The proposals aren’t.
First, Trump calls for a temporary moratorium on all federal regulations. For starters, that would be unlawful. Congress has required executive agencies to issue regulations involving air pollution, food safety, consumer protection and highway safety. The president is not allowed to ignore those requirements. (Disclosure: I was administrator of the White House Office of Information and Regulatory Affairs from 2009 to 2012.)
A moratorium is also a terrible idea. Some regulations are necessary to respond to emergencies, such as outbreaks of infectious diseases, oil spills, unsafe drinking water, dangerous working conditions and national security challenges at airports and elsewhere.
Other regulations are needed to reduce discrimination on the basis of sex, race or disability. Still others protect consumers against deception, exploitation or invasions of privacy — and reduce the risk of another financial crisis. Some regulations are even demanded by the businesses they affect, because rules can promote predictability. Many regulations sort out ambiguities, eliminate confusion, correct mistakes and generally make the law easier to navigate. And some regulations actually eliminate regulatory burdens.
Regulations can even produce benefits that greatly exceed costs — for example, when an energy efficiency regulation for refrigerators reduces environmental harm, promotes U.S. energy security and saves consumers billions of dollars. A moratorium is a temper tantrum, not a serious proposal.
Second, Trump wants every federal agency to list and eliminate all regulations that are “not necessary, do not improve public safety and which needlessly kill jobs.” Since 2011, the Barack Obama administration has been doing just that, requiring agencies to revisit existing rules and to report on their progress every six months. To date, the “regulatory lookback,” as it is called, has produced more than $28 billion in savings over five years.
It’s true that much more should be done. Building on the efforts of the Obama administration, the next president should insist that agencies scrutinize the costs and the benefits of their most expensive rules — and if the law allows it, scrap those whose benefits do not justify their costs.
Third, Trump proposes “energy reform,” which he understands to mean the elimination of regulatory restrictions on coal-fired power plants. Many of those restrictions are compelled by the Clean Air Act, which means the president can’t just wish them away.
In any case, the principal goal of those restrictions is to protect Americans from particulate matter, ozone and other air pollutants, which cause many thousands of premature deaths every year. The Clean Power Plan, for example, is projected to avoid 2,700 to 6,600 premature deaths annually —- alongside 140,000 to 150,000 asthma attacks in children.
Trump could have championed many good ideas for regulatory reform. Some low-hanging fruit: The American public now faces over 9.45 billion hours in paperwork burdens each year.
Those burdens take up time and attention, and make it unnecessarily difficult for people to obtain permits, licenses and economic opportunities. The next president should act aggressively to reduce paperwork burdens by simplifying or eliminating forms and making things automatic.
To promote growth, the federal government could make greater use of waivers and exemptions to reduce regulatory burdens on small businesses and start-ups. The next administration should also cut and harmonize overlapping, redundant and inconsistent requirements, currently imposed by a baffling array of federal agencies and by state and local authorities as well.
To eliminate unjustified burdens, a new president could apply existing restrictions on issuing new rules (such as the requirement that the benefits of regulation justify its costs) not merely to the executive agencies, which are already covered, but also to independent agencies such as the Securities and Exchange Commission and the Federal Trade Commission. And to ramp up the regulatory lookback, it might well make sense for the next president to create a new commission. Such a body could invite the public to identify the highest priorities for cost-cutting.
For regulatory reform, there’s a lot of work to be done. Trump’s proposals are a clumsy and irresponsible diversion.
By Cass R. Sunstein
Cass R. Sunstein is a Bloomberg View columnist. He is the author of “The World According to Star Wars” and a coauthor of “Nudge: Improving Decisions About Health, Wealth and Happiness.” — Ed.
