President Trump will be remembered by the public as the only president to be impeached twice, as well as for his over-the-top social media persona. However, scholars who take a deeper look at the actual policies enacted during his time in office should notice something different. Much of substance can easily be missed if one only reads Trump’s now-suspended Twitter feed. His legacy is likely to prove especially strong in one area: regulation.
Some critics have pointed out that regulatory cuts made during the Trump years have not lived up to the president’s lofty promises on social media or in speeches. One that received considerable attention was a pledge to cut federal regulations by 70 percent. That clearly has not happened, but it was also never an official policy, and may be best understood as a signal of the administration’s priorities.
Looking beyond the rhetoric, Trump’s regulatory legacy is likely to stem from three main programs: regulatory cost caps, an innovative regulatory accounting system, and “process regulations” designed to rein in agency abuses of power.
The annual cost of regulations is now widely considered to be in the trillions of dollars, according to the latest peer-reviewed academic research. Regulatory costs have grown so out of control largely because the agencies that regulate bear few consequences for blanketing the economy with red tape. Regulators, politicians and special interests trade favors with one another; the result is ever-more regulation from which they all benefit. The public ends up bearing the costs. This government failure is a classic example of what economists call an externality.
Regulatory cost caps are a sensible solution. Congress sometimes uses budget caps to prevent fiscal spending from exploding out of control, but no such caps existed on regulatory “spending” until President Trump’s tenure. And while Joe Biden is likely to ditch the new regulatory budget — essentially returning to federal agencies the outrageous license to spend the public’s money without limit — it is hard to imagine every future administration embracing such profligacy.
Another Trump administration innovation is a new accounting system to implement its regulatory budget. Few Americans are aware that, for years, the Office of Management and Budget was supposed to be enforcing presidential executive orders directing agencies to weigh the costs and benefits of regulating. OMB instead used the opportunity to promote a bizarre social justice agenda lacking a basis in coherent economic principles. But that has begun to slowly change during the Trump years.
Regulators have started to tally the costs and benefits of their actions in a coherent and theoretically sound framework, considering tradeoffs, economic efficiency, opportunity costs and the compounding effects of economic growth. These are all factors that have been strikingly absent from regulatory analysis produced by both parties in the past.
Again, expect Biden to ditch the new cost-benefit regime, in essence returning the country to a situation where regulating takes place in the dark. However, the Trump accounting system will almost certainly return in full force in future years. Good ideas tend to win out over the long term, and that’s likely to be the case here.
Finally, the Trump administration has been rapidly finalizing regulations on the regulators rather than the public. Usually, federal agencies use their authorities to restrict the domain of allowable private-sector activities. But the same powers can be used to rein in the abuses of regulators, too. That’s precisely what Trump’s team has been doing, passing regulations that formalize cost-benefit analysis procedures, standardize regulatory guidance practices, impose transparency measures, and force periodic reviews of the impacts of regulations.
It is unlikely that any other administration issued as many substantive process regulations of this kind. Given Congress’ apparent unwillingness to deal with issues of executive overreach, meaningful regulatory reform at the federal level will almost certainly come in the form of self-binding, executive-led efforts like these, which pre-commit the executive branch to fair, transparent, and efficient practices.
Trump may not have cut as many regulations as he claimed he would, but his administration has created a desperately needed roadmap to improve the performance of the U.S. regulatory system. It’s easy to conflate the man with the policies and therefore to paper over the administration’s accomplishments — but don’t be fooled. Whether or not the man has a lasting influence on our politics, on the policy front, Trump’s regulatory legacy is likely to endure.
James Broughel is a senior research fellow with the Mercatus Center at George Mason University. Follow him on Twitter @JamesBroughel.