President Trump's regulations order is incoherent, foolhardy, and delusional. Here's why.
For an incredibly simplistic idea, President Trump's new executive order on regulations is a total mess.
On Monday, the president issued an executive order requiring government agencies to scrap two old regulations for each new regulation they introduce. The order also says that each year, the White House's Office Management and Budget (OMB) will decide a total cost that new regulations can add to the economy. Scrapping old rules to make way for new ones will be how agencies stay under the threshold. And for 2017, the order sets a threshold of $0.
Trump may not be an orthodox Republican, but regulations were one subject he definitely toed the party line on during his campaign. He regularly railed against government rules for allegedly suffocating business and job creation. So this new order is Trump making good on that rhetoric. Or at least trying to.
In truth, the order is incoherent, foolhardy, and delusional. Let's take each adjective one at a time.
1. Incoherent: It's not even clear what this executive order does. Because Congress has passed laws that tell agencies to put regulations in place, requiring these agencies to revoke old regulations could actually force them to break the law. Trump's order seems to implicitly recognize this, since it only asks agencies to "identify" regulations that could be revoked, and acknowledges that the "authority granted by law to an executive department or agency" can't be overridden by executive fiat.
Those are massive caveats. Once you've introduced them, it's not obvious this executive order actually does anything — well, besides allowing Trump's OMB to "harass agencies and slow regulation," as Harvard Law School Professor Jody Freeman told Reuters. So like many of Trump's executive orders, this one might be mostly sound and fury.
2. Foolhardy: But what if it's not? If this becomes a rubric for the Trump administration, then we're all in trouble.
That's because as far as anyone can tell, the order directs agencies to focus solely on the economic costs of regulations when making their judgments. It says nothing about regulations' economic benefits.
This might be a standard oversight in GOP policymaking, but it's also a huge mistake. Think, for instance, of EPA regulations. Cleaning up the air and water isn't just good for the environment; it means people come down with fewer cardiac and respiratory diseases and other ailments. So Americans live longer, are more productive at their jobs, and spend less on health care — which means they can spend more on other stuff in the economy.
As Alana Semuels recently explained in The Atlantic, regulations also create jobs because businesses have to hire new people to comply with the rules. "A factory that makes lead additives for gasoline might be shut down because regulations have banned lead additives. But new jobs will then be created at a factory that makes catalytic converters, which are emissions-control devices for cars." In fact, Semuels looked at a series of studies and found no evidence that regulations cause aggregate job loss in the economy.
Other countries have similar "one in, one out" rules for regulations, but they consider costs and benefits in deciding what regulations to swap out. Trump's order sounds like it only acknowledges one side of the ledger, and all the benefits of the other — from health to job creation — are now in the administration's crosshairs.
3. Delusional: So why do regulations get such a bad rap? The answer comes down to the operative word in aggregate job loss: "aggregate." If the new catalytic converter factory is in a different city or state — or if the new jobs require a different set of skills — the specific workers laid off at the lead additive factory could still be out of a job. If the economy is humming along, they will find well-paying jobs relatively quickly. But if it's not, then regulations will be an easy scapegoat.
Unfortunately, the real world has more often reflected the second example than the first. The economy has been in a prolonged slump for most of the last 40 years and regulations have caught an inordinate amount of flack. One researcher told Semuels that "mentions of 'job-killing regulations' peak in times of economic uncertainty, such as during the 2007-2009 recession."
Unfortunately, most commentators tend to just stop here with a shrug. Voters are irrational and regulations are an easy target, so what can you do?
Well, for one thing, we have the fiscal and monetary policy tools to run the economy much hotter than we usually do, and produce many more jobs at a faster pace. Really ambitious industrial policy could also create jobs for specific communities and groups of workers whose jobs are eliminated by new regulations. People usually don't try to try to blame regulations (or anything else) for killing jobs unless the evidence from their own life is that jobs are dying.
Unfortunately, these sorts of policies are often deemed too radical by most Democrats, never mind most Republicans. And so far, it looks like Trump will do the opposite: His plans for public investment and government spending will likely suck money out of the economy, grinding down our already agonizingly slow recovery.
Ultimately, our goal should be an economy that's clean, healthy, and safe, and that's flush with employment. The only reason those two goals seem to conflict is that we've abandoned alternative ways to meet the second priority.