- Critics cite fuel economy, overtime, financial advice rules
- White House advisers say rollbacks to spur economic growth
Total regulatory costs were reduced by $31.1 billion in fiscal 2017 and 2018, according to the Office of Information and Regulatory Affairs, the White House agency charged with reviewing significant federal rules. Agencies project another $18 billion in regulatory cost savings for 2019.
CAP counters that while regulatory cost savings accrue to industry and the economy, consumers will be left paying more.
An accurate assessment needs to consider both benefits and costs, said Jerry Ellig, a research professor at the George Washington University Regulatory Studies Center.
“Both sides focus on what they think will do the most to persuade people they are right,” Ellig said. “The Trump administration emphasizes cost reductions because reducing the cost of regulation was one of the president’s key campaign promises. Defenders of regulation focus on benefits—or simply transfers—and downplay costs.”
Complying with regulations increases the cost of doing business and results in opportunity costs—business and consumer activities that are forgone due to regulation, said the 2019 Economic Report of the President released earlier this month.
The White House report said that, ultimately, costly regulations penalize consumers and workers because fewer competitors, higher costs, and lower productivity lead to higher prices, limited consumer choice, and lower real wages.
Over the last two years, the Trump administration has taken major steps to reverse the long-standing trend of rising regulatory costs, the report said. Further, if the U.S. adopted product market regulatory changes, over the next decade gross domestic product could be 1 percent to 2.2 percent higher, it concluded.
The real question is whether any of Trump’s deregulatory efforts are boosting the economy, said James Broughel, a senior research fellow at the Mercatus Center, a market-oriented think tank based at George Mason University.
“Benefits to growth won’t show up in estimates of reduced compliance costs, just as lost growth doesn’t show up in OIRA’s annual estimates of the cost of regulations,” Broughel said.
The federal government has significant power to set the rules that help determine winners and losers in the economy, said Sam Berger, vice president for democracy and government reform at CAP, and an author of the new consumer study.
For example, this administration overturned the previous overtime rule—which has cost workers almost $1.7 billion to date—proposing instead a weaker rule that would still cost workers $840 million a year in lost wages, said Berger, a former counsel at the Office of Management and Budget during the Obama administration.
Similarly, the Trump administration overturned the fiduciary rule that protected retirees from being cheated by financial advisers—a problem that costs people $17 billion in retirement savings per year, the CAP study said.
Finally, the Trump administration is looking to weaken standards governing fuel efficiency and climate pollution, which means that American families could spend a net $23.8 billion more each year from higher spending on gasoline, the study said.
Overall, this debate highlights how a few small changes in assumptions can determine whether the Trump administration’s regulations are estimated to save Americans billions, or cost them billions, Broughel said.
To contact the reporter on this story: Cheryl Bolen in Washington at firstname.lastname@example.org