Advantages of Present Deregulation Policies for the Economy

Advantages of Present Deregulation Policies for the Economy

The Biden Administration has imposed a record $1.8 trillion in new regulatory costs on the economy, prompting a multi-agency initiative aimed at rescinding Federal regulations that contribute to higher living costs. This initiative could potentially generate significant cost savings, with the Administration's strategy for long-run regulatory reduction including a 10-to-1 regulatory budget, requiring that for every new rule, 10 existing rules must be eliminated.

In the previous administration, the Trump Administration took steps to reduce regulatory burdens impacting American households and businesses. The President's deregulatory agenda, with its 1-in-10-out regulatory budget, has the potential to generate additional savings. The estimated economic growth benefits from the Trump Administration's deregulatory efforts so far in its second term include $86 billion in total regulatory cost savings and 52.2 million hours in paperwork reductions within the first six months.

However, most of these savings result from a single deregulatory action—the repeal of the Beneficial Ownership Information Reporting Requirement—suggesting that the broader deregulatory agenda has been less impactful compared to the first term in 2017, when more widespread rollbacks occurred. Congressional Review Act resolutions repealing regulatory rules have saved an estimated $3 billion in regulatory costs this year, slightly less than in 2017.

Regarding the impact on the federal deficit over 10 years, the deregulatory efforts' direct effect on deficit reduction appears limited. While deregulation reduces costs to businesses and paperwork burdens, there is no clear evidence showing these savings translate into significant federal revenue increases or cuts in federal spending. President Trump's recent tax and spending bills are projected to add over $4 trillion to government debt over the next decade.

In the Biden Administration, the potential cost savings estimates, such as from rescinding the EPA's "Good Neighbor Plan" ozone air quality rule and multi-pollutant emission rule for light-duty and medium-duty vehicles, could reach $679 billion. Other potential savings include $25 billion from the elimination of the Department of Transportation's current Corporate Average Fuel Economy standards and $23 billion from the delay and eventual rollback of seven Department of Energy rules on appliance conservation standards.

The length of the time horizon used for regulatory impact analysis (RIA) depends on how long a regulation is estimated to have an economic effect. For example, the EPA tailpipe emission rule considers costs and benefits out to 2055.

President Trump immediately froze all regulatory proposals still in the approval process, potentially saving Americans over $180 billion or $2,100 per family of four in present value terms.

In summary, while deregulatory efforts provide measurable economic cost savings that could stimulate growth, their scale and scope appear insufficient to meaningfully reduce the federal deficit over a decade, especially given large current fiscal expansions.

1. The Biden Administration's strategy for long-run regulatory reduction includes a 10-to-1 regulatory budget, implying that for every new technology-related rule, ten existing rules in the same field might be eliminated, potentially impacting the tech business and investing landscape.
2. In the Biden Administration, the potential cost savings estimates, such as from rescinding certain Environmental Protection Agency (EPA) rules, could reach tens of billions, indicating that decisions in the area of environment could have significant financial implications for corporations and investors.
3. President Trump's deregulatory agenda, with its 1-in-10-out regulatory budget, could generate additional savings, particularly in areas like finance, business, health, and finance, as evidenced by the $86 billion in total regulatory cost savings.
4. While deregulation might translate into paperwork reductions in various sectors, from food production to science, there is no clear evidence showing that these savings directly contribute to federal revenue increases or cuts in federal spending, reinforcing the importance of careful planning and strategic investments.
5. The length of the time horizon used for regulatory impact analysis (RIA) varies, with some regulations, like the EPA tailpipe emission rule, considering costs and benefits out to 2055, highlighting the long-term nature of impacts from decisions in environmental science and technology on the overall economy and business landscape.

Read also: