Is Trump great at cutting red tape?

In his campaign speeches, Donald Trump has been pounding claims that as president he was the greatest deregulator in US history. He promises more in a second term, vowing to control “rogue bureaucrats” and “shrink” the scale and reach of the federal govt every year. Even critics are less inclined to challenge his claim than to warn of untoward consequences, should the self-styled king of deregulation return to office. Trump’s story is part true. No US president since Ronald Reagan made a campaign to roll back the bureaucratisation of American life so central to his political identity, which helps explain why small- and medium-sized business owners tend to support him. They suffer most from costly new regulations, which have prevented many entrepreneurs from launching, or forced them to fold. To a degree many other politicians have yet to acknowledge, the rise in red tape helps explain why the dynamism of US economy has flagged over time – a fact visible in slowing growth in productivity and fewer start-ups. Still, Trump’s claims overstate his accomplishments. He tried to downsize big govt but was undone by bureaucratic resistance and his own erratic style. Most notably, he gave the Environmental Protection Agency a deregulatory mission, aiming to lift protections for wetlands, limits on carbon emissions and much else. Many of these efforts failed legal challenges. Often hastily drafted, nearly 80% of his initiatives were defeated in court – more than twice the normal rate. Meanwhile, Trump was quietly adding new regulations. From the start, as conservative regulatory scholar Clyde Wayne Crews Jr has put it, Trump showed a “zeal” for restrictions on certain sectors and industries, like foreign trade and the media, and over time his “own regulatory impulses derailed and even eclipsed the rollback agenda.” In his last year, Trump unleashed a record gusher of ‘midnight regulations’, including against targets of his political agenda, with new restrictions on immigrants, abortion funding and transgender rights. Boosted by that final rush, Trump ended up adding more than 3,000 new regulations a year, in the same range as his predecessors going back to Bill Clinton. So Trump did not cut nine of every 10 pages in the US code of regulations, or “deconstruct the administrative state”, as he and his aides had promised. Regulatory agencies continued to grow, as they had for decades; administrative staff grew an average 3% a year and budgets 1% – both close to the middle of the pack among his six predecessors going back to the 1970s. On these measures, then, Trump looks like just another garden-variety regulator. As bureaucracy and regulations grow, small firms die. Since the late 1990s peak, the number of public firms in US has fallen from around 7,000 to 4,000, with small firms accounting for most of the decline. As the average length of bank regulatory filings doubled to 90 pages, small banks collapsed in growing numbers. Many of them started firing clerks and hiring compliance officers to process the paperwork, but still could not keep up. Even new rules written with ‘deregulatory intent’ were growing longer, more maddening, more deeply riddled with loopholes favouring giant corporations with armies of lawyers.Trump did not slow this process of strangulation by red tape. He complained early on about inheriting so many layers of presidential appointees that “it’s just people over people over people”. One result is govt job titles so long-winded they could have been written by a satirist, such as ‘deputy associate assistant commissioner’. But as Brookings Institution researchers have shown, the levels within this hierarchy continued to multiply from 17 under John F Kennedy in the 1960s to 71 under Obama and 83 under Trump, who thus bequeathed an even higher stack of “people over people” to Biden. Biden then reversed course. Embracing big govt, he untethered the ship of state and ordered it to run full speed ahead. He scrapped Trump’s regulatory budget, which demanded (unsuccessfully) that for every new rule, two must be cut. He dropped Carter-era directives calling for balanced cost-benefit analysis, telling supervisors instead to seek “opportunities” to write new regulations with “positive” social benefits, and worry less about costs. Not surprisingly, costs exploded. These costs are perhaps the most important measure of deregulatory success, and it shows Trump did not “shrink” the state, but he did slow its expansion. Trump imposed just $16bn a year in new regulatory costs on business – far less than George W Bush or Obama, and petty cash compared with his successor. Under Biden, businesses faced $150bn in new costs per year, and 93mn hours of added paperwork, both records. And Kamala Harris, who embraced Biden’s big govt agenda as his Vice President, is expected to deliver more of the same as his Democratic successor. One of the many things Americans dislike about modern capitalism is creeping bureaucratisation, creating a thicket of red tape that only the biggest corporations have the resources to navigate successfully. Their working lives, crowded with federally mandated trainings and attestations, have been spoofed as death by a thousand paper cuts. Trump may not be the true king of deregulation, but he is addressing popular frustrations that his rivals do not even recognise. The writer is an author and global investor