This essay is a part of The Right Way Forward, Restoring America’s new think tank debate series in which leading conservative institutions argue the defining questions of the post-Trump era. Read about the series here.
The unsung hero of the Trump administration thus far has been deregulation, saving consumers and businesses billions of dollars. While issues like tariffs or the optimal structure of the tax code are hotly debated on the political Right, there should be near-universal agreement that the crusade to roll back burdensome regulation is constructive and should continue in earnest.
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For decades, Washington D.C.’s primary export has been costly red tape that strangles innovation and job growth, increases the cost of living, and reduces consumer choice. Empirical evidence shows that aggressive, targeted deregulation removes government-imposed economic barriers, allowing workers, families, and businesses to thrive.
While the Biden administration added trillions of dollars in regulatory burdens, the second Trump administration is building on the deregulatory success of the first term. Upon taking office, President Donald Trump issued an executive order imposing a 10-to-1 ratio of rules to be eliminated before one could be added. The actual results have significantly exceeded expectations.
The administration has slashed 129 rules for each new one imposed, saving well over $200 billion, or more than $1,600 per household. But these direct savings are dwarfed by the long-run impact that deregulation has on spurring growth, which means more jobs, more income, and even less dependency on government.
Overregulation has reduced annual economic growth by almost a full percentage point on average each year since the 1980s. It has hamstrung small businesses and sent countless jobs overseas. Consider that manufacturers routinely face annual regulatory burdens of $50,000 or more per worker. It’s no wonder America’s industrial base has gone to China.
THE RIGHT WAY FORWARD: THE ROLE OF THE STATE IN THE ECONOMY
But it’s not just manufacturing that has been hollowed out by regulation. The financial services industry has been suffocated by government overreach ever since Dodd-Frank, which became law in the wake of the Global Financial Crisis. As a result, small banks, unable to comply with the mountains of red tape cost-effectively, started going under.
Consumers were left with fewer choices when it came to important financial decisions, like borrowing for a home mortgage, and they paid higher interest rates as a result. Simultaneously, the interest they received on savings accounts went down. Regulation didn’t make banking and lending safer — it made them more expensive.
The Trump administration has also been pushing bureaucracy out of the way for America’s energy industry by reforming leasing and permitting, along with fast-tracking critical infrastructure, like refineries. These efforts mean more energy supply, which in turn means lower prices.
Of course, energy prices have risen dramatically since February because of the war with Iran, but that doesn’t negate the fact that deregulation was putting significant downward pressure on prices at the pump before the outbreak of war. Today’s higher fuel costs are in spite of, certainly not because of, deregulation.
And the deregulatory crusade is not just a matter of making things cheaper, but making them better. Many household appliances, for example, use less water and energy than previous models, but they do a much worse job. Dishwashers and washing machines regularly need to be run a second time to actually clean their contents. Toilets don’t flush well. Air conditioners can’t keep up on very hot days.
Manufacturers are forced to meet such stringent water and energy requirements for many products that they must sacrifice quality. In other words, they’re forced to make the government happy instead of making customers happy. Deregulation rolls back this nonsense by allowing companies to produce and sell the kinds of appliances consumers actually want.
Critics make all manner of hyperbolic claims that deregulation is reckless, destroys the environment, or even kills people. Au contraire. It is government overreach through burdensome regulation that makes us less efficient and causes us to waste resources, thereby incurring truly negative outcomes like lives lost.
Deregulation is about getting inefficient government out of the way so the private market can thrive and produce the rising tide that lifts all boats.
E.J. Antoni, Ph.D., is chief economist and the Richard Aster fellow at the Heritage Foundation and a senior fellow at Unleash Prosperity.
