WASHINGTON • While fights over health care and tax reform have captured the spotlight, President Donald Trump and the Republican Congress have spent 2017 methodically unraveling regulations of the previous administration that affect broad swaths of the American economy.
Republicans say that it’s a necessary pendulum swing away from President Barack Obama’s “nanny state” and that their work already has boosted the economy.
“We saw under the Obama administration, really, just an explosion in government overreach, and an explosion of red tape that, at the end of the day, was really hurting American families,” said Rep. Ann Wagner, R-Ballwin.
Democrats warn that the GOP is risking environmental degradation and a return to the lax regulations that led to the 2008 financial crisis.
“You are going to see less consumer protections, because of the rollbacks of certain regulations, you are going to see more environmental disasters and hazards because we are relaxing standards,” said Rep. William Lacy Clay, D-St. Louis.
Rep. Blaine Luetkemeyer, R-St. Elizabeth, a former banker and senior member of House committees on financial services and small business, said that over the last few years of the Obama administration, business owners and entrepreneurs had begun to “pull back” from expansion or starting new businesses.
“They said that if we continue to get this onset of rules and regulations and we get no tax relief, we are going to have to hunker down to be able to survive,” Luetkemeyer said. “Small business folks who create the most jobs in this country were sitting on the sidelines.”
Wagner, Clay and Luetkemeyer all serve on the House Financial Services Committee, an epicenter of Trump-era regulatory rollbacks, many aimed at Dodd-Frank reforms put in place after the 2008 financial crisis. On one day in mid-November alone, the committee passed 23 separate financial-related regulatory rollbacks.
The Senate has been slower to act, but activists on all sides of the regulatory issue agree that the Trump-led offensive has been broad and persistent.
The Competitive Enterprise Institute, a free-market advocacy organization, estimates that regulatory compliance annually costs the American economy $1.9 trillion. That amounts to a “hidden tax” of roughly $15,000 on the average American family, the CEI says, a statistic often cited by Republicans.
“The pace of the amount of regulations that (Trump) is putting into the pipeline has gone way down,” said Wayne Crews, vice president of policy at the CEI. “And the regulations that were in the pipeline but were not final under Obama, he was able to slow that down.”
But Heidi Shierholz, who was the chief economist at Obama’s Labor Department and who now directs a project on worker rights and wages at the liberal Economic Policy Institute, said that there were no credible studies showing that regulations cost American jobs. Some industries, such as the fossil fuel industry, may suffer disruption and losses, she said, but others — such as renewable energy — step in.
She accused Trump of campaigning as a populist but governing as a big-business president when it comes to regulations to protect people.
She said that her organization estimated that delaying implementation of the Obama rule requiring financial advisers to put their clients’ interests over fees will cost small investors more than $10 billion over the next decade.
“He is going to literally make it easier for financial advisers to not act in your best interests,” Shierholz said. “It is outrageous.”
Trump has liberally used executive actions to delay or stop regulations. And this year, Congress has used a once-obscure law — the Congressional Review Act — 15 times to peel back regulations on everything from shortening how long workplaces have to keep records of injuries on the job, to regulating how states set up retirement systems.
Congress had invoked the Congressional Review Act only once before, in 2001.
One of the first uses of that act this year came when Congress killed an Obama-era regulation that restricts coal companies from dumping mining waste in waterways. While environmentalists recoiled, Republicans hailed it as a first step to revive the coal industry they say had been regulated toward extinction under Obama.
Trump’s administration has pulled back on the “Waters of the USA” initiative by Obama’s Environmental Protection Agency that was ostensibly aimed at preventing pollution nearer to the source of rivers and lakes. But critics said it was a big-government overreach into regulating virtually all waters in Missouri and other states. Sen. Roy Blunt, R-Mo., has given Senate floor speeches denouncing that rule as an overreach for years.
In late November, Trump’s EPA director Scott Pruitt, is scheduled to hold two days of hearings in West Virginia to repeal Obama’s Clean Power Plan. Environmental groups had praised the plan as a giant step toward moving the U.S. toward cleaner energy; Blunt and others had said it would have punished energy users in Missouri because of the state’s high dependence on power generated from fossil fuels.
“The excessive new rules would have amounted to an additional tax any time someone flipped on a light switch, harvested a crop, or paid for groceries,” Blunt said.
Republicans say statistics bear out what Trump and the GOP Congress is doing to rein in what they call the regulatory state:
• As of Nov. 14, the administration claimed to have canceled 105 regulatory rules – including 27 related to the environment, 15 to labor and finance, 16 on civil rights, 12 on healthcare and 12 on workplace and consumer protection. Nearly three dozen more rollbacks were in the works.
• Wagner pointed out that, as of Nov. 16, the Federal Register, which includes all proposed regulatory actions by the government, had 45,678 pages for 2017. Over the same period of Obama’s last year in office, the Register had 67,900 pages.
“Everyone pays for the cost of compliance by government overreach, and it was on steroids during the Obama administration,” said Wagner, who said that an aversion to government regulation had been in “my DNA” since she was 12 or 13 and she saw her father and mother have to replace a new sign in their carpet store because it was a few inches too wide.
Luetkemeyer said he heard consistent complaints about government overreach from business owners in his district. One, he said, told him he was fined $5,000 for a broken taillight on a forklift even though the business owner offered to fix the light while the regulator was there.
“This is what is going on with our small business folks,” Luetkemeyer said. “It wasn’t this one particular rule. They will tell you over and over again: ‘It is not one, it is a compilation of all of them.’ ”
Some Democrats do not defend all of the Obama-era regulations. Sen. Claire McCaskill, D-Mo., is trying to repeal a rule requiring a magician from Springfield, Mo., to register his rabbit with the federal government and to have a disaster evacuation plan for the bunny.
“I am not against getting rid of regulations that make no sense and make businesses jump through hoops that aren’t necessary,” McCaskill said, pointing out that she and Luetkemeyer had worked together on financial regulation rollback. “But I am not going to let them dismantle the EPA. I am going to do everything I can to fight Scott Pruitt because they are nominating people (to administer federal environmental programs) that can’t cite one clear air regulation they agree with.”
Clay said the financial industry had already adapted to the fiduciary rule that Trump had delayed, by putting in “safeguards for the small investor.”
“It is really part of a pattern of trying to undo the good things that the previous administration tried to do for the public,” Clay said.
Shierholz, of the Economic Policy Institute, said she believed the public did not grasp the full measure of what Trump and Republicans were doing because media focus had been on “more shiny objects,” such as the special counsel investigation of Russian influence in U.S. elections and ongoing Trump Twitter fights with everyone from Democratic leaders in Congress to North Korean dictator Kim Jung Un.
“I feel like there should be more attention on these things,” Shierholz said. “It is hard because … there are so many other sensational things going on. This is being sold on this huge lie that deregulation is going to spur growth, that it is going to create jobs.”
But Trump’s budget director Mick Mulvaney said regulatory reform, coupled with tax cuts and energy development, were the keys to Trump’s promise to grow the economy. Mulvaney has dubbed it “MAGAnomics,” a play off Trump’s “Make America Great Again” campaign slogan.
“When you put (tax reform) together with the other parts of the initiative ... which is our tax plan, plus the deregulatory plan, plus our energy plan ... you really do see a pathway towards sustained, 3 percent economic growth in this country,” Mulvaney said.