By Alan Zibel
President Trump often claims that cutting back on regulations will help the U.S. economy. But the Trump administration’s zeal for slashing “red tape” conceals an often-ignored reality: regulations provide massive benefits to consumers, workers and the economy.
In fact, a new Public Citizen analysis [PDF] finds that the Trump administration wants to deprive Americans of more than $2.1 trillion in benefits, in the form of improved health, enhanced safety and a more energy-efficient economy, over the next two decades by enacting reckless deregulatory rollbacks.
If Trump achieves this misguided goal, the potential loss would amount to about $16,700 per household, far exceeding any cost savings for businesses. The research highlights how Trump’s crusade against regulations is the product of special-interest lobbying rather than a serious effort to promote economic growth.
Cost-benefit analysis has been part of federal rulemaking since the 1980s. Under an order signed by President Reagan in 1981, federal agencies must analyze whether the potential societal benefits of regulations outweigh the potential costs. This sort of analysis is routinely used by business groups to derail life-saving regulations despite valid concerns about the difficulty of assigning dollar values to hard-to-quantify benefits such as clean air and human life. But federal agencies have devoted exhaustive study in recent years demonstrating the economic benefits of those rules.
Public Citizen’s examination of 13 rules repealed, delayed or targeted for repeal by the Trump administration found that more than $105 billion in benefits, on average, will be lost every year from 2020 through 2040 if the Trump administration erases these rules or enacts toothless replacements. These at-risk benefits amount to $836 per year for every U.S. household, vastly exceeding the rules’ average annual costs of nearly $21 billion. The benefits are also far higher than the administration’s claimed savings of at least $570 million per year through regulatory rollbacks.
Public Citizen’s analysis primarily uses economic cost-benefit numbers developed when these rules were proposed or enacted during the Obama administration rather than misleading numbers published by the Trump administration to justify their repeal. In some cases, we use numbers from expert sources that calculate the benefit to consumers or workers, rather than to the entire economy.
Benefits of Targeted or Eliminated Rules, 2020-2040 ($ Billions)
|Rule||Agency||Annual Benefit (Low)||Annual Benefit (High)||Average Yearly Benefit|
|Clean Car Standards||EPA/NHTSA||$8.55||$119.40||$63.98|
|Glider' truck pollution||EPA||$6.00||$14.00||$10.00|
|Energy efficient light bulbs||Energy||$3.60||$14.20||$8.90|
|Battery backup efficiency||Energy||$0.26||$0.46||$0.36|
|Public lands methane||Interior||$0.21||$0.40||$0.31|
|Air conditioner efficiency||Energy||$0.21||$0.33||$0.27|
|Packaged Boiler efficiency||Energy||$0.09||$0.30||$0.20|
|Oil rig safety||Interior||$0.16||$0.16||$0.16|
|Air compressor efficiency||Energy||$0.03||$0.07||$0.05|
Costs of Targeted or Eliminated Rules, 2020-2040 ($ Billions)
|Rule||Agency||Annual Cost (Low)||Annual Cost (High)||Average Yearly Cost|
|Clean Car Standards||EPA/NHTSA||$9.19||$22.60||$15.90|
|Glider' truck pollution||EPA||n/a||n/a||n/a|
|Energy efficient light bulbs||Energy||$0.00||$1.80||$0.90|
|Public lands methane||Interior||$0.11||$0.28||$0.19|
|Battery backup efficiency||Energy||$0.12||$0.16||$0.14|
|Oil rig safety||Interior||$0.09||$0.10||$0.10|
|Air conditioner efficiency||Energy||$0.05||$0.06||$0.06|
|Packaged Boiler efficiency||Energy||$0.03||$0.04||$0.04|
|Air compressor efficiency||Energy||$0.01||$0.01||$0.01|
Public Citizen’s analysis excludes some important rules. For example, it does not include the impact of replacing Obama-era rules regulating carbon dioxide emissions from power plants. Though that rule was initially expected to bring large economic benefits, many of those benefits have been achieved far earlier than expected as inexpensive natural gas forces the retirement of coal power plants. Additionally, the Obama-era carbon rules were not allowed to go into effect due to an unfavorable Supreme Court decision. Furthermore, Public Citizen’s analysis also does not include the rollback of a rule curtailing mercury pollution from power plants, as power plant owners have already made the necessary upgrades to implement the rule, and several states might still require the use of such equipment. If we had included the benefits from those rules, our $2.1 trillion lost benefit figure would be far higher.
Under an executive order signed by President Clinton in 1993 and a similar order signed by President Obama, federal regulators almost always proceed only with new regulations when monetized benefits outweigh the costs. This kind of calculation tends to overstate the costs of rules, primarily based on information provided by industry, and underestimate benefits. Often missing from these calculations are benefits such as privacy, averted pain and suffering, democracy, equality and fairness. Often, the benefits of new regulations are immense, such as efforts to mitigate global climate change, and far greater than just those benefits that agencies can calculate. In many cases, particularly for pollution and energy efficiency standards, the economic benefits of regulation often dramatically exceed the costs.
A case in point is Trump’s s recent proposal to roll back automotive fuel economy and greenhouse gas standards. Despite objections from career EPA career officials, the administration implausibly claimed that the rollback would result in increased safety as consumers would be more likely to buy new cars without the added cost of fuel economy technology. In fact, improved fuel economy can motivate consumers to buy newer car models.
An analysis by Trump’s own EPA acknowledges that the Trump rollback plan would increase emissions of air pollutants both from vehicle tailpipes and from fuel refining at a societal cost of $800 million to $1.2 billion through 2026. Meanwhile, one analysis finds that freezing federal vehicle standards at 2020 levels would boost consumer spending on gasoline by $20 billion in 2025, lead to 60,000 fewer jobs and an $8 billion decline in gross domestic product in 2025.
Still, the Trump administration as well as corporate-allied critics, focus obsessively and exclusively on regulatory costs without acknowledging or taking into account regulatory benefits. One of the Trump administration’s early actions was an executive order that conveniently ignored the “benefit” side of the cost-benefit equation by directing federal agencies to repeal at least two federal regulations for every new rule they issue. (Public Citizen is suing the Trump administration over the legality and constitutionality of the deregulatory executive order) This sort of approach would be better described as cost-cost analysis. In the Trump administration’s view, regulatory benefits are not even part of the picture.
The Trump administration also has put key rules on ice despite the considerable net benefits. For example, the administration has refused to publish in the Federal Register four beneficial energy efficiency rules, and even appealed a federal judge’s ruling that it must do so, prefferring to battle in court rather than simply implement the law. Trump officials have also worked to undermine the regulatory process, particularly by cooking the books and lowering or eliminating consideration of benefits that are lost when rules are repealed.
When trying to repeal rules its industry allies dislike, the Trump administration often employs logic that is sloppy at best. For example, under former EPA Administrator Scott Pruitt, the agency last year proposed to repeal pollution requirements for super-polluting diesel freight trucks created by dropping old engines into new truck bodies. This “glider truck” proposal was virtually devoid of any evidence or analysis of why the repeal was necessary, ignoring the agency’s legal responsibility to demonstrate its rules are the product of reasoned decision-making based on sound science and economics. Given that a glider truck can emit up to 450 times the particulate matter and up 43 times the nitrous oxide of new trucks, these issues deserve a serious, professional review. The repeal would cost Americans $6 billion to $14 billion in benefits every single year. More recently, the EPA’s acting administrator, Andrew Wheeler, has backed down on Pruitt’s plan to not enforce the glider rule but still appears likely to proceed with a repeal.
The Trump administration has even failed to consider the possibility that federal rules may benefit the public. In a proposal to roll back offshore drilling safety standards, the Interior Department neglected to mention any benefit to society that would be forgone if the rule were to be repealed. The benefits, including avoided natural resource damage, personal injuries, the cost of spill containment and impact to commercial fishing, could add up to $163 million per year, according to government calculations. Yet, the Interior Department only calculated the safety rule’s costs to oil and gas companies. As Sen. Bill Nelson (D.-Fla.) wrote in a letter to the Interior Department, the proposal “places its entire justification on oil company profits and completely ignores potential economic costs to the lives and safety” of oil industry workers and coastal communities.
Trump officials also are undermining efforts to incorporate forecasts of the economic damage caused by climate change into government rule-writing. The Obama administration calculated that, based on the global damages from climate change, each ton of carbon emissions would cost the world economy $54 in 2030. But the Trump administration lowered this figure to $7 a ton, a move that artificially diminishes the climate change impact of the administration’s deregulatory agenda.
In a similar vein, the EPA has proposed eliminating ancillary benefits, known as co-benefits, from its cost-benefit calculations. For example, power plant regulations intended to reduce mercury levels in the air can also have the extra benefit of curbing soot in the air. And rules designed to lower carbon emissions also reduce other kinds of pollution. Just as the Trump administration wishes to study the impact of regulatory changes on employers and jobs, it should take the impacts on public health just as seriously.
Although pro-corporate think tanks and analysts have developed a cottage industry of generating fanciful estimates of the cost of regulation, overall costs are not consequential compared with the size of the U.S. economy. Thus, analysts at Goldman Sachs studied whether job growth and capital spending have been stronger in sectors and companies that were more highly regulated before the most recent election and found “no evidence that employment or capital spending accelerated more after the election in areas where regulatory burdens are higher.” They found the results “not surprising,” partly because “the estimated costs of regulation are not that high.” Relatedly, a study by a libertarian economist at George Mason University found no correlation between increased federal regulation and the formation of startups or tendency of workers to switch jobs or move for new jobs.
Americans have seen firsthand that cutting regulations can lead to economic devastation. The deregulation of Wall Street in the 1990s and 2000s led to the financial crisis of 2008 and the Great Recession, cost Americans up to $14 trillion, destroyed 8.7 million jobs and caused workers’ pension funds to lose nearly a third of their value. The Trump administration’s deregulatory obsession is costing America, massively. The “deconstruction of the administrative state” may sound appealing in abstract terms, but in blocking and rolling back key rules, the administration is inflicting needless pain on Americans every single day.