President Donald Trump is taking a hatchet to Washington’s regulatory octopus. Through executive power, he directed federal agencies to eliminate ten regulations for every new regulation instituted.
Releasing American households and businesses, especially small businesses, from the grip of strangling red tape helped fuel the economy under Trump 1.0.
The new Trump administration is taking even more aggressive actions to free the economy from the onslaught of regulations during Biden’s past four years.
What Happened
On January 31, President Trump signed an executive order launching a massive government-wide deregulatory initiative:
The Order requires that whenever an agency promulgates a new rule, regulation, or guidance, it must identify at least 10 existing rules, regulations, or guidance documents to be repealed.
The Director of the Office of Management and Budget will ensure standardized measurement and estimation of regulatory costs.
It requires that for fiscal year 2025, the total incremental cost of all new regulations, including repealed regulations, be significantly less than zero.
President Trump is building on his deregulatory efforts in his first administration which required two regulations to be cut for every new one.
What This Means for Me
By the end of his first term in office, the White House touted quadrupling deregulatory efforts. “Between FY 2017 and FY 2019, the Trump Administration has cut nearly eight regulations for every new, significant regulation—more than fulfilling the promise of Executive Order 13771 to cut two regulations for every new regulation imposed,” they reported in 2020.
The Council of Economic Advisers (CEA) estimated that this raised real incomes by upwards of $3,100 per household per year, or $53 billion per year, over the period of 2021-2029.
Analysis by the American Action Forum calculated a net total of $40.4 billion in regulatory costs and an annual average of $10.1 billion in cost—far less than 10% of the Obama administration’s average of $111 billion annually.
What’s Next
Regulatory advocates and opponents agree that the road ahead will be more difficult for President Trump as he faces more legal roadblocks and pushback.
The publication Government Executive wrote:
… the bulk of Trump’s deregulatory agenda will require substantial work and people to perform it, and many experts have argued that a lack of officials with relevant expertise was a factor that limited Trump’s effectiveness in eliminating regulations during his first term.
Certainly, the Trump administration could delay, abandon, or oppose Biden-era rules. We urge them to do so with the independent contractor rule, the overtime rule, and others. However, the legal challenges the administration could face may be greater than before.
In addition, the impact of Chevron’s deference, which empowered federal agencies with rulemaking beyond what Congress delegated to agencies, was overturned by the Supreme Court in 2024. That may work against Trump’s regulatory efforts, according to Bridget Dooling, a law professor at Ohio State University:
It puts any administration that’s trying to come in and change things, whether it’s to make them more regulatory or less regulatory, to really explain why their new interpretation is better.
This argument remains yet to be seen but will undoubtedly be tested.
Cutting back the federal workforce could play yet another role. A regulatory expert from AAF added that the removal of federal bureaucrats may also work against the goal of good rulemaking. “The operational chaos that will almost certainly ensue at the agency level would delay the administration’s core rulemakings,” he wrote. “And, even if such an agenda ultimately proves largely successful, while the resulting agencies may be composed of more ideologically aligned personnel, the diminished levels of both sheer manpower and expertise may lead to fewer and less well-crafted rulemakings.
Bottom Line
Cutting regulations lifted real income for American households under Trump 1.0. After four years of inflationary policies, deregulation may deliver more added financial relief to households.