Skip to content
Subscriber Only

Trump’s New Math on Old Regulations

Trump’s cost-benefit analysis is all cost and no benefit.

On Jan. 30, Donald Trump did something that every U.S. president has done since Jimmy Carter: He directed the federal government to reduce the burden of regulation. As he signed an executive order in the Oval Office, surrounded by small-business owners, Trump declared that it would lead to “the largest-ever cut by far in terms of regulations.” In signing it, Trump made good on one of his core campaign promises—to roll back federal regulations that he repeatedly blamed for costing the U.S. economy $2 trillion in annual growth.

The intent of Trump’s order isn’t new. The mechanics are. Rather than weigh the pros and cons of individual rules as they come, it directs federal agencies to adhere to a simple trade-off: For every new regulation finalized, two old ones must be phased out. The order also says agencies can’t create new net costs for companies or consumers. This sets up a sort of regulatory cap and trade, in which agencies can swap regulations with each other to stay under the cap.