Speaking at CPAC last month, President Trump’s chief strategist Steve Bannon identified “deconstructing the administrative state” as one of the Trump Administration’s top priorities. Though reasons exist to fear Trump’s economic message (primarily his proclivity for protective tariffs), addressing the administrative state would constitute a great victory for the economy and for average working Americans.
The American bureaucracy seems to stretch across every imaginable sphere of human activity. Virtually no conduct goes without some form of regulation, and almost all regulations, which carry the force of law, are promulgated by administrative agencies vaguely authorized by Congress. Aside from posing accountability and separation of powers concerns, the administrative state weighs heavily on both American businesses and consumers. Consider, for instance, the sheer growth in the size of the code of federal regulations. Nearing the end of the New Deal in the late 1930s, the Federal Register was composed of around 18,000 pages. By 2014, it consisted of over 175,000 pages.
These regulations fall heaviest on America’s small businesses. A 2010 study released by the Small Business Administration’s (SBA) Office of Advocacy found that not only does the annual cost of regulations exceed $1.75 billion – almost $16,000 per American household – but small businesses (those with fewer than 20 employees) face a regulatory burden of over $10,000 per employee, which is 36 percent higher than firms with over 500 employees. This is especially harmful because almost 90 percent of firms in the United States employ fewer than 20 employees, while large firms make up less than 1 percent of all firms.
Burdensome regulations from the vast federal bureaucracy haunt consumers too. The same SBA study found that, combined with the federal tax burden, the federal regulatory burden consumed over a third of America’s national income in 2008.
The Trump administration has long promised to address this leviathan lurking in the shadows of American government. The president has been active in condemning the current state of regulation, and he has signed numerous executive orders geared toward evaluating their efficacy and necessity. For instance, a recent order guides federal agencies to establish task forces to evaluate federal rules and recommend either repealing them or keeping them. And recently, President Trump told business executives that he wants to slash around three-fourths of regulations.
There seems to exist a general consensus in favor of this attitude. Less than a quarter of Americans think that government regulates business too little, while almost half think that businesses were regulated too much, a 9 percent increase since 2008.
Of course, political hurdles remain for Trump before he can institute broad regulatory reform. Many Americans worry about eliminating environmental regulations, for instance, and as Trump undertakes his project to radically transform the regulatory environment, he faces some ideological opposition from Democrats, who are much less likely to think that the government too heavily regulates businesses.
Nonetheless, it is a worthwhile project for Trump and his administration to engage. Far too much capital is devoted to complying with repetitive or unnecessary federal regulations, many of which are arcane, difficult to understand, and extremely lengthy.
The early weeks of the Trump presidency carry mixed reviews, but small businesses have something to hope for: an easing of their burden and a liberation of resources that can be used to invest in company growth and hiring. This is a valuable project, and it constitutes a positive development in an otherwise objectionable blueprint for the American economy.
Thomas Conerty is a recent graduate of Hope College in political science. He is currently a Koch Fellow researching colonial-era sermons to trace American traditions of rights and liberties.