Editorial: U.S. should play by fewer rules

In just six weeks, the Trump administration has repealed 90 federal regulations. It’s also put a freeze on all new and pending regulations. And it’s required agencies to remove two old regulations for each new one proposed.

That should be just a warm-up lap in the reform of a federal regulatory code that’s dizzying in size.

“The code is 178,000 pages, and over 100 million words, and there are over 1 million restrictions, words like ‘shall,’ ‘must’ and ‘may not,’ ” says James Broughel, public policy fellow at the Mercatus Center. “Where do we even begin?”

A good place to start, beyond Obamacare and the tax code, is the Dodd-Frank Act regulating the financial industry. As we wrote recently, Dodd-Frank Act needs deep rewriting to restore the viability of small, community banks, to make mortgage lending in urban areas easier and to restore the risk to large, too-big-to-fail banks for making poor decisions.

Energy is another fertile area. Energy and fuel-efficiency regulations are too often regressive and disproportionally burden the poor. “These really aren’t achieving as much as they should be given their cost,” Broughel says.

Research from Michigan Tech University in October found there’s no technical or safety rationale for regulations on solar energy, which would benefit businesses and consumers. It identified the potential U.S. market for plug-and-play solar energy systems at more than 57 million households, and more than $14 billion in sales. But burdensome federal rules are slowing that market.

And regulation intended to protect the environment often has real consequences for jobs and the economy. Stringent Obama-era regulations on coal burning caused seven coal-fired plants to shut down in Michigan because of the immense cost to retrofit the older plants. That forced a switch to natural gas, which is both cheaper and cleaner. But the Obama administration added new rules to fracking that threaten to drive up costs and drive down supply.

A less flashy issue, licensing regulation too often doesn’t serve a social purpose and hurts the working class. Hair braiding, funeral parlors and flower shops are just some of the industries where licensing requirements allow established businesses to keep newcomers out.

“It’s exactly the kind of job that might help someone get on their feet, to get some income,” Broughel said.

Trump has the opportunity to implement not just one-and-done repeals, but a culture of evidence-based review of the regulatory code. Rules should be periodically examined to make sure they’re doing what was intended, without unintended consequences.

One principle that should be restored is that rules and regulations that have significant impact on the economy should be approved by Congress. Federal agencies have grown in power, and much of their rulemaking resembles legislation. That expands the power of the executive branch.

“With Trump in the White House, it’s possible you will get less usurpation of the legislative powers by the executive branch,” says Hillsdale College economics professor Gary Wolfram.

That would be a positive change.