Consumer Confidential: Former officials deride Trump’s ‘mindless’ 2-for-1 deregulation plan

Joan Claybrook, head of the National Highway Traffic Safety Administration during the Carter administration, had an immediate reaction when informed Monday of President Trump’s executive order requiring that federal agencies scrap two existing regulations for every new one adopted.

She burst out laughing.

“That’s a completely illogical way of doing things,” Claybrook told me. “It’s going to harm the public. People are going to die if you start eliminating safety standards.”

I reached out to a number of former federal regulators after Trump’s order was announced. I wanted to know how such an arbitrary approach to rule-making squared with their real-world experience of keeping the public safe and monitoring businesses.

Every one of them, Republican and Democrat, said Trump’s approach to the highly complicated task of official oversight is reckless and irresponsible.

“I can’t think of a single regulation that has no basis in fact,” said Christine Todd Whitman, head of the Environmental Protection Agency under former President George W. Bush. “It’s going to be hard to find regulations that aren’t important to protecting human health.”

She called Trump’s executive order “mindless.”

In signing his order, Trump called it “a big one” and said his goal is “the largest-ever cut by far in terms of regulations.”

“There will be regulation, there will be control, but it will be a normalized control where you can open your business and expand your business very easily and that’s what our country has been all about,” he said.

Trump’s order specifically requires that the cost of any new regulation be offset by eliminating existing rules with the same costs to businesses. Military regulations are excluded.

Inez Tenenbaum, head of the Consumer Product Safety Commission under former President Obama, said Trump doesn’t seem care which regulations are abandoned, as long as there are significantly fewer rules for businesses to follow.

“That’s not a formula for rule-making,” she said. “That’s a formula for just pulling things out of the air.”

As with many of Trump’s pronouncements, details are a work in progress. But the order suggests a sweeping emphasis on deregulation affecting numerous aspects of peoples’ lives, from environmental protection and health care to banking practices and workplace safety.

“What the president is talking about is reducing public health protection,” said David Michaels, who oversaw the Occupational Safety and Health Administration under Obama.

Even so, he pointed out that getting rid of regulations can be just as hard as implementing new ones. It’s not a matter of simply crossing out rules in some regulatory ledger book.

To scrap a regulation, a federal department or agency needs to notify the public, businesses, unions and others of its intentions, explain the rationale for the move, receive comments, and undergo the horse trading that typically surrounds decisions with potentially far-reaching ramifications. This can take years.

“Responsible companies want regulations,” Michaels said. “They want a level playing field with rules that everyone has to follow.”

As with his ban on travel from some predominantly Muslim countries, Trump’s 2-for-1 approach to deregulation represents fulfillment of a campaign promise. His position prior to the election was that businesses are burdened by too many rules and we can easily get rid of most of them.

He’s said his objective is to eliminate 75 percent of existing regulations.

That might work as a sound bite, but in reality he’s tackling a highly complex, deeply nuanced process that cuts across virtually all aspects of society and commerce, with trillions of dollars in economic activity on the line.

For example, Trump said Monday that he intends to “do a big number” on Dodd-Frank financial regulations that have become part of the corporate DNA of financial-services companies and created the Consumer Financial Protection Bureau.

Gerald Sachs, a former senior attorney with the CFPB, said banks have spent millions figuring out how to comply with Dodd-Frank. They’d have to spend just as much, he said, figuring out any significant changes to the law.

“Having no regulation is just not practical,” Sachs said. “What we can’t have is a race to the bottom.”

Trump lacks the power to demand specific changes from independent government agencies such as the CFPB and the Federal Communications Commission that operate outside the control of Cabinet secretaries. However, he can sack agency leaders under certain circumstances or use the Republican-controlled Congress to slash their budgets.

“There are lot of ways presidents can take action against an agency that doesn’t follow an executive order,” said Lisa Heinzerling, who served as associate administrator of the Environmental Protection Agency’s Office of Policy under Obama. “It’s very unsettling.”

Whitman, the former EPA administrator and New Jersey governor, told me that “everyone is scared” at the agency as a result of Trump nominating Oklahoma Attorney General Scott Pruitt to take charge. Pruitt, a strong supporter of the oil and gas industries, has described himself as a “leading advocate against the EPA’s activist agenda.”

Whitman said a likely scenario is that the EPA and other agencies will stop seeking new regulations so they can protect existing rules. “I think people will go to extremes to avoid running afoul of this administration,” she said.

There’s always room for revisiting regulations once their true impact on businesses or the public becomes known. Some might be discarded. Most simply need to be improved.

Trump’s 2-for-1 deal is governing by foolishness, treating the public interest like a cheesy offer on late-night TV.

He might just as well offer free steak knives to the regulator who does the most cutting.