Here’s What Happened The Last Time We Tried Donald Trump’s Moratorium On Regulations

In Donald Trump’s Detroit economic speech and in his “An America First Economic Plan: Winning The Global Competition,” he said:

"Upon taking office, I will issue a temporary moratorium on new agency regulations."

This has been tried, and there are takeaways from the experience.

In an effort to assert some control over regulation, former President George H. W. Bush issued a moratorium on January 28, 1992, during which agencies were to refrain from issuing non-essential new rules and instead examine and reduce the burden of regulations already on the books. The moratorium was extended an additional 120 days on April 28, and was extended for the remainder of Bush’s term during his acceptance speech for the Republican presidential nomination on August 20, 1992, though it was abandoned with Bill Clinton’s arrival in the White House. (I described all this in the original 1993 Ten Thousand Commandments, wow, time flies)

During the initial 90-day phase of the moratorium, then Vice President Quayle stated that the moratorium was part of the administration’s efforts “to … change a mindset, change an attitude, change behavior” (“Bush to Extend Regulatory Moratorium for 90 Days or Longer,” Daily Report for Executives, Bureau of National Affairs, April 24, 1992, p. A-20) in regard to the tendency to regulate without guaranteeing that benefits offset costs. Agency estimates during the initial 90-days projected that savings of $15-$20 billion per year would materialize, although little solid data from the agencies exists to substantiate these claims. (Fact Sheet on the President’s Regulatory Reform Initiative, The White House, April 29, 1992, p. 1.)

In any case, those who expected the moratorium to sire a considerably smaller version of the Federal Register in 1992 were disappointed. Although, arguably, moratorium-exempt deregulation-oriented regulations to “foster economic growth” could account for some of the 1992 volume, Bush also specifically exempted regulations addressing hazards that “pose[ed] an imminent danger to human health and safety.” (“Memorandum for Certain Department and Agency Heads. Subject: Reducing the Burden of Government Regulations,” White House Memo signed by President Bush, January 28, 1992.)

Combined with the fact that regulation can be largely mandated by legislation (see the Dodd-Frank financial law) rather than impelled by discretionary agency rulemaking, this exemption effectively neutralized the moratorium.

In fact, it was obvious by roughly mid-year that 1992 was to be another record year for regulation in terms of Register length despite the enthusiasm and controversy surrounding the moratorium in its early months. Consider: in 1990 and 1991, mid-year (June 15) page counts were 24,546 and 27,887, respectively. Yet the Register was up to 26,766 pages on June 15, 1992, seemingly in stubborn disregard of the moratorium, and all the way up to its fourth-highest level ever by year-end.

This pointedly illustrates that the executive branch’s inability to curb regulation unilaterally even when it goes so far as to freeze new rules. The flip side of that, of course, is that President Obama has expanded the state unilaterally. Ultimately, institutional checks far more stringent than anything that currently exists will be needed to restrain the regulatory enterprise.

But the lesson or takeaway is not, “don’t do it.” Rather, tee up the actions that need to accompany any moratorium to actually accomplish regulatory liberalization. Have the Office of Management and Budget issue a report explaining precisely why the moratorium had to fail, so posterity can correct the systemic only-upward trajectory regulation follows. Use the opportunity presented by any moratorium to review regulations in detail and lay groundwork for the deeper reforms needed.

My colleague Ryan Young today pointed out how a moratorium is “trumped” by the need for rediscovery of the separation of powers, and highlighted existing legislation Trump should support to achieve that. I explore other options for an aggressive executive action (within the rule of law) in the book chapter “One Nation, Ungovernable? Confronting the Modern Regulatory State.” As the economists like to say, the moratorium is perhaps necessary but not sufficient.

If it happens, the effort should build upon the best elements of the Bush moratorium, and lawfully freeze regulation for a lengthier, more thorough audit, publish reports on the data generated, seek public comment on which rules should go and so forth. Creativity can produce useful information to support more substantive reforms such as stipulating that for every new rule, one within or outside the agency should be eliminated. This would amount to a status quo “regulatory budget” or freeze for the duration of the review. In fact, the House of Representatives is now exploring the idea of a regulatory budget, something a moratorium could help inform.

Originally posted to Forbes.