The 2017 first quarter and second quarter decline, according to NAM, “is likely because manufacturers are optimistic that the new administration will continue to provide regulatory relief and make progress on regulatory and tax reform.” Moreover, the first quarter 2017 survey results show manufacturers’ optimism rose to a new all-time high (average of 93.3%) in the survey’s 20-year history, with the second quarter 2017 survey results registering the second highest all-time high (89.5%).
So what regulatory reform policy efforts has the Trump administration undertaken to improve the U.S. manufacturing sector’s operating environment and justify this optimism? Immediately after entering office, President Trump placed an executive hold on approval of administrative rules (with exceptions made to those pertaining to emergency circumstances relating to health, safety, financial, or national security matters).
Second, the President issued Executive Order 13771 (“Reducing Regulation and Controlling Regulatory Costs”), with the Office of Management and Budget, in a follow-up Memorandum, further explaining its requirements: “In general, executive departments and agencies may comply with those requirements by issuing two “deregulatory” actions for each new significant regulatory action that imposes costs. The savings of the two deregulatory actions are to fully offset the costs of the new significant regulatory action (emphasis added).”
Third, with the assistance of Republican majorities in Congress, President Trump was able to successfully employ the 20 year-old Congressional Review Act, which provides that an administrative rule once repealed cannot be promulgated again without a new act of Congress, to prevent 14 rules adopted in the final months of the Obama administration from taking effect. One of those rules, “Clarification of Employer’s Continuing Obligation to Make and Maintain an Accurate Record of Each Recordable Injury and Illness”, was submitted by the U.S. Department of Labor and had an industry-estimated regulatory cost of $1.9 billion.
CHART TWO
Source: Office of Information and Regulatory Affairs
In the first six months of the Trump administration, the results of regulatory reviews undertaken by the White House’s Office of Information and Regulatory Affairs (OIRA) (see Figure 2 above) show that this “gatekeeper” Office has approved significantly fewer “major” rules (i.e., having an economic impact of $100 million or more, or meets other criteria specified by the OIRA administrator), and dramatically fewer “minor” rules than the previous three administrations. Compared to his immediate predecessor’s administration, the Trump administration has approved 58 percent fewer “major” rules and 73 percent fewer “minor” rules than the Obama administration during its first six months in office.
For calendar year 2017, it is safe to say that the Trump administration appears to be on-track to generate significantly fewer actual pages (minus blanks and skips) in the Federal Register than the all-time high of 95,894 pages established by the Obama administration for calendar year 2016.
Basically, he improved the business climate for manufacturers by passing significantly fewer regulations and giving tax relief. His executive order right when he got into office states that executive departments and agencies must slash two regulations for every one new regulation proposed. Regulation spending cannot exceed $0, and any costs associated with regulations must be offset with eliminations.
The order also directs the head of each agency to keep records of the cost savings, to be sent to the president.
Moreover, the first quarter 2017 survey results show manufacturers’ optimism rose to a new all-time high (average of 93.3%) in the survey’s 20-year history, with the second quarter 2017 survey results registering the second highest all-time high (89.5%).