Executive Summary

Excess regulation harms economic activity by increasing compliance costs and misallocating resources away from more profitable activities, thus discouraging innovation, investment, and economic growth. Regulatory complexity coupled with high compliance costs can also act as a barrier to entry, sheltering incumbent producers and stifling competition, thereby reducing startup activity and job formation. Moreover, onerous regulations can lead to higher prices, reduced opportunities, an increase in the poverty rate, and disproportionate impacts on small businesses.

In response, the Trump Administration has taken major steps to reduce regulatory burdens impacting American households and businesses. Upon returning to office, President Trump immediately froze all regulatory proposals still in the approval process, which, had they gone into effect, could have cost Americans over $180 billion or $2,100 per family of four in present value terms. In addition to these cost savings, President Trump launched a sweeping, multi-agency initiative aimed at rescinding Federal regulations that contribute to higher living costs.

These efforts have already identified a range of significant potential cost savings that can be achieved through deregulatory action, including $679 billion in combined potential savings from rescinding the Environmental Protection Agency’s (EPA) “Good Neighbor Plan” ozone air quality rule and multi-pollutant emission rule for light-duty and medium-duty vehicles, $23 billion in potential savings from the delay and eventual rollback of seven Department of Energy (DOE) rules on appliance conservation standards[1], and $25 billion in potential savings from the elimination of the Department of Transportation’s (DOT) current Corporate Average Fuel Economy (CAFE) standards.[2]

The combined savings from all these actions and other agency actions in the works could be as high as $907 billion dollars or over $10,600 per family of four in present value terms[3] if all the preempted regulatory proposals had otherwise been finalized.[4]

A key component in the President’s strategy for long-run regulatory reduction is the 10-to-1 regulatory budget, requiring that in any fiscal year when an agency issues a new rule or guidance document, 10 existing rules or guidance documents must be eliminated. Additionally, for Fiscal Year 2025, the total cost savings from repealed rules must “significantly” exceed the total cost associated with new rules. This initiative expands upon the regulatory budget framework successfully implemented during President Trump’s first term, which mandated the repeal of at least two existing regulations for every new rule introduced, but in practice eliminated 5.5 regulations for each new significant rule.

To date, the Trump Administration has issued over 20 presidential actions (i.e., executive orders, presidential memoranda, and presidential proclamations) that promote regulatory reform, a record for any President in their first 100 days in office. These actions mandate a wide range of actions, including:

• Rescinding onerous executive orders and proposed regulations issued by previous administrations;
• Ending DEI programs;
• Eliminating regulatory obstacles to increased energy supply and natural resource extraction;
• Sunsetting obsolete energy rules;
• Cutting costly regulations that have increased the prices of essential consumer goods and services, including food, housing, energy, and healthcare;
• Eliminating obstacles to sustained American leadership in artificial intelligence;
• Dismantling rules hindering innovation in digital assets and finance;
• Creating the United States Investment Accelerator to significantly expand government assistance to foreign companies that invest and build in the United States by promptly removing regulatory obstacles;
• Revoking unconstitutional regulations and rules that stifle competition;
• Implementing emergency measures to increase water resources in California; and
• Removing regulatory hurdles to disaster recovery in North Carolina.

To get a better sense of the potential long-run benefits of deregulation, it is instructive to look at rulemaking under the previous administration. Based on estimates from Federal agencies themselves as reported by the American Action Forum, the Biden Administration imposed a record $1.8 trillion in present value in new regulatory costs on the economy. If the potential cost savings from rolling back these rules is annualized over a 20-year period, it is equivalent to a 0.29 percentage point increase in annual economic growth, assuming that every dollar of regulatory cost reduces gross domestic product (GDP) by a dollar and that these regulations have no market benefits.[5]

However, even those effects come in far below University of Chicago Professor Casey Mulligan’s estimate of $5 trillion in present value regulatory costs in Biden Administration rulemaking, when properly accounting for resource and opportunity costs that, in his assessment, were not captured in the official estimates.[6] If Professor Mulligan’s estimate is used, the potential long-run cost savings from rolling back these rules increase to 0.78 percentage points annually.

While a wholesale recission of all rules finalized in the previous administration is unlikely, this range illustrates some of the potential savings of the Trump Administration’s deregulatory agenda. Moreover, any further deregulatory actions aimed at earlier regulations could generate additional savings, which will likely occur given President Trump’s 1-in-10-out regulatory budget. Taken together, the upper bound associated with the elimination of just the Biden Administration’s regulations results in cost savings equivalent to a 0.29% to 0.78% boost in annual economic growth over 20 years. Using the Office of Management and Budget’s (OMB) rules of thumb and employing the FY 2025 Federal budget and economic outlook as a baseline, this additional economic growth generated by deregulation would reduce the Federal deficit by between $1.1 and $2.9 trillion over 10 years.[7]

An additional benefit of deregulation is lower inflation. As previously mentioned, regulations can substantially increase prices. A recent study finds that a 10-year moratorium on regulation growth would reduce the inflation rate by 0.60% annually. Moreover, since interest rates move with changes in inflation, the same study predicts that such a regulation moratorium would reduce Treasury rates by 0.70 percentage points over this period and reduce the Federal deficit by $630 billion over 10 years. These benefits are in addition to the positive growth effects associated with deregulation.

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[1] The seven energy conservation rules for appliances includes gas-instantaneous water heaters, conventional cooking products, dishwashers, clothes washers, clothes dryers, consumer furnaces, and commercial water heating equipment.

[2] The potential cost savings estimates reported above were provided by the agencies to the Council of Economic Advisors and will likely change as the deregulatory actions move through the rulemaking process. For reference, analysis from the American Action Forum’s Regulation Rodeo reported much higher costs for the original final rules: $870 billion for the EPA vehicle emission rule and $45 billion for the DOT rule.

[3] All estimates in this paper are presented in present value in 2024 dollars because regulations affect economic activity not just in the year imposed, but persistently and in many cases for decades. Regulations may also produce monetary benefits (e.g., cars with increased fuel efficiency are less expensive to operate since they consume less fuel) which should be subtracted from monetary costs when determining the net monetary savings from rolling back a regulation. In some cases, such monetary benefits are recorded by agencies as negative costs (see, e.g., Table 211 from the EPA tailpipe rule), but this varies by agency.

[4] This total does not include any 2025 Congressional Review Act resolutions. Because the EPA and DOT rules both impact vehicle emissions, there may be overlap in their regulatory requirements. In that case, savings from repealing both rules may be less than the sum of their standalone cost estimates.

[5] The length of the time horizon used for regulatory impact analysis (RIA) depends on how long a regulation is estimated to have an economic effect, which in some cases exceeds 20 years. For example, the EPA tailpipe emission rule considers costs and benefits out to 2055.

[6] Mulligan estimates $5.792 trillion in “true” regulatory costs based on the Biden Administration’s pace of rulemaking 41 months into office. The actual self-reported regulatory costs of agencies at the end of Biden’s term was 13.3% below Mulligan’s forecast. Therefore, if one adjusts Mulligan’s “true” regulation cost estimate accordingly, it drops to $5.020 trillion.

[7] According to OMB’s latest rules of thumb (see Table 2-4 in the FY25 Budget’s Analytical Perspectives), a sustained 1 percentage point increase in real GDP growth would result in deficit reduction of approximately $3.7 trillion over the 10-year budget window, using the FY25 Federal budget and economic outlook.