The Daily Dish

A Regulatory Shocker

Eakinomics: A Regulatory Shocker

I haven’t been this surprised since the Clean Power Plan vanished. The Department of Transportation and the Environmental Protection Agency finalized the Safer, Affordable Fuel-Efficient (SAFE) Vehicles rule, and it is estimated to produce economic savings of nearly $200 billion. This rule is (easily) the largest deregulatory measure since the American Action Forum (AAF) invented RegRodeo.

Recall that only a month ago the word on the street (and in the press) was that the SAFE rule (which sets fuel efficiency standards for autos) was a costly misadventure. Eakinomics wrote: “The Washington Examiner reports that instead of saving hundreds of billions of dollars, the SAFE rule will cost $34 billion. The original logic was that by relaxing the fuel efficiency, cars would be cheaper and safer – both big wins for the private sector. Unfortunately, it turns out that the cars are not likely to be safer (bad) and that additional fuel costs would outweigh the lower purchase price (worse).”

The $200 billion U-turn in regulatory costs has saved the Trump regulatory budget aspirations, and is a tale well-told by AAF’s Dan Goldbeck and Dan Bosch. The SAFE rule is a complicated animal, but in the end there were two key elements. First, it turns out that oil and gasoline are cheaper – and projected to remain cheaper – than previously expected. That makes lost fuel savings less of a big deal. Second, the Trump Administration scaled back its aspirations. Originally, it had envisioned swapping a 5 percent annual increase in fuel efficiency for freezing it at model year 2021 levels. Instead, it adopted an annual increase of 1.5 percent.

Who knows what will happen to regulatory cost reductions in a post-coronavirus world. But this was a major victory for the administration.

Disclaimer

Fact of the Day

Small businesses employ 58.9 million Americans and contributed $5.9 trillion to gross domestic product in 2014, the last year this information was available.

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