Trump 2.0: A Deregulation Juggernaut
Trump Plan to Reshape Federal Government
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Deregulation has once again taken center stage in American political discourse. With less than 30 days to go before the next Presidential Elections, we sat down with a senior Trump Campaign official to assess how they plan to reshape the Federal Government should Trump 2.0 become a reality.
The COVID-19 pandemic served as a reminder of government power, prompting citizens worldwide to reassess their relationship with state institutions. While some praised the swift governmental response, others viewed it as an extension of a quarter-century trend of escalating overreach, only briefly interrupted during the first Trump administration.
Yet for many Trump faithful, Trump 1.0 was a lost promise which they hope Trump 2.0 will fulfill. To understand Trump's position, the extent to which he plans reshaping government in his own image, we sat down with a senior campaign official who is currently working on a policy paper that details Trump's regulatory plan. Key points:
Trump 2.0 to attack the 9 million strong Federal contract workforce -
While most of the focus has been on Section F, which impacts 50-100k salaried employees, the true force of Trump actions will come from its actions around contract and grant workers
The official told us there are no holy cows, including defense and highways
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"A government employee costs the economy 3.9 times their direct cost," declares the senior Trump campaign official, highlighting the economic rationale behind their deregulatory push. Our team has obtained and analyzed a draft of an ambitious proposal aimed at overhauling what many consider the world's largest and most sophisticated bureaucracy.
The official elaborates, "We're looking at approximately 2 million federal employees, backed by an additional 7 million grant and contract workers. Add to that the extensive infrastructure required to manage these contracts. The direct cost of federal personnel and support is estimated at no more than $1.2 trillion, even if you add benefits." However, the campaign's analysis suggests a far greater indirect economic burden of "$4 to $5 trillion, attributed largely to inefficiencies and systemic waste."
Central to their argument is the notion that government workers, unlike their private sector counterparts, often generate additional work—both for themselves and the public they serve—perpetuating a cycle of inefficiency. "What Reagan envisioned and Trump's first term initiated, Trump 2.0 will fully realize: a streamlined, frictionless economy," the aide asserts with conviction.
The Deregulation Pendulum
Deregulation has long been viewed as a settled fact of U.S. economic policy—a promise of freer markets, reduced bureaucratic burden, and enhanced efficiency. Both Democrats and Republicans acknowledge that excessive bureaucracy imposes a de facto tax on the economy. The first wave of deregulation was spurred by none other than Jimmy Carter, whose administration pushed through the paperwork reduction act, touted as one of the major wins by Reagan.
Despite wide support from the voters as well as party officials, deregulation often fails to make much inroads.
A senior economist from Harvard offers a sobering perspective: "Deregulation is rarely about relinquishing power; more often, it's about redistributing it, concentrating influence in fewer hands." This paradox lies at the heart of America's ongoing regulatory debate and explains why comprehensive deregulation has struggled to gain traction despite considerable voter support.
What sets the prospect of a second Trump presidency apart, according to its proponents, is Trump's unique relationship with power. "In Trump, we have someone who has shown he can wield influence even when he's not in office. He doesn't need to hoard power by expanding the federal workforce or increasing welfare spending," argues a senior Trump donor who is vying for a potential cabinet position.
Further Reading*:
As the deregulation debate continues to evolve, a wealth of literature offers deeper insights into the complexities of government operations, policy decisions, and their economic impacts. The following works provide a nuanced backdrop to the ongoing discussions:
"The Fifth Risk" by Michael Lewis explores the intricacies of government operations and the impact of policy decisions on crucial agencies. Lewis's work offers a stark reminder of the expertise and institutional memory that underpin federal bureaucracies—factors that deregulation advocates must consider in their pursuit of streamlined governance.
"The Great Deformation: The Corruption of Capitalism in America" by David Stockman, penned by Reagan's budget director, presents a critical view of how deregulation and government intervention have shaped the U.S. economy. Stockman's insider perspective challenges both sides of the regulatory debate, arguing that decades of misguided policies have distorted American capitalism.
"The Conservative Sensibility" by George F. Will delves into conservative philosophy, including the delicate balance between government control and market freedom. Will's exploration of how historical shifts in regulation have influenced American society provides crucial context for understanding the ideological underpinnings of deregulation movements.
While not directly addressing federal regulation, "The Power Broker: Robert Moses and the Fall of New York" by Robert A. Caro offers invaluable insights into the interplay of government power, influence, and infrastructure development. Caro's meticulous examination of Moses's reign over New York's urban planning serves as a cautionary tale about the concentration of power, whether in the hands of regulators or deregulated industry leaders.
"The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War" by Robert J. Gordon provides a comprehensive look at the history of American economic growth and the role that government policies, including regulation and deregulation, have played in shaping economic development. Gordon's work challenges readers to consider the long-term implications of regulatory policies on American living standards.
*Includes affiliate links.
While proponents argue for the successes of a lighter regulatory touch, the debate remains complex. "Economists widely agree on the efficiency gains from deregulation, even if we haven't fully quantified the overall payoff," notes a member of the President's Council of Economic Advisers. Still, he tempers his optimism: "The effects of deregulation are visible across various sectors, with both positive and negative outcomes. On the upside, U.S. GDP growth has outpaced that of European economies, accompanied by greater productivity gains. However, the downsides are equally significant." Citing a recent study from the National Bureau of Economic Research reveals that market concentration in the U.S. has surged by 75% across 12 key industries, she continues, "Deregulation has been great for 90%, but there's a significant minority which has been left behind in this constant rush to deregulate."
Public support for deregulation has often been grounded in an aversion to "big government," but remains similarly complex. A senior fellow at the Brookings Institution underscores this tension: “The support isn’t just ideological. It's driven by real economic concerns, the 'bread-and-butter' of American livelihoods. But the oceans aren’t cleaner, and sometimes, the bread isn’t cheaper.”
History of Regulation and Deregulation
Between 1887 and 1917, Congress established 11 regulatory agencies, heralding an era of unprecedented government intervention. Among these was the Sherman Antitrust Act of 1890—a legal framework that remains central to U.S. antitrust enforcement. “The Sherman Act emerged as a response to the unchecked power of trusts and monopolies that dominated the late 19th-century economy,” observes a legal historian from Columbia University. “It laid the foundation for a century of debate over the extent of government control in free markets.”
The fervor for regulation peaked during the Great Depression, exemplified by the Glass-Steagall Act of 1933, which severed commercial banking from investment banking. “This separation was a direct response to the stock market crash of 1929 and the ensuing economic collapse,” notes an economic historian from Yale University. “Glass-Steagall sought to protect depositors from speculative risks, reshaping the American financial sector for decades.”
This regulatory momentum also saw the birth of the Securities and Exchange Commission (SEC) in 1934, creating a new paradigm of financial oversight. “The establishment of the SEC represented a turning point in American markets,” recalls a former SEC chairman. “It brought about a level of transparency and accountability that remains a cornerstone of investor protection.”
Yet, by the late 20th century, the pendulum began to shift. From 1970 to 2000, the U.S. experienced a 67% decrease in industry-specific regulations, as noted by a former chief economist of the International Monetary Fund. “This was driven by a growing belief that markets were more efficient arbiters of their own behavior than federal agencies,” he explains.
This wave of deregulation found its roots in the late 1970s with the Airline Deregulation Act of 1978. “The Act slashed airfares by an average of 50% over two decades when adjusted for inflation,” states a transportation economist from MIT. “However, it also led to significant industry consolidation, reducing the number of major airlines from 11 to just 4 today.”
The momentum carried through to the 1980s, particularly with the breakup of AT&T in 1984, often seen as a transformative moment for the telecommunications industry. “The dismantling of AT&T’s monopoly spurred innovation and competition, setting the stage for the digital communication era,” says a former FCC commissioner.
Not all were convinced of the deregulatory approach, particularly in the Reagan era. “Deregulation didn’t go as far as some expected,” comments a former member of President Reagan’s Council of Economic Advisers. “The opportunity to fundamentally reshape the regulatory landscape was there, but it wasn’t fully seized.”
If Reagan had his missed chances he didn't say. The modern era of deregulation, beginning with President Reagan, has been marked by significant shifts in economic policy and regulatory philosophy. Reagan’s tenure laid the groundwork for a transformative approach to government oversight, rooted in the belief that "Government is not the solution to our problem; government is the problem." This mindset drove a sharp reduction in federal regulations, evidenced by a 4.7% annual decrease in the number of pages in the Federal Register during his administration, as noted by a former Reagan economic advisor.
From Reagan to Trump: The Modern Era of Deregulation
Bush Sr. briefly promised a "gentler" or in other terms "bigger" government.
After a brief hiatus in deregulatory fervor, the torch was passed on to Clinton. A critical turning point came with the repeal of the Glass-Steagall Act in 1999. The move was lauded at the time as a victory for financial efficiency, with senior Treasury officials claiming savings of up to $15 billion annually for the financial services industry. Yet, the long-term consequences are still being debated: “The repeal of Glass-Steagall contributed to a 37% spike in risky lending practices,” asserts a Federal Reserve economist, linking the deregulation directly to the financial crisis of 2008, which obliterated an estimated $19.2 trillion in household wealth.
The Bush wars, no child left behind, ACA, Dodd-Frank - 2000's were not great for small government proponents.
“Dodd-Frank represents the most significant regulatory overhaul since the Great Depression,” explains a former Chair of the Council of Economic Advisers. The legislation sought to prevent another crisis by increasing capital requirements for banks by an average of 50%, reinforcing the regulatory firewall between commercial and speculative financial activities.
However, the momentum of regulation and big government was once again curtailed under the Trump administration. “For every new regulation, two old regulations must be eliminated,” Trump vowed, a pledge that was nearly met as an analysis by the Brookings Institution showed a 1.9-to-1 ratio of deregulation to new rule-making. This approach was characterized by a belief in market self-regulation, a philosophy resonating across various sectors, from finance to environmental policy.
With an eye on the future, the potential for a second Trump term could bring even more profound shifts. A number of policy papers have been floating around, most famously Project 2025. “Project 2025 aims to fundamentally rework the regulatory state,” asserts a senior Trump campaign advisor. A centerpiece of this vision is Schedule F—a proposal to reclassify tens of thousands of federal policy-making employees, stripping them of their civil service protections. This could lead to a 35% turnover in key policy-making positions, representing a structural change to federal agencies not seen since the Pendleton Act of 1883.
The senior Trump campaign official we sat down with dismisses the proposal as a distraction. "They are rehashing old ideas. What we are planning is much more concrete. There are no laws nor the courts that will support turning over 35% of the salaried workforce." Or not. "If there is something concrete, we will take that as a part of the plan. They are on the same side."
In contrast, the Harris campaign argues for targeted regulation rather than broad deregulatory sweeps. “Smart regulation is not about strangling markets, but ensuring they serve the public interest,” says a campaign policy director. Plans for a 15% increase in enforcement budgets across key regulatory bodies underscore a commitment to proactive oversight.
The stakes are significant, and the challenges for any administration are complex. “Regulatory complexity has surged by 22% since 2016,” notes a regulatory affairs specialist. “The ultimate test of effective deregulation isn’t about cutting rules; it’s about crafting an environment where innovation can thrive without jeopardizing market stability and public welfare.”
Trump's Regulatory Vision: Past and Future
The Trump administration's approach to regulation represented a significant departure from previous norms, characterized by a sweeping effort to reduce federal oversight across numerous sectors. "We're here today for one single reason: to cut the red tape of regulation," President Trump declared in 2018, setting the stage for an ambitious regulatory rollback agenda.
This initiative was executed swiftly. A senior official from the Office of Information and Regulatory Affairs remarked, "Within the first 11 months, over 1,500 planned regulatory actions were either canceled or delayed—a rate unparalleled in modern history." These actions led to a 22% reduction in the regulatory pipeline compared to the previous administration.
Despite the rhetoric, the reality was more complex. The Brookings Institution found that while the Trump administration made strides in slowing the introduction of new regulations, it fell short of its "two-for-one" goal, achieving a 1.7-to-1 ratio of deregulatory actions to new regulations.
The effects of deregulation were pronounced across different sectors. "Over 100 environmental rules were revised or rolled back," notes a former EPA administrator. In the financial sector, a former Federal Reserve economist observed, "Relaxations of Dodd-Frank rules led to a 15% increase in lending by mid-sized banks."
Critics argue that this approach often prioritized immediate economic gains over long-term stability and public welfare. However, proponents assert that the regulatory cutbacks were instrumental in fostering economic growth. "Our reforms led to the creation of nearly 7 million jobs and added $3.1 trillion to household net worth," claims a former White House economic advisor.
Looking ahead to a potential second Trump term, a senior campaign official outlines their plan: "Trump 2.0 will drastically cut both regulations and the federal workforce. We aim to restructure the entire system." This time, the focus extends beyond just federal employees to include the vast network of contractors and grant workers that has evolved over time.
This "blended workforce" has expanded the government's reach far beyond official headcounts. Recent estimates suggest this hidden workforce numbers between seven and nine million people—more than triple the number of official federal employees. The Trump official states, "This shadow government of nine million contractors is choking American progress. We will expose this hidden workforce and significantly reduce it."
The roots of this blended workforce trace back to the evolution of federal governance over the last century. By 2010, the ratio surged to 3.4 contractors and grant workers for every federal employee—a three-decade high driven by post-9/11 defense spending, wars in Iraq and Afghanistan, and economic stimulus policies.
"Eisenhower's warning about the military-industrial complex has become reality," the Trump official says. "Trump 2.0 will dismantle this complex. We plan to cut the overall government workforce, including contractors and grant workers, by at least 50%."
This aggressive approach stands in contrast to previous administrations' efforts. For instance, President Clinton, despite being an advocate of reducing "big government," paradoxically led to an increase in contract and grant employees through his efforts to streamline the federal workforce.
The Trump campaign's white paper suggests a 50% reduction in the contract and grant workforce, potentially affecting 4-5 million contract workers. "We'll audit every department, contract, and grant. Our goal is to bring the ratio back to at least 1:1, possibly lower," the official adds.
"The complexity and size of this blended workforce create challenges for transparency, efficiency, and accountability," states a senior fellow at the Brookings Institution. As policy debates center around the appropriate size and function of government, the reality of who actually implements federal policy often goes unnoticed, hidden beneath layers of contracts, grants, and evolving workforce needs.
The campaign official concludes: "Trump 2.0 will expose the full extent of government overreach and systematically reduce it. We envision a small, efficient government that truly serves the people."
Trump 2.0: The Promise of Radical Deregulation
With the 2024 election less than 30 days away, the Trump campaign's regulatory agenda promises an unprecedented dismantling of federal oversight. In March 2023, Trump announced, "Here's my plan to dismantle the deep state and reclaim our democracy from Washington corruption once and for all," outlining a strategy to reshape the federal government's role in American life.
It's a foregone conclusion that of Schedule F, a plan to reclassify tens of thousands of federal employees in policy-making roles into the "excepted service" will be revived. A senior Trump campaign advisor explains, "This initiative would allow for rapid and substantial turnover within key policy-making roles, impacting up to 50,000 federal positions. The goal isn't to dismantle salaried ranks, but to ensure we control the temporal hiring, which is where the contract workforce comes in."
The potential impact is significant. A public policy expert from Georgetown University cautions, "If this plan is implemented, we could see a 50% turnover rate in these key roles across federal agencies. This level of disruption in the federal workforce has not been seen since the civil service reforms of the late 19th century."
To prepare for these changes, the Trump team has created a shadow team which has been meeting for past several months with plans to execute the changes immediately as Trump takes over. A spokesperson explains, "It's a policy roadmap and a personnel pipeline designed to ensure swift implementation of a second Trump administration's deregulatory vision."
Economic forecasts for the proposed deregulatory measures vary widely. A conservative think tank projects that "full implementation of Trump's regulatory agenda could boost GDP by 13% over the next four years." Conversely, progressive policy institutes argue that "environmental and financial deregulation could incur long-term costs that outweigh short-term economic gains, potentially at a ratio of 2-to-1."
Corporate America is divided on the issue. A survey of Fortune 500 CEOs reveals that "42% support Trump's deregulatory agenda, primarily for its potential to cut operational costs, while 38% express concern over regulatory uncertainty and the potential for long-term instability in markets."
A regulatory affairs specialist notes, "Since 2016, regulatory complexity has increased by 22%, and the next administration will inherit that burden. The real test will be crafting a balance between the freedom to innovate and the need for structured oversight."
Trump 2.0 represents a vision of radical deregulation—promising to dismantle the "deep state" and fundamentally restructure the federal bureaucracy. As the nation prepares to decide its regulatory future, the debate continues: Will this approach catalyze economic growth or create unprecedented risks?