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How far is Donald Trump willing to reduce the size of government if re-elected?

One of the core themes of Trump’s campaign about the economy is deregulation. The Former President has accused Joe Biden of destroying the U.S. economy with more regulations, which are impeding sustainable growth.

Poll after poll shows that voters overwhelmingly trust the Former Republican President more than the Democratic incumbent to handle economic issues. According to Bloomberg, a survey from last December had voters in seven battleground states expressing more confidence in Trump’s ability to tackle a wide range of economic issues including housing, interest rates, and inflation, along with balancing the budget.

Deregulation has always been a central theme in Trump’s campaign. To deregulate the economy, he has proposed bringing regulatory agencies such as the Federal Trade Commission and the Federal Communication Commission under presidential authority, while vowing to cut two existing regulations for every new one proposed. For example, Trump’s Executive Order 13771 required agencies to remove two existing regulations for every new one they create. This incentivizes deregulation but raises concerns about ignoring important safety or environmental regulations.

Donald Trump intends to use the power of executive orders to their full extent to cut existing regulatory agencies. Indeed, executive orders empower the President to directly repeal existing regulations, but it can obviously face legal challenges in court if the repeal isn’t based on sound reasoning and proper procedures. Moreover, executive orders empower the President to delay the implementation of new regulations or enforce them less stringently. The ability of a President to use executive order to delay the implementation of a regulation gives temporary relief to businesses but is subject to agency pushback.

Javier Milei in Argentina did not hold back on the use of executive orders to drastically reduce the size of government once he took power. He implemented a series of measures to adamantly reduce government. For example, over 5,000 government employees hired in 2023, before Milei took office, have had their contracts terminated. This move targets potential "padding" of payrolls by the previous administration. Furthermore, the Milei government slashed the number of ministerial positions from 21 to just 9. And President Milei will cut government spending by 14% of its GDP as part of deregulating the Argentinian economy.

The United States has 438 federal agencies and sub-agencies, and the Executive branch has 15 department heads, and 10 cabinet-level officials. Despite all these departments and regulatory agencies being in place, the U.S. government has been inefficient in delivering the optimal outcomes it promised to deliver. Is Donald Trump willing to cut down the size of the U.S. government as much as Javier Milei did his?

We may not know yet exactly how many federal agencies he is going to cut, but one thing that must be done is to also reduce the budget of these agencies in order to avoid government deficits, thus reducing the national debt by extension. When Donald Trump was president, the federal deficit increased substantially, especially between 2018 and 2020. In 2018, the federal deficit hit $779 billion. It then increased to $3.2 trillion in 2020 due to the pandemic before it slightly decreased to $1.5 trillion in 2021. In other words, the national deficit under the Trump administration increased by 33% and the national debt under his presidency has increased by $7.8 trillion. While it was certainly lower than under the Obama administration, it is still an increase. This then tells us that even if Donald Trump cuts government size, it does not mean that he will necessarily cut the federal budget.

Deregulation is not just about reducing the size of government. It is also about reducing the government’s budget. Because if government size is reduced but the budget of the remaining agencies increases, which means that they will be prone to spend more than they generate in tax revenue, then it defeats the purpose of keeping the national debt under control, and makes the whole meaning of “deregulating the economy to stimulate growth” meaningless.


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