Better than Baseball by David Montgomery

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Although October has been depressingly familiar for Washington baseball fans, it has been just the opposite for political observers. While Congress continues to dither, the President has been moving ahead to reverse the expansion of the Administrative State. And he has done so by using his executive authority to force Congress to do the work assigned to it by the Constitution.

In the case of immigration, the President sent a letter to Congress with a comprehensive plan for strengthening enforcement of immigration laws and screening out those who would be a threat or a burden. And he has been explicit about the message he wants Congress to hear: If you care so much about those who are now in the United States illegally, pass a law to change their status. I do not have the authority to do that on my own. Quite a contrast to President Obama’s “I’ve got a pen and I’ve got a phone. And that’s all I need.”

In the case of Obamacare, the President sent the liberal press all atwitter by terminating subsidies to insurance companies losing money under Obamacare. Again, he sends a message to Congress that they must fix the structural problems in Obamacare and not rely on the public purse to hide them.

Third, his EPA Administrator has declared that the Clean Power Plan put into effect by his predecessor is illegal, because it goes beyond what Congress authorized EPA to do in the Clean Air Act.

In taking these actions, the President is fulfilling what I saw as the most important of his campaign promises, to stop government agencies from issuing regulations that make new laws never passed by Congress. That is, he is challenging and attempting to rein in the Administrative State.

I admire the subtlety in President Trump’s cancellation of subsidies to insurance companies for many reasons. The subsidies make the insurance companies fat and happy and motivate them to work against his goal of reforming ACA. His action shows that the excessive delegation of authority made by Congress in ACA can be used to reduce as well as increase the administrative state. And he tosses the political problems back to Congress in a way that should send the message that Congress cannot avoid political responsibility for legislation by leaving all the details up to bureaucrats.

The critical flaw in the Clean Power Plan that took it to the Supreme Court is its insistence that electric utilities pay others to reduce emissions on their behalf in order to satisfy regulatory requirements. This is contrary to the explicit language in the relevant parts of the Clean Air Act that such requirements be feasible for the regulated companies to meet on their own.

I am known as an advocate of emission trading where appropriate, but only when applied through Constitutional processes in which its suitability for a particular task is examined openly, not by an agency using legal casuistry to require something prohibited by the clear wording of the law.

Likewise, I fully support the goal of open borders for all who qualify to be future citizens, but equally, strongly opposed President Obama’s refusal to enforce a clear requirement of the law – not to mention his willingness to accept the lazy and criminals along with those who support themselves and obey the law.

There are much broader issues at stake here than just these specific abuses of powers delegated by Congress in regard to immigration, environmental regulation, and Obamacare. It is the growing role of unaccountable administrative agencies in creating rules and regulations that go far beyond anything considered or authorized by Congress. Philip Hamburger calls this the “Administrative State” and describes its influence by saying “Americans must live under a dual system of government—one part established by the Constitution and another circumventing it.” The Trump Administration has been trying to rein in the Administrative State since its first day in office through its deregulation initiatives.

First, the Administration and Republicans in Congress are reversing the flood of regulations issued by his predecessors. Economically significant rules are defined as those with an annual cost of $100 million or more, and during the Obama Administration, almost 500 of these regulations with an estimated burden of $890 billion were issued. The burden of regulation accelerated under Obama, but it has been growing since the 1970s. Between 1995 and 2016, Congress passed 4260 public laws but the Executive Branch issued 88,899 new final rules. Since regulations have rarely expired or been repealed, this adds up to a growing cumulative burden. These regulations proliferate – 27 new regulations for every new law – because Congress delegates its legislative responsibilities to administrative agencies, which have proceeded without hindrance beyond what Congress intended.

In comparison, under President Trump agencies have pulled or suspended 860 pending regulations, and the number of economically significant regulations still in process fell to 58.

One of President Trump’s first actions was to require all agencies to re-examine their past regulations and eliminate two existing rules for each new one they issue. His Executive Order also required agencies to reduce the burden of existing regulations by an amount at least as large as the cost of any new regulations. Some of my colleagues in the field of environmental economics complained about this order on the grounds that costs should be weighed against benefits and not be the sole criterion. Although I agree with the principle, I am unconcerned about the application because among the regulations issued under the Obama Administration there are ample to choose from that do no net good.

This is also an area where Congress has done good, by exercising its authority to disapprove regulations and especially those issued by a lame-duck President. Voting under the Congressional Review Act, which limits debate on disapproval resolutions, Congress repealed 14 midnight regulations issued in the last days of the Obama Administration.

These actions are the beginning of an effort, with a clear populist base, to rein in the Administrative State that has grown in power and size for decades. Visible actions to limit and repeal unnecessary regulations only address part of the problem of the Administrative State. Like the iceberg, most of the Administrative State is hidden. Wayne Crews of the Competitive Enterprise Institute has called this “regulatory dark matter,” which he defines as “thousands of executive branch and federal agency proclamations and issuances, including guidance documents, memoranda, bulletins, circulars, and letters, that carry practical (if not always technically legally) binding regulatory effect.” None of these show up in the counts of regulations in the Federal Register, and they are subject to none of the public comment and appeal processes that apply to published regulations.

This is also a target of the Administration, and a particularly difficult one since decisions behind these memoranda and guidance letters and individual rulings are not made in open regulatory processes. They are made day to day by permanent bureaucrats buried in agencies and often difficult or impossible for their political superiors to reach and control.

One of the reasons for the expansion of the Administrative State before President Trump was the deference of the courts to decisions of regulatory agencies that did the proper paperwork, no matter how vague the facts or casuistical the legal arguments justifying them.

This is the major uncertainty about whether President Trump will succeed. Courts have already shown a willingness to block his Executive Orders that they never showed to his predecessors. Thus the question is whether courts will defer as readily to an Administration that wants to reduce the Administrative state as to one that wants to expand it. As Philip Hamburger put it “The courts often defer to the executive—both to its interpretations of law and to its fact-finding” and he decries this as depriving those who challenge regulations of due process.

What really matters here is the attitude of 5 Supreme Court justices. Some, like Justice Stephen Breyer, have attitudes toward actions of regulatory agencies that appear to go even further and sound more like admiration than deference. Once again, the key to Making America Great Again may be less in what regulations the President abolishes than in whom he appoints to the Supreme Court.

David Montgomery was formerly Senior Vice President of NERA Economic Consulting. He also served as assistant director of the US Congressional Budget Office and deputy assistant secretary for policy in the US Department of Energy. He taught economics at the California Institute of Technology and Stanford University and was a senior fellow at Resources for the Future.

 

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Letters to Editor

  1. Deirdre LaMotte says:

    Oh please, like Trump is really evaluating each of these initiatives. All this man wants is to eviserate anything President Obama did as President; he just cannot stand the fact that he will absolutely never measure up. Do not provide an analysis for this despicable man. It is all totally visceral for him.

    What is scary are those who actually believe that there is a method to his madness. Listen to Senator Corker who can speak freely. Anyone who takes this man seriously is either enjoying retirement wayyy too much or really cannot give a hoot.

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