Politics & Policy

For Regulatory Reform, Look to Congress

(Photo: Rrodrickbeiler/Dreamstime)
Taming regulators by strengthening the legislature

It is rare that we get a glimpse at the guiding principles that motivate a president and his team, but White House senior adviser Stephen Bannon’s recent remarks at the Conservative Political Action Conference may have provided unique insight into the Trump administration’s operations and goals.

For conservatives, it was a mixed bag. Bannon’s emphasis on economic nationalism raises concerns about autarky and statism. But as Rich Lowry observes, his pledge for the “deconstruction of the administrative state” was music to conservatives’ ears.

Regulatory sprawl and executive overreach have been the target of principled conservatives for some time. Efforts to tame the administrative state predate President Trump and even President Obama, whose proclivity for executive action has been the subject of plenty of NRO commentary.

Conservative animus toward the administrative state is focused on more than just its economic costs, which come in the form of less investment and job creation. The principal objection is that it undermines the role of the legislative branch relative to the executive. As Bannon quipped: “The way the progressive Left runs, if they can’t get it passed [by Congress], they’re just going to put it in some regulation.” This tendency to governance by regulation and executive rulemaking must therefore be reversed, for both economic and political reasons.

What steps can the Trump administration and conservatives both agree to take toward reducing the size and scope of the administrative state? An obvious step would be to give Congress some way to review and scrutinize regulations and executive rulemaking, as has been done in other jurisdictions.

The U.S. Constitution indisputably places responsibility for lawmaking with Congress. The legislative branch promulgates and passes laws, and the president and his appointees implement and enforce them.

But that is not how the system of government has evolved. Many of the laws passed by Congress delegate authority to departments and agencies to produce rules and regulations to effectuate or administer them. These secondary or accompanying policies are sometimes called “delegated legislation,” because they have the full force of the law.

One good (or bad, depending on your perspective) example is the Dodd-Frank Wall Street Reform and Consumer Protection Act. The 2,300-page statute covered a far-reaching set of issues — including financial instruments, executive compensation, mortgage lending, and government oversight — and established three new agencies, including the Consumer Financial Protection Bureau. While comprehensive in its scope, the law was light on details. Federal agencies were granted considerable discretion to promulgate regulations to accompany the statute, with no congressional role.

Vague drafting that agencies “may” issue rules or shall issue rules as they “determine are necessary and appropriate” gives the executive branch tremendous power to define, broaden, and interpret the law. As the Hudson Institute’s Christopher DeMuth has put it: “In these cases, the agencies make the hard policy choices. They are the lawmakers.” The upshot is that, in 2016, Congress passed 211 laws and the federal government issued 3,853 rules and regulations. It is fair to say that this 18:1 ratio is not what James Madison had in mind.

As the Hudson Institute’s Christopher DeMuth has put it: ‘In these cases, the agencies make the hard policy choices. They are the lawmakers.’

Here is where other nations may have something to offer the Trump administration and Congress as they seek to reverse this trend of bureaucratic lawmaking.

Australia, Canada, New Zealand, and the United Kingdom have sought to give the legislative branch a role in reviewing and scrutinizing regulations and executive rulemaking. The purpose is to ensure that the government complies with the law and does not use delegated authorities to reach far beyond legislative intent or scope.

Each of these Anglosphere countries has a permanent legislative committee to oversee and review delegated legislation. None is perfect; regulations and executive rulemaking have certainly not disappeared. But these committees at least in theory can serve to enhance public transparency and executive accountability. Each experience offer strengths and weaknesses that can inform U.S. lawmakers on how best to strengthen the role for congressional oversight of executive action.

It must be recognized that the inherent differences between the “separation of powers” in the United States and the “fusion of powers” in these parliamentary countries would invariably require a “made in America” solution. But two clear takeaways from these Anglosphere experiences are that legislatures can competently review regulations and that doing so strengthens their hand vis-à-vis government departments and agencies.

Establishing a legislative committee to review and scrutinize regulations and executive rulemaking along these lines is not a silver bullet. It must be part of a broader strategy to reverse the growth of the administrative state. Fortunately, we are witnessing progress in this regard, including passage of the REINS Act and President Trump’s imposition of regulatory budgeting.

But there is more work to be done. Drawing from the strengths and weaknesses of the Anglosphere experience should be part of the mix. It could be a positive step in the direction of public transparency and executive accountability.

It is no longer enough to lament the growing infidelity between the founders’ vision and our current political practices. We must close this gap. Institutional reforms to review rules and regulations can help to achieve the goals of deconstructing the administrative state and restoring republican governance.

— Sean Speer is the author of “Legislative Scrutiny of Regulations in the Anglosphere” and a senior fellow at the Macdonald-Laurier Institute. Kevin R. Kosar is a senior fellow of the R Street Institute and edits LegBranch.com.

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