Bureaucracy Unbound


Review of Liberty’s Nemesis: The Unchecked Expansion of the State, edited by Dean Reuter and John Yoo

New York: Encounter Books, 2016

This book consists of 26 short essays by a clutch of prominent government officials, former government officials, think-tank denizens, academics, and lawyers, who believe that the federal bureaucracy has extended its power, violated the law, sought ideological ends, or made bad policy—in short, “overreached.” Many of the authors make a reasonable case that government officials acted wrongly in one way or another; others rehearse ideological hobbyhorses; a few fly off into outer space. The best case for this book lies in its accumulation of details. The book lays out a bill of particulars, and seems to be saying that even if you think that each individual charge is of little moment, possibly explainable or excusable, in combination they amount to a monstrous indictment, echoing in prolix fashion the list of charges laid out so magnificently in the Declaration of Independence.

The authors charge that the Obama administration has:

  • Violated legally mandated deadlines and unlawfully waived portions of the law in the rollout of Obamacare.
  • Violated the Second Amendment by joining an arms trade treaty, pressuring banks to sever ties with gun dealers, and using aggressive and illegal tactics to capture gun law violators.
  • Infringed on religious liberty by compelling employers to cover contraceptives in health insurance plans, by weakening ties with religious institutions that have performed quasi-government functions, and by refusing to defend the Defense of Marriage Act in court.
  • Failed to enforce immigration law by deferring enforcement against millions of people who entered or stayed in the country unlawfully.
  • Expropriated the investments of shareholders of Fannie Mae and Freddie Mac, banana republic-style.
  • Compelled the FCC to adopt net neutrality, in violation of the FCC’s independent status.
  • Overregulated small businesses.
  • Regulated auto lending, through the Consumer Financial Protection Bureau (which allegedly discriminates against its minority employees), in violation of legal restrictions.
  • Pressured universities to adopt speech codes and enforcement practices that violate the First Amendment and due process.
  • Circumvented constitutional rules that require Senate confirmation of high-level executive appointments.
  • Used the National Labor Relations Board to curtail the speech of corporate management while also blocking management’s ability to curtail the speech of employees.
  • Pushed to reduce residential segregation in a manner that violates the Equal Protection clause.
  • Overstepped limits on EPA’s jurisdiction by regulating bodies of water that fall within the boundaries of states, and issuing pollution regulations that violate EPA’s statutory authority.
  • Used the IRS to deny tax benefits to Tea Party-inspired organizations.
  • Used the FTC to interfere with legitimate commercial advertising.
  • Interfered with the states’ efforts to ensure that only their residents participated in elections.
  • Arbitrarily designated large financial institutions systemically important, which subjected them to harsh regulatory treatment.

Some of these charges are plausible but underwhelming. Jonathan Adler is right that the Obama administration violated the letter of the Obamacare law by disregarding some congressionally mandated deadlines. But anyone with experience in a large organization knows that it’s better to violate a deadline than rush through a project. Bob Barr’s criticisms of Operation Fast and Furious—a botched sting operation intended to trap Mexican cartel leaders—are certainly reasonable. But his claim that it showed insufficient sensitivity to the Second Amendment is hard to credit. The purpose of the operation was to capture drug dealers, not to keep guns out of the hands of law-abiding citizens.

In other cases, actions described as executive overreach—including contraceptive mandates, small-business regulation, NLRB rules, and regulation of commercial advertising—reflected policy choices that the executive branch was entitled to make under the authorities vested in it by Congress. In still other cases, the Obama administration violated the law but was beaten back by the courts—but even here, the legal arguments were mostly reasonable even if they did not persuade judges, and agency action blocked by courts cannot be counted as “executive overreaching.” No harm, no foul.

Many of the authors don’t actually take aim at the administrative state. Sober essays on immigration policy (by Linda Chavez), the Treasury Department’s handling of Fannie and Freddie (by Richard Epstein), campus speech regulation (by Samantha Harris and Greg Lukianoff), and FTC regulation (by Maureen Ohlhausen and Joshua Wright) present reasonable criticisms of questionable policy decisions, but do not attack the administrative state itself. Other authors make good but small-bore points that hardly justify the violent anti-government rhetoric that they engage in. In a parallel universe, most of the essays in this book could have been published by a liberal watchdog that cared about good government, like the Brookings Institution.

But Brookings would not have called its version “Liberty’s Nemesis.” The idea that the essays, in accumulation, expose the “unchecked expansion of the state,” is advanced in an introductory chapter by Dean Reuter and a concluding chapter by John Yoo. Faintly echoing Philip Hamburger’s recent argument that the administrative state is unconstitutional, they argue that the harms described by the 26 contributors cannot be addressed through moderate reforms, or brushed off as the tolerable errors of a vast organization that mostly does good, but are the inevitable consequences of a many-tentacled federal bureaucracy that flourishes in defiance of constitutional norms.

Reuter reviews the Madisonian argument for separation of powers. If power is lodged in one office or branch of government, tyranny results. The framers therefore divided power between three branches, countering the ambitions of one branch with the ambitions of the others. “With everyone in government pushing with equal force against everyone else, the delicate balance of power would be preserved” (4). However, “maintaining this balance of power requires a certain faithfulness” (4). Instead, the branches have conspired to lodge power in the executive branch. Congress delegates power to agencies and fails to oversee them. The agencies either act autonomously or under the president’s control. The courts have acquiesced in these arrangements. The Madisonian approach failed.

The usual complaint is that the failure of separation of powers has resulted in an “imperial presidency,” an office with excessive power. Reuter seems to take this view, as do many of the other authors, who place the blame for the malfeasance they identify squarely on the shoulders of Obama. In their view, Obama wields excessive power, which he uses to impose his ideological agenda on a helpless public.

Yoo, in contrast, argues that the bureaucracy is ungovernable, effectively a plural executive that, as Hamilton predicted, would “conceal faults and destroy responsibility” (366). The federal government’s “operations are so vast and its reach so sprawling that it lies beyond the control or comprehension of any one man or group of men” (367). Far from being too strong, the president is too weak. Obama is a victim of the plural executive, not its creator. He can be blamed only for weakening the presidency further—by extending the system over healthcare and handing over some of his commander-in-chief power to judges.

Scandalously, Yoo blames the hypertrophic administrative state on the conservative patron saint, Ronald Reagan. It was the Reagan administration, as Yoo explains, that centralized regulatory supervision in the White House; gave the president leverage over agencies by strengthening his power to fire agency heads; and persuaded courts to give more deference to agency action than they had in the past. The problem, according to Yoo, is that while Reagan used these powers to impose his deregulation agenda on the agencies, subsequent administrations used these powers to support the regulatory missions of the agencies, in the process (Yoo seems to think) losing control over the bureaucracy.

Yoo does not explain how actions that gave the president more power over the bureaucracy could have weakened his control over it. More likely, he thinks that Democratic presidents have chosen not to press these levers of control, or have used them to push agencies to overregulate. In any event, Yoo argues that courts should reverse course and scrutinize the agencies rather than defer to them. They should resurrect the nondelegation doctrine, which limits the power of Congress to give rulemaking authority to agencies. Conservatives need “to re-think some of their constitutional hostility toward Congress” and endorse doctrines that give Congress more power to control regulatory agencies. (One might think that such a course of action would further weaken the executive rather than strengthen it.) And courts should enforce “natural rights,” exemplified by the jurisprudence of the Lochner era, when courts struck down statutes that violated property rights.

A cynic might think that Yoo’s newfound respect for Congress reflects its current partisan makeup. Enthusiasm among conservative lawyers and intellectuals for executive power in the 1980s flourished when the president was a Republican and Congress was mostly Democratic. Today, the roles are reversed. But the more serious problem is that Yoo’s prescription contradicts his diagnosis. If all three branches have conspired to concentrate power in the agencies over more than a century, across numerous administrations, crises, and ideological ebbs and flows, why would the courts and Congress take it back? And if a persuasive case can be made that the federal government overregulates, then the president is in a far better position to cut back regulation than Congress and the courts are.

The major problem with the book is that it lacks an intellectually compelling and politically plausible argument for dismantling the administrative state. To their credit, the authors do not try to ground their position in history or constitutional norms, in the style of Hamburger and earlier critics like Judge Douglas Ginsburg, who coined the phrase “the Constitution in Exile” to argue that the administrative state rested on constitutional law that was a judge-made imposture. Yoo wants to change constitutional law, and doesn’t repeat the originalist arguments against administration which are now in fashion. The book, appealingly, is pragmatic at its core if not always in its rhetoric. The authors base their opposition to the federal bureaucracy on the bureaucracy’s errors and abuses—much as Reagan and the deregulation movement did back in the 1970s and 1980s.

But times have changed. The deregulation movement succeeded in eliminating the biggest regulatory abuses of the 1970s—above all, rate regulation in trucking, air travel, energy, and other fields, which led to underinvestment and misallocation of resources. And it (marginally) helped rationalize regulation through the introduction of cost-benefit analysis. But the intellectual momentum carried through only into the 1990s. Today, conservatives must launch their assault on the administrative state against the background of two vast market failures: the financial crisis of 2007-2008 and climate change.

One of the contributors, Peter Wallison, argues that the financial crisis was caused by the government, whose policies inflated the housing bubble. To avoid future financial crises, he says, we don’t need additional financial regulation; we need a government that does not inflate asset bubbles. However, even if he’s right that government policy contributed to the housing bubble, asset bubbles are inevitable—they surface even without government involvement. If the financial system can’t survive the bursting of an asset bubble, it’s not doing its job. Ours didn’t, the result of the invention and spread of securities that magnified housing-price risk and concentrated it in the crossroads of the financial network. These securities were mostly the work of the private sector, as was the massive leveraging which further magnified the effects of risk. Deregulation of the financial system failed spectacularly. Reregulation, initiated by the Dodd-Frank Act, is the only reasonable response.

As for climate change, mercifully, none of the contributors to this book claims that climate change is a hoax, but then none of them discusses it either. If the editors want to make their claims broadly appealing, as the Chicago School did before them, they can’t ignore the reasons that people support regulation in the first place. The curious feature of this book, which weakens its impact, is that the descriptions of the malfeasance of the agencies takes place without any context about their functions and successes. It’s as if one thought that Bernie Madoff’s Ponzi scheme was grounds for abolishing capitalism.

Posted on 8 February 2016

ERIC POSNER is Kirkland and Ellis Distinguished Service Professor of Law and Arthur and Esther Kane Research Chair at the University of Chicago Law School, and co-editor of The New Rambler Review.