Right Sizing the Federal Trade Commission Is Step One

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As part of regulatory streamlining and administrative state reform efforts, members of the 118th Congress have already reintroduced several prominent pieces of legislation. These include the Article I Regulatory Budget Act to place regulatory costs like tax receipts and outlays above board, and the All Economic Regulations Are Transparent (ALERT) Act to require prenotification on upcoming regulations. In this new session, both of these come from Rep. Bob Good (R-Virginia).

The REINS Act (H.R. 277(—for Regulations from the Executive In Need of Scrutiny—reintroduced in the 117th Congress by Sen. Rand Paul (R-KY) was introduced this month by Rep. Kat Cammack (R-FL) with 177 cosponsors in the House. It would require congressional approval of the costliest rules before they can take effect. Other reform proposals are in the hopper and more are on the way such as the GOOD Act—for Guidance Out of Darkness—to help publicize and discipline slippery sub-regulatory guidance documents that might be used to influence policy without being presented for notice and comment.

As plans are made and hearings scheduled, challenges to the legitimacy and authority of an increasingly destructive administrative state should be a priority for the 118th Congress.

Economic interventions by the Federal Trade Commission are particularly noteworthy, especially since both parties are overly sympathetic to this agency’s purported mission to “prevent business practices that are anticompetitive or deceptive or unfair to consumers.” Rather, the FTC is a chief perpetrator of these ills, and its costs to the economy extraordinary and unchecked. As agencies pursue progressive ends like climate policy and competition policy, their policies are getting bundled across dozens of agencies in top-down “whole-of-government” campaigns.  

challenging the conceits of antitrust, reformers should not only take a broader view in rejecting the Biden administration’s interventionism but rethink their own support of antitrust that is ripe for abuse. Following are some considerations that policy makers and interested observers ought to reflect on with respect to discipling agencies and the FTC in particular.

The White House Competition Council needs to be challenged. The Federal Trade Commission is only one of over a dozen members of Biden’s White House Competition Council, which met for the fourth time February 2. Biden again made the claim that “capitalism without competition is exploitation,” while ignoring how his sweeping “whole-of-government” agenda is replacing capitalism and property rights evolution with vast consolidations of federal authority. Regulators are energized over matters ranging from ordinary lead pipes (see this past week’s bizarre and verbose “Lead Pipe Replacement Summit”) to meat packing, agriculture, hospitality, airlines, and mega-pursuits like space commercialization. (For more see “The Problems with the White House Competition Council.”)

The FTC’s antitrust premise is flawed. All the rent-seeking arguments against antitrust regulation are well-known, but those still have not been enough to end the damage antitrust intervention continues to inflict. Contrary to the “big is bad” mantra,  private competitive enterprises of the future that expand human flourishing will need to be far larger than the so-called monopolies of today. The country could be vastly wealthier today—and can still be tomorrow—without antitrust. Whether drone networks and airspace property allocations, workable EV charging networks, “smart cities,” or spacecraft—if these private ventures and undertakings are not allowed to rise to their true and necessary scale, the default will be stunted “public-private partnerships.”

Large-scale assets require redundancy, duplication, and co-location, which we will not get with government infrastructure. That means allowing “collusion” and mergers between various network industries, and letting them quickly rise and fall on their own. Major enterprises of tomorrow must not be merely artificial tax-funded constructs. Property rights in complex networks become more important to wealth creation and to well-being as societies evolve. The FTC is part of the problem, pursuing the opposite of its stated mission by neglecting core market institutions crucial to consumer well-being.

Beyond antitrust, tbe FTC’s rulemaking pursuits needs direct challenge. There are also new rules underway requiring “energy labeling for major home appliances and other consumer products to help consumers compare the energy usage and costs of competing models,” which signals counterproductive regulation of information markets.   

The more government steers the remnants of private enterprise, the less it needs to write rules at all. It can simply issue guidance. The FTC’s new “Policy Statement Regarding the Scope of Unfair Methods of Competition” is now central to everything it will be doing, yet is a guidance document that never received notice-and-comment treatment.

The copycat Department of Transportation (DOT) is taking a cue from the FTC on using statutory language to justify (yes, at bottom, this is all Congress’ fault) rule-by-guidance to harass airlines and other targets. As DOT put it in “Guidance Regarding Interpretation of Unfair and Deceptive Practices” in August 2022, “Section 41712 was modeled on Section 5 of the Federal Trade Commission (FTC) Act.”

It didn’t start with the Biden administration, of course, as other more long-standing FTC moves like its guidance on disclosures for social media influencers, and policymakers’ attempts to enlist FTC in content controls, remind us.

Don’t fixate solely on “antitrust,” Washington can overregulate “competition policy” without the FTC. The FTC is not necessarily needed in order to pursue consolidations that derail private enterprise. Industrial policy efforts and large-scale infrastructure spending and subsidies with broad regulatory effect can set market-structure terms, too, just like FTC routinely does. If not FTC-driven antitrust, policy makers can achieve similar ends by hopping to a new ledge as is being done with rules like “Inclusive Competition and Market Integrity under the Packers and Stockyards Act” from the U.S. Department of Agriculture’s Agricultural Marketing Service. In a separate but parallel pursuit, the purported student loan forgiveness authority is being shifted from the “emergency” rationale to the HEROES Act “stimulus” bill of 2020.

Control the price controls. The Competition Council’s forays into price controls also advance progressive policies. Everything of which there is a shortage would be abundant if not for government interventions. The Fourth Meeting of the White House Competition Council and its celebration of imposing price controls across sectors is another potential source of shortages and supply chain disruption. Several new forays were announced or underscored, from a proposal to lower credit card late fees from $31 to $8, magically generating “$9 billion a year in savings,” and ending certain hotel and airline charges that Washington politicians deride as “junk fees.” Rulemakings are already underway on airline “ancillary fees” and prescription drug prices, and more rules and guidance are in development thanks to the Competition Council.

Sectors typically derided in this fashion are already among the most heavily regulated. In better functioning free information markets, the amount of disclosure or non-disclosure over the likes of pricing and energy conservation disclosures are developed and optimized in markets as competitive features, like other product or service attributes like quality, safety, and convenience. 

Back when agencies began eliminating Trump-era guidance document “portals,” it was striking to see the boilerplate language some agencies used in concert, systematically reversing positions they had held only months earlier.

Under the Biden administration, agencies have issued “strategic plans” to nag and cajole in the pursuit of “carbon neutrality,” “equity,” and “competition policy.” With strategic exploitation of the federal government’s spending power and procurement heft, the administration can engineer otherwise impossible coordination among federal agencies aimed at social engineering and displacement of private, voluntary sector and local governance aims with federal priorities. Even the national defense spending thought unrelated to the regulatory state must be recognized as highly regulatory, but is nowhere counted as such (except here). Instead of raising concerns about any of this cartelization, the FTC is a participant.

The FTC may be as irredeemable as an oversight body as the Office of Management and Budget (OMB) is swiftly becoming with respect to cost-benefit supervision owing to Biden’s “Modernizing Regulatory Review.” Preferable would be to transform the FTC into a body with an “Office of No” function. This would require tasking the FTC with questioning many regulatory pursuits and recognizing that “expertise” does not reside with oversight agencies. To unwind much of the damage, a newly constituted FTC would stress political failure’s eternal swamping of market failure, recognize that a sizeable portion of regulatory interventions have been misguided, and provide roadmaps and blueprints for downsizing the federal regulatory apparatus.

Not a fix, but hold hearings. Much of the regulation being engineered today is coming not from departments and agencies whose rules are reviewed by the OMB, but by independent ones like the FTC and Consumer Financial Protection Bureau, which are exempt. Although, as noted in the opening, numerous regulatory reform bills have already been introduced in the 118th Congress, legislation is not in the offing, since Biden would veto most of them. In the meantime, hearings on regulatory oversight that also fix upon independent agencies can lay groundwork for when a potential alignment does occur. 

Address Guidance Documents, and Defund Agencies. Many of the fixes regarding guidance document disclosure could underscore the abuses of what goes by the name “competition policy.” Like any legislative measures, these are longshots, but, as it happens, guidance document reform does appear to have more bipartisan support than the typical regulatory reform initiative. In addition, defunding federal agencies by withholding appropriations is an option, and a controversial one, but debate over debt limits and spending in general will likely bring discussion to the fore. Stay tuned.