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One Nation, Ungovernable? Confronting the Modern Regulatory State

(Note: What follows is a hyperlinked version of the introductory paragraphs to the chapter of the same name in the new Fraser Institute/Mercatus Center book What America’s Decline in Economic Freedom Means for Entrepreneurship and Prosperity, edited by Donald J. Boudreaux.)

When policymakers neglect federal regulation, they ignore arguably the greatest element of governmental influence in the United States’ economy and perhaps in society itself. One cannot prove it, but it would be no great surprise to find the regulatory enterprise to constitute a greater bulk than federal spending. As a policy concern, regulation merits attention like the $18 trillion national debt receives. This essay provides a roadmap for focusing attention on regulation.

But in the early 21st century, those wishing to address regulation find themselves constrained; after a century of progressivism and policy dominance by intellectuals supportive of larger government, there remains little mobilized constituency for limited government. Republicans are at peace with the welfare state, a federal role in education, antitrust regulation, non-declarations of wars, and with not even enforcing the congressional “power of the purse,” out of fear of blame for shutting down the federal government. The executive branch steers and makes law, despite the Constitution’s assignment of that role to Congress in Article 1, Section 8: “All legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.” Once executive power expands, noted University of Chicago political scientist William Howell, “The president doesn’t give back that which was given to him before. …What you see over the long arc of history is… a dramatic expansion of presidential power and authority.”

The modern ethos of extending regulatory agency and executive branch power became epitomized in President Barack Obama’s February 2013 State of the Union Address. Capping weeks of the White House’s touting of a “pen and phone” strategy to further expand federal economic, environmental and social regulation and intervention, the president promised that, “[I]f Congress won’t act soon…, I will. I will direct my cabinet to come up with executive actions we can take, now and in the future.”

Should the new 114th Congress object to such aspirations, it faces “the year of the veto.” The president followed through on a veto of the Keystone XL pipeline in contrast to America’s onetime ethos of rapid, driven infrastructure growth. Alas, no resurgence of constitutional order and federal government restraint appears in the offing; politicians and even courts no longer possess the vocabulary for it. Nonetheless, the goal of this paper is to inspire advocates of limited government by showing how policymakers could use the limited tools at their disposal to create a body of information that can make such reform possible in more favorable circumstances.

Part 2 points to some economic and social consequences of the unrestrained modern government, and takes a moment to recognize (or perhaps lament) that, while the Constitution is not coming to the rescue, we are not without options.

Part 3, in light of Congress’ over-delegation of power to federal agencies, briefly reviews the formal oversight procedures that ostensibly exist for the thousands of regulations issuing annually.

Part 4 shows that central oversight of regulation sports theoretical inconsistencies and gaps and argues it hasn’t worked, but posits why, just possibly, it could.

Part 5 presents the data demonstrating that federal regulatory review has fallen short and is far from comprehensive.

Part 6 covers some of what is (imperfectly) known about regulatory burdens and volume to help inform efforts to liberalize.

Finally Part 7—given the reality that code or administrative agency law is here to stay for the time being—offers disclosure-based “low-hanging fruit” reform proposals, while remaining cognizant of central review’s shortcomings. The aim of these proposals is to (1) help legitimize Congress’ case for regulatory liberalization and enable a revival of some semblance of constitutional order; and to (2) facilitate future liberty-minded executive branches’ deployment of the “pen and phone” in defense of liberty (what I’m now calling “Liberty’s Meataxe”). An alternate take on “Energy in the Executive” would be a welcome contrast to its malevolent usage in undermining the institution of limited government and destabilizing core values of classical liberal society.