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Free Minds & Free Markets

The Tyranny of the Administrative State

Unelected bureaucrats should not wield legislative power.

The tyranny of the administrative state is real and hard to tame. Americans would be horrified if they knew how much power thousands of unelected bureaucrats employed by federal agencies wield. These members of the "government within the government," as The New York Times' John Tierney describes them, produce one freedom-restricting, economy-hindering rule after another without much oversight. These rules take many forms, and few even realize they're in the making—until, that is, they hit you square in the face.

Take the Consumer Financial Protection Bureau's rule that effectively banned car dealers from giving auto loan discounts to customers on the claim that they might lead to racial discrimination (a dubious conclusion reached using flawed statistical models). Dodd-Frank, the legislation that created the CFPB, prohibited it from regulating auto dealers—so the CFPB quietly put out a "guidance" document to circumvent due process and congressional oversight.

Thankfully, this time around, someone noticed. In recent weeks, the Senate passed a resolution of disapproval under the Congressional Review Act—a streamlined procedure for Congress to repeal regulations issued by various federal government agencies. The House is expected to follow suit soon and send the bill to the president's desk, if it hasn't already by the time you read this.

In a major blow against regulatory overreach, the Government Accountability Office correctly determined that this "guidance" is, in reality, a rule and subject to congressional review. Even though the CFPB never submitted a report to Congress (as required by law for new rules), pretended that this wasn't a new rule, and tried to regulate without any supervision, the rule still fell within the window for congressional review.

Informal regulations are all too common, but they're not the only form of regulatory abuse. Midnight regulations, or the spike of regulatory activity that occurs right before lame-duck administrations leave office, are another scourge. My former colleague Jerry Brito and I documented the sad phenomenon several years ago. We found large regulatory surges with outgoing administrations and smaller—but worth noticing—surges when incumbent presidents were re-elected. We also found that the quality of regulatory analysis for midnight regulations is poorer than average. The review is rushed, and the oversight is light to nonexistent—meaning a lot of rules that shouldn't go through do.

One such rule was issued by the Obama administration a mere week before Donald Trump was sworn in to office. Once fully implemented, it will damage a program that brings foreign investment into the U.S. economy, by arbitrarily raising the cost to participate in the program.

The EB-5 visa program, which currently allocates 10,000 employment-based green cards annually for foreigners who invest and create jobs in the United States, ought to transcend the political controversy surrounding most immigration questions. In brief, it has brought in over $20 billion in foreign investment over the past decade and led to an estimated 174,000 American jobs. Many other nations recognize the value in attracting job creators through these "economic citizenship" programs. The same logic that drove corporate tax reform—recognizing the need to compete with other powerful economies—ought to also drive support for shoring up the EB-5 program.

Contributing to the problem is the fact that Congress usually provides only short-term extensions of the program, leaving its future in doubt, rather than tackle long-term reform. Though that's frustrating, it's not a good reason to let regulators assume responsibility for reshaping the program themselves, which they do by pushing new investment requirements when nobody is watching. This dramatically curtails a valuable initiative. By withdrawing this Obama-era rule, the Trump administration could shift the responsibility back to Congress to properly settle the issue.

These are only two examples, though there are hundreds of thousands just like them. In the name of an expedited process, Congress delegated some powers to these unelected bureaucrats to write laws, interpret them, and enforce them in their own courts, with their own judges. But the whole thing has snowballed out of control. As Tierney notes, "in volume and complexity, the edicts from federal agencies exceed the laws passed by Congress by orders of magnitude." So much for the Constitution.

It's time for the legislators we actually elected to reclaim these unchecked powers and do their jobs before the next round of midnight regulations takes more of our freedoms away.

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  • buybuydandavis||

    Apparatchiks gonna apparatchik

  • loveconstitution1789||

    To be fair, in the USA legislatures don't really protect their legislative power very well.

  • Zebra Jr.||

    You're right. The administrative state was given too much by both the legislative branch and the judicial branch who's job it is to make sure everyone stays within their lanes but you kniw who wields the most power--- unelected corporatations bribing the govt by paying off the friends of politicians. You heard it straight from Scott Pruitt's mouth, i.e. money gets you access if didn't pay him money he didn't pay you any attention. Fucking corruption on both sides. Ya'll need to wake the fuck up.

  • Zebra Jr.||

    So pretty terrible typos in there and I should have said we need to wake up. I didn't realize that AT&T bribes people to affect govt regulations. It's fucked up and our complacency allows it to happen.

  • Vin_Decks!!!||

    Maybe government should have less power then and be less worth bribing, huh? Somehow, I feel like that is not your proposed solution.....

  • Cynical Asshole||

    Of course not. We need to give the government more power to bring those EVUL KKKOCHPORAYSHUNZ under control! And if that doesn't work, then the government isn't big enough, and needs more power. And if that still doesn't work, then the government isn't big enough, and needs more power. And if that still doesn't work...

    The ratchet only ever moves in one direction, all right thinking people know this to be true. /sarc

  • J2Hess||

    The corporations don't have to be "evil" to bring about evil consequences under the conditions of market competition in a capitalist economy. Competition is good for consumers but a threat to profits and hence stock value. Consolidation is a frequent response, leading to oligopoly and loss of power to workers and consumers and citizens. Government is subject to capture, but what other institution has the capability to protect individuals? That is a serious question, not a troll. I'm interested in your response.

  • jerbigge||

    The Supreme Court effectively made political bribery "legal" as long as you did it in the form of campaign contributions. Then our "vested interests" also hire lots of lobbyists to keep the "bribed" politician aware of "where" the money for his campaign came from.

  • Citizen X - #6||

    Corporations only wield that power because the politicians and bureaucracies they're in bed with have power to share with them in the first place. Strike the root and the branch withers.

  • Inigo Montoya||

    So much this.

    Whenever I'm with people griping about big business, I try to point out that it all goes back to government overreach.

  • Vin_Decks!!!||

    BUT THEN THE CORPORATIONS WILL BE IN CONTROL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Trigger Warning||

    I demand Robocop-style Detroit everywhere. It's the only possible conclusion.

  • Deconstructed Potato||

    I'd buy that for a dollar.

  • JesseAz||

    Did you miss the part from Pruitt's interview where he said his non corporate constituents got access before any lobbyist? Of course you did. The media hid that part.

  • J2Hess||

    No, I saw it reported in 'liberal' bastions like the Washington Post and the Los Angeles Times.

    Since they are "the people's" representatives, I make the modest suggestion that the people should get the campaign contributions rather than the congress critters. Or a 50% cut at least!

  • Hackmaschine Mutter||

    " in volume and complexity, the edicts from federal agencies exceed the laws passed by Congress by orders of magnitude."
    Damn. A criticism of Obama's administration?

  • utopia27||

    This is a condemnation of Congress's delegation of its authorities. Rulemaking and administration is essential to actually put Congress's loose guidance into operation. And it happens in every administration pretty much since FDR.

  • Jerryskids||

    Americans would be horrified if they knew how much power thousands of unelected bureaucrats employed by federal agencies wield.

    "If only Comrade Stalin knew!"

    Sad to say, I think you've misjudged the character of a large portion of the American people. Trading (the illusion of) security for liberty is all too human, many - too many - people sleep easier at night comforted by the knowledge that Big Brother is keeping a close watch on them. Too few have trouble sleeping at night for fear that Big Brother is keeping a close watch on them.

  • Quo Usque Tandem||

    It's an insidious process; little by little it progressively becomes worse. And of course it is the inherent nature of regulators, agencies, and governments to expand over time.

  • MichaeI Hihn||

    It helps that the state first goes after outgroups. People don't generally care what happens to an outgroup.

    Then there's a whole host of neurological tics which feed the process. Dunning-Kruger: we don't know how much we don't know, which mostly means we ask too few questions. Confirmation bias has us assigning low value to new data which conflicts with our bias - and low-value information is quickly forgotten. Backfire effect means we'll fight to the death when we're wrong, and Gell-Mann amnesia leads us to trust authority even when we know better.

    Really, it's a wonder we made it this far. Well done, humans.

  • blitzstrasse||

    THIS! You nailed it to the wall here.

  • I'm Here, for MOAR Hihn||

    Don't agree with him or help inflate his already over inflated ego. It's much more entertaining to wind him up with simple attacks on his general lack of social skills and his weak grasp on reality.

  • Deconstructed Potato||

    pssst - it's not the real fake Hihn, it's the capital i fake fake Hihn. You can tell by the fact he is making sense.

  • Microaggressor||

    You left out another big one: social desirability bias. Politicians are rewarded for saying things that sound good even if they aren't, e.g. "teachers need to be paid more" and "support our troops" and "[product of someone else's labor] is a right".

  • Hank Phillips||

    "We," paleface?

  • Cynical Asshole||

    The tyranny of the administrative state is real and hard to tame. Americans would be horrified if they knew how much power thousands of unelected bureaucrats employed by federal agencies wield.

    That's crazy conspiracy talk. Out benevolent overlords know what's best for all. We should trust them without question to serve The Greater Good.

    ^THIS IS WHAT PROGRESSIVES ACTUALLY BELIEVE^

  • Unicorn Abattoir||

    Only when it's their benevolent overlords in power.

  • J2Hess||

    I've yet to see any conservative or libertarian display any grasp of what liberals/progressives actually believe. Instead I see either a negation of the poster's beliefs or a display of psychological projection of one's own neurosis onto another.

  • gimmedatribeye||

    By all means, please explain what liberals/progressives actually believe.

  • I'm Here, for MOAR Hihn||

    Well, libertarians, much like their fiscally-focused conservative brethren (I'll leave the SocialCons out of this discussion as they are as bad as many progs) think logically and rationally. If logic and reason are applied up many mainstream prog theories, the ideas wouldn't make it. They run on pure emotional ideas: someone is getting a better deal and/or someone hurt someone's feelings.

    When dealing with children, you act like an adult. Sticks and stones buttercup

  • Finrod||

    Ted Cruz wants to use Trump's insistence on renegotiating NAFTA (which is dumb) to do something useful: put in the renegotiation that no rule that has economic costs of more than $100 million can take effect without approval from Congress. (Since it's a treaty, it can't be filibustered by Senate Democrats.) Personally I'd make that cost figure a lot lower, but if it's not indexed, it'll drop in real money amounts a bit each year.

  • Tionico||

    The US Constitution:

    is the supreme law of the land, together with laws passed PERSUANT TO IT

    vests ALL legislative power in the Congress

    prohibits Federal Government from dealing with almost everything it does meddle in, including financing, lending, consumer behaviour, foreign invstment, etc. It DOES assign ALL matters pertaining to immigration, citizenship, entry into the US by foreign nationals.. but lately it seems anyone BUT Congress can make such policies or laws.

  • I'm Here, for MOAR Hihn||

    I'm fairly certain it also outlawed the unnecessary use of the letter 'u' in words like behavior or favorite; it mandated the use of the letter 'z' in words like realize or apologize; it rearranged the letters in words like centre or fibre to the correct spelling center and fiber

  • Deconstructed Potato||

    I'm not sold on "center" as a noun, because then there is no differentiation from the verb.

  • utopia27||

    The implementation detail of the broad-sweeping programs currently implemented by the Federal government has to come from somewhere. It's either going to come from the executive branch, as part of its effort to implement legislative mandates, or it's going to come from Congress crafting detailed legislation. Sometimes it makes more sense to come from one than the other, but in recent decades, Congress has consistently passed the buck.

  • Rockabilly||

    fucking communist pieces of shit, fuck all of you, every last one

    Fuck you.

  • jerbigge||

    Our "shadow government". Consists of petty tyrants "protected" by Civil Service rules.

  • Hank Phillips||

    Ah! Finally, a Plunkitt of Tammany Hall fan!

  • Hank Phillips||

    Vero makes good points. But I see a federal bureaucracy whose number of sharksucker remoras leveled off after the LP got that electoral vote. State and local parasites then took off with the usual aggregate growth and asset forfeiture replacing conventional looting-by-law. Preaching and scolding seems to accomplish less than voting libertarian.

  • oncefallendotcom||

    There is a drawback to positions of power being subject to the whims of an ignorant populace, just look at the effort to recall the judge in the Brock Turner case.

  • SimonP||

    This piece is just incredibly dishonest and misleading. Reason should be ashamed to run something like this.

  • Deconstructed Potato||

    Last time I questioned one your posts you instructed me to "go fuck [my]self", the mechanics of which did not appeal to me in the least, as a man of limited athletic capacity. However, I'm an optimistic and tenacious fellow, so I will endeavor to ask you to please elaborate on your criticisms of this article. What in particular do you find dishonest?

  • J2Hess||

    There is, as you point out, a fix for the over-reaches of the administrative state. I am not too worried about the examples you give; well-heeled business interests have very effective ways of making themselves heard. And sometimes those regulations serve a legitimate purpose.

    For example, regulations preventing discrimination in auto loans. If someone pay less, and someone else with the same objective risk pays more, you can apply make-up so it looks pretty (Look - a discount) or you can look at it from the point of view of someone charged a premium and call it discrimination. If you are referring to the "flawed statistical models" I think you are, they are based on work by a very accomplished RAND mathematician that has been used effectively in other domains, so I need more than your word to accept your conclusion. References?

  • para_dimz||

    Oddly, the first article presented in today's email selections answers this one including the first question in the first article ostensibly posed. Why are Republicans embracing Trumpism? Because he is the only one doing anything, that's why. Congress is a two ring, 535 criminal clown show. That's not saying the cliche that every blind squirrel finds a nut now and then doesn't ever apply. But still, the exception doesn't prove the rule.

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