Creating the American Rules by Agencies of Alphabet Soup

A self-important youth who clerks for a Supreme Court Justice boasted to me the other day that the court has already ruled on the constitutionality of the Gramm-Rudman-Hollings deficit-reduction law. If I were sharp, I could take this inside information and make a fortune on the stock market, even though he didn’t tell me what the ruling was. Wall Street brokers hang on any hint of the court’s decision because of its enormous potential effect on the economy.

The Washington political community awaits the decision for a different reason: Its enormous potential effect on the way the country is governed. This is hard for the average citizen to comprehend--all this mumbling about the “separation of powers” and some strange official called the comptroller general. We’re used to reporters hyping court decisions as “landmarks.” But believe it this time. Gramm-Rudman could easily be one of the two or three most important Supreme Court decisions of this century.

To understand why, it’s best to start at the beginning, with the Founding Fathers. We all learned in civics class how they tried to prevent majority tyranny by establishing a complicated system of “separated” and balanced powers. The executive branch was separated from the legislative branch which was itself divided (into House and Senate). Each institution was democratically chosen, but in a different manner--and before a law could take effect, all three had to agree.

This system prevented the government from oppressing the people by the simple expedient of making it difficult for the government to agree to do anything at all. It worked, more or less, until the New Deal, when we discovered there was a lot more governing to do than the Fathers had anticipated. There were whole industries to regulate, prices to set, stockholders to protect. And there was seemingly no way everyone could agree on all the needed rules. So Congress created an “alphabet soup” of administrative agencies, in the words of Sam Rayburn, to “do what we don’t have time to do.”

Agencies like the Federal Trade Commission and the Securities and Exchange Commission write rules that have to be obeyed just as laws do. But those laws are never passed by Congress nor written by the President. Congress, leery of giving the President such powers, instead made most of the rule-making agencies “independent”--that is, the President could appoint the agencies’ leaders but only fire them for “inefficiency” or “malfeasance,” provable in court. The idea was that rule-makers would be experts, “bred to the facts” rather than politics.

Thus was born the “headless fourth branch of government”: the administrative state. Independent agencies were an excrescence on the Constitution, ruled by unelected bureaucrats, accountable to neither President nor Congress. But they seemed to be what the times required. In a case called Humphrey’s Executor, the Supreme Court (the other “separated” government branch) approved the idea that there were agency officials the President couldn’t fire except “for cause.”

But nobody was very comfortable with this arrangement. In 1946, Congress tried to limit the discretion of the agencies by subjecting their rulings to “judicial review.” This only made things worse. Now, instead of rules just being written by unelected bureaucrats, they were then second-guessed by unelected judges. The lengthy and legalistic process by which rules are written, reviewed, revoked and rewritten--it takes a minimum of two years to produce a simple auto safety standard--is a central horror of contemporary Washington, as well as a primary source of income for its lawyers.

Meanwhile, Congress itself grew even more inefficient than it had been in the days when it “didn’t have time” to write rules. Party discipline evaporated. Committees proliferated. Even if Congress could get its act together, the separation of powers still made a stalemate with the executive branch likely.

Gramm-Rudman is the product of such a stalemate. It is a sign that the Founding Fathers scheme not only can’t produce the regulations necessary in a modern government, it can no longer even produce the budget necessary for any government. Congress wanted to cut defense spending and raise revenues. The President wanted to cut social spending. Instead of compromising--there being no constitutional mechanism that forces a compromise--they decided to create a sort of doomsday machine. If they couldn’t agree by a certain date, all agency budgets (with major exceptions) would be cut across the board by an amount necessary to end the deficit. But who would decide what that amount was? Neither branch of government trusted the other. So the final decision was given to the comptroller general, an obscure official (he heads the General Accounting Office) who is “independent” because he may be removed only by two-thirds vote of Congress, with the concurrence of the President.

This bizarre “let-GAO-do-it” setup may be effective, but it obviously isn’t what the Fathers had in mind. So ruled a three-judge federal appeals court, in an unsigned opinion apparently written by Antonin Scalia, a Reagan appointee. Congress could “delegate” the power to decide on the size of the budget cuts, the decision said. However it could only delegate it to an executive branch official, not to somebody (the Comptroller General) who can’t be fired by the President. Although conservatives have tried to paint the decision as a much-needed expansion of presidential power against an aggrandizing Congress, the opinion isn’t really about the balance of power between the branches at all. It is about democratic accountability. Congress needn’t, under this opinion, give the President the power to do anything. It can keep that power for itself. But if it does give the power to someone else, that someone else must be an official accountable to the only other elected official in government, namely the President.

But wait a minute. What about those “independent” agencies? They can’t be controlled by the President either--or by Congress for that matter. If Gramm-Rudman isn’t constitutional, then the alphabet soup of agencies doesn’t look so constitutional either. Scalia and company did their best to encourage this conclusion, heaping scorn on Humphrey’s Executor and, in a much quoted passage, declaring it not “obvious” that “there can be such things as genuinely ‘independent’ regulatory agencies.” Which is why the case is such a big deal. It threatens to throw out, not only the budget-balancing law, but also the FTC, the SEC, the Federal Reserve, the Federal Communications Commission, the Environmental Protection Agency, the Interstate Commerce Commission, the Occupational Health and Safety . . . you get the picture. Much of government as we know it would go down the drain.

This might not be a bad thing. If Congress could delegate its power only to the President, it might be reluctant to delegate its power to anybody. That means it would have to pass regulations itself, like it passes ordinary laws, making the tough decisions and taking the political heat. If it wanted to pass the buck, it could only pass it to the President, and he would then be accountable to the voters. All nice and neat, the way the framers of the Constitution intended.

Unfortunately, the reason we got into this whole mess is that the framers nice, neat scheme didn’t work--or at least it didn’t work efficiently enough to do the amount of governing we now have to do. Imagine the House and Senate, which take two months to debate a single arms sale to Saudi Arabia, trying to negotiate among themselves, and then with the President, on the thousands of regulations issued each year--even by this Administration. Congress couldn’t conceivably do the job without an unprecedented degree of party discipline and a radically streamlined committee system.

If the Supreme Court throws out Gramm-Rudman on sweeping, Scalia-like grounds, Congress may have to experiment with such dangerous notions. The most significant part of Gramm-Rudman, in fact, may be the five-day, single-committee budget procedure it sets up as a “fallback” if the law is thrown out. But working within the Constitution’s rusty machinery would probably require a dramatic reduction in the amount of government regulation.

The betting in Washington is that this won’t happen. The court will chicken out and invalidate Gramm-Rudman on narrow grounds that don’t threaten the rest of America’s regulatory apparatus. If that happens, Gramm-Rudman will be go down in history as just another futile attempt to escape the constitutional straitjacket bequeathed to us by the Founding Fathers.

We’re used to reporters hyping court decisions as ‘landmarks.’ But believe it this time. Gramm-Rudman could be one of the most important Supreme Court decisions of this century.