January 10, 2011

Who Needs Congress: Legislation by Regulatory Fiat

by Hal Gershowitz

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Fashioning good legislative policy (so that laws that we enact garner maximum respect from the public) requires, as we have seen from its absence in the prior Congress, patience and compromise.  A party with electoral control over both chambers of Congress and the presidency can probably pass a bill into law, but you rarely can get everything you want if the goal is to maximize a national consensus.  Mr. Obama and his Democratic majority claim to have gotten much of their agenda through, but until the president was forced to engage in coalition building in the lame duck session, as a result of the November 2 “shellacking” taken by his party, most of the bills supported only by the far left are under attack by the new Congress and the courts.  And even if the GOP cannot either dismantle the monstrous health care and financial “reform” laws that were passed or be successful in court challenges, we will be left with years of anger, recrimination, and confusion arising out of multi‑thousand page laws that no member of Congress even read.

Instead our elected leaders have left it, largely, to unelected bureaucrats appointed by the current Administration to write detailed regulations to determine how to interpret and enforce the so‑called “will” of the same Congress that never read or understood what they passed.  We have seen alarming portents of this in recent pronouncements by regulatory agencies as to their intent when final regulations are promulgated.  The regulations, as we have seen from the  public pronouncements show no real effort to determine that intent but rather are designed to enact the agenda of the far left which the Democrats, even with their large congressional majority, could not pass.  The common thread is to transfer more control of the private sector to the government, to redistribute wealth and dismantle or exercise unprecedented control over the industries that are in their crosshairs.  This is not alarmist rhetoric; it is simply sad fact.  For them the ends justify the means.

Take this example.  Because of alarm that Sarah Palin’s so‑called “death panels” would scuttle the healthcare legislation; end-of-life counseling was dropped from the health care bill.  Frankly, we think the term “death panels” was overheated rhetoric and an allegorical stretch even for politicians, and that counseling terminally ill patients who are in pain about their right to refuse “heroic” but probably ineffective measures to prolong life a while longer, is totally appropriate.  However, in order to pass the law, Congress compromised and dropped the end-of-life counseling provision.  Before the end of 2010, however, Medicare issued a regulation restoring the provision.  Moreover the regulation was buried among hundreds of other Medicare regulations.  The original Congressional supporter of government payments for such counseling was so delighted by this action that he urged his supporters “not to crow about it” presumably so it wouldn’t get much attention.  Can anyone believe this wasn’t the Administration’s intent all along?  As Charles Krauthammer stated in his December 31 op‑ed in the Washington Post, “For an Obama bureaucrat, … the will of Congress is a mere speed bump.”

But even more alarming is what is coming in those areas where Congress never passed any legislation, for example:

  1. The FCC has passed so‑called “net neutrality” rules that ostensibly are aimed at stopping the problem (although there is no evidence a problem exists) of phone and cable companies blocking access to websites and interfering with Internet traffic.  But as the Wall Street Journal has reported, over 300 members of both houses of Congress have opposed regulation of the Internet and a federal appeals court has ruled that the FCC does not have jurisdiction to enforce net neutrality rules.  Our objection here is not whether there should be net neutrality rules but rather the power grab by FCC Chairman Julius Genachowski and the Democratic members of the Commission to so broadly change the existing law, as it has long been understood, without the elected representatives of the people voting on the subject.  Not only is their arrogance breathtaking, it undercuts the very essence of representative democracy for the purpose of giving the government the right to regulate the Internet, the most phenomenally growing industry in a generation or more, when private capital has been responsible for the growth of this large swath of the economy.
  2. The Federal Energy Regulatory Commission (“FERC”) is proposing new rules to take away from the several states the right to regulate retail electricity service and transfer to the Commission control over demand forecasting, resource planning and the ability to ensure that transmission is available to meet service obligations thereby pre‑empting members of elected state legislative bodies to determine appropriate retail policy.  Here again we express no view as to whether the matter belongs under federal or state regulatory authority … only that it is another example of a power grab by unelected officials to take control of a vast part of the economy previously under state supervision and to do it without an Act of Congress.
  3. Perhaps the granddaddy power grab of them all belongs to the Environmental Protection Agency (“EPA”).  One of the most controversial subjects facing the nation is what once was called “global warming”, now called “climate change” given record cold weather in states not used to winter chills.  This issue, (and again we take no position in this essay on the science of the matter) has led to efforts to reduce carbon emissions to “save the earth”.  Effective clean air laws have been on the statute books since the 1970s, but were never intended to regulate carbon from oil refineries and power plants.  In fact, when Congress decided not to take up “cap and trade” legislation it showed its intent not to wade into this subject.  Never mind that.  The EPA, using the same power grab techniques as its sister agencies, is trying to enact the same policies through a regulatory end run.  Where do they get the audacity to assert such authority?  Last we looked, laws have to be passed by Congress.  The Executive Branch cannot by its appointments also serve as the legislature.  What’s next:  Judicial appointments made by the President to pass judgment on those laws?  Sounds more like Putin’s Russia than our America.

This same EPA is also trying to strip several states of authority to issue air permits that are necessary for large power and industrial projects.  As the Wall Street Journal noted in its lead editorial on January 3, 2011, “This is the first time in the history of the Clean Air Act that the EPA has abrogated state control”.  And what is the legal justification for changing this long- standing policy?  As the Journal analyzes the explanation of the EPA regulation chief, “the best [she] could offer for voiding Texas’s permitting authority was that EPA erred in originally approving the state’s plan in 1992 (18 years ago).  The error that escaped EPA’s notice for 18 years was that the Texas plan did not address all pollutants … subject to regulation … among others … greenhouse gases.  In other words, back then Texas hadn’t complied with regulations that didn’t exist and wouldn’t be promulgated for another 18 years.”  Kafka couldn’t have said it better.

We had better watch out.  If anyone thought the November 2 election would, at a minimum, be a check on the enactment of further runaway left-leaning laws aimed at industries reviled by those whose agenda is to convert America from an economy and a political system driven by private citizens making private decisions, and private enterprise making investment choices based on risk analysis, think again.  The electorate may have begun the transition back to the values which made this nation great, a nation where private enterprise and the accumulation of wealth are seen as rewards for hard work, industriousness and smart investment decisions, but the government is still under the sway of nameless, faceless and unaccountable bureaucrats who report to work every day to advance an agenda often at odds with the wishes of the American people and those who they have sent to Congress to represent them.

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2 responses to “Who Needs Congress: Legislation by Regulatory Fiat”

  1. Dan Newell says:

    Hal:

    The thing that bothers me most is how proponents of the health care bills are misusing information from the CBO to claim that passage of the bills will actually save money. As an engineer who has been responsible for private sector new business development from government agencies, I know you damn well better include all relevant factors or you lose credibility quickly as well as your job.

    Regarding the CBO, a highly regarded agency, they analyzed only what they were told to look at by the proponents of the bills. I heard on CSPAN yesterday that including all factors, the bills would not save $230B as we have been told, but in fact cost up to $500B more. Here are parts of Page 10 and 11 from the new December, 2010 CBO report to Speaker Pelosi where the CBO admits there are other known expenses not included in the report:

    CBO has not completed an estimate of the potential impact of the
    legislation on discretionary spending, which would be subject to future appropriation action. Discretionary costs would arise from the effects of the legislation on several federal agencies and on a number of new and existing programs subject to future appropriation. Those discretionary costs fall into three general categories.

    Page 11
    The first category is implicit authorization of discretionary costs associated with implementing the new policies established under the legislation. Although no provisions in the legislation specifically authorize such spending, it would be necessary for agencies to carry out the responsibilities that would be required of them by the bill. For example:
     CBO expects that the cost to the Internal Revenue Service of
    implementing the eligibility determination, documentation, and
    verification processes for premium and cost sharing subsidies would probably be between $5 billion and $10 billion over 10 years.
     CBO expects that the costs to the Department of Health and Human Services (especially the Centers for Medicare and Medicaid
    Services) and the Office of Personnel Management of implementing
    the changes in Medicare, Medicaid, and the Children’s Health
    Insurance Program, as well as certain reforms to the private
    insurance market, would probably be at least $5 billion to $10 billion over 10 years. (The administrative costs of establishing and
    operating the exchanges were included as direct spending in CBO’s
    estimate for the legislation.)
    The second category of discretionary costs is explicit authorizations for a variety of grant and other programs for which specified funding levels for possible future appropriations are set in the act for one or more years. (Such cases include provisions where a specified funding level is authorized for an initial year along with the authorization of such sums as may be
    necessary for continued funding in subsequent years.) CBO has identified at least $50 billion in such specified and estimated authorizations in H.R. 3590, as passed by the Senate.6
    A third category of discretionary spending is explicit authorizations for a variety of grant and other programs for which no funding levels are specified in the legislation. CBO has not yet completed that analysis.

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