The Imperial Presidency: Implications for Economic Growth & Job Creation
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Today, we released the #ImperialPresidencyreport detailing 40+ abuses of authority by President Obama. Read it here »http://t.co/V0obVBXhImplications for Economic Growth & Job Creation
Over the past several months opinion pieces appearing in such places as The Washington Post, National Review, and The Wall Street Journal have talked about the emergence of an “Imperial Presidency.” While some may wish to simply chalk this up to partisan criticism of the incumbent President, even The New York Times in a recent A1 article examined “an increasingly deliberate pattern by the administration to circumvent lawmakers…”
Less noticed, but perhaps even more important – especially to the over 20 million Americans currently out of work or underemployed – is the link between a breakdown in the rule of law and reduced economic growth and individual prosperity.
Property rights and rule of law are essential for the proper and efficient functioning of society and the economy. Unambiguous laws and procedures provide a framework by which free people agree on the scope and reach of their government's actions, whereas unclear laws or arbitrary enforcement undermine individual liberty and the notion of popular sovereignty. Clear, transparent, predictable rules that are applied without preference or prejudice allow individuals to invest, build businesses, and create jobs. When there is a breakdown in the rule of law, increased uncertainty leads to reduced investment and less growth.
Numerous economic studies have documented the relationship between a strong rule of law and economic growth. In 2008, The Economist published the following chart alongside a story entitled “Order in the Jungle.” The chart aptly illustrates the strong relationship between adherence to the rule of law and economic growth. As economist Hernando de Soto – a leader in the field of the impact of property rights and rule of law on economic growth succinctly stated: “So the origin of the rule of law— which will allow a modern nation to grow and so bring peace, stability, and prosperity to the world—is property rights. And the rule of law will actually generate prosperity.”
In the United States, the ultimate law is the Constitution, which specifically provides how laws are to be enacted and requires the President to take care that the laws that are enacted are faithfully executed. The laws of the United States establish the process whereby individuals can enforce their property rights and private contracts and provide the framework by which executive agencies are to conduct rulemakings and the other regulatory activities.
When “laws” are created without going through Congress; when laws are selectively executed; when an administration intervenes into the normal judicial process and diminishes an individual's property rights; and when the normal regulatory process is circumvented, the rule of law is eroded.
All of this increases uncertainty. Individuals, families, and businesses now not only face uncertainty with respect to the policy decisions made by government, but they face uncertainty as to how those decisions will even be made, Numerous economic studies and surveys indicate that uncertainty itself (which is certainly increased with the breakdown in the rule of law) also hinders economic growth.
While Administrations of both political parties have been known to test the bounds of the limits of their power, the breadth of the breakdown in the rule of law in recent years has reached new levels. In the Heritage Foundation and Wall Street Journal's annual Index of Economic Freedom, the United States scores lower today on the rule of law than it did in 2008. As the 2012 report notes, “Corruption is a growing concern as the cronyism and economic rent-seeking associated with the growth of government have undermined institutional integrity.” Individuals and businesses are increasingly forced to rely on the courts to enforce their most basic substantive and procedural rights.
Over the past year-and-half, the Committees of the House of Representatives have investigated and documented numerous break-downs in the rule of law. This report compiles over 40 separate examples that span the breadth of government, including instances where the Administration has attempted to:
- Tell a private business in what state it can locate;
- Tell a religious institution which employees are “religious” under certain federal laws;
- Regulate the internet;
- Rewrite Federal education law;
- Created new “Super” regulatory agencies; and
- Significantly restrict America's energy resources.
Ignoring Advise & Consent
One of the checks and balances imposed by the Founding Fathers was the requirement that senior Executive Branch officials be appointed only with the consent of the Senate. In the modern regulatory state the approval of officials by the Senate is one key way to ensure that regulators do not abuse their authority. In order to address situations where the Senate was in recess, thus preventing them from consenting, the Founders provided for a limited interim appointment process absent Senate confirmation.
“Recess” Appointments
When the Senate did not approve four of his nominees to two regulatory agencies – the head of the new Consumer Financial Protection Bureau (CFPB) and three members of the National Labor Relations Board (NLRB) – President Obama took the unprecedented step of declaring that the Senate was in recess – even though it wasn't – and invoking his interim appointments power.
Seating the head of the CFPB and a quorum for the NLRB allowed both agencies to begin promulgating regulations that would have otherwise have been on hold until the President and the Senate came to agreement on filling the vacancies.
The President's unconstitutional acts are now the subject of pending litigation by those negatively impacted by the new rules and determinations published by these agencies.
Creating “Laws” Outside of the Congressional Process
For decades, Congress under both parties authorized and permitted federal agencies to exercise immense control over the economy through the rulemaking process. For the regulated, there is virtually no difference between a legal requirement imposed by statute and a legal requirement imposed by regulation. But both parties have always agreed that agency action is limited to the authority granted to the agency by an Act of Congress, duly signed by the President. Under this simple limitation, at least some limits are imposed on the unelected officials who run the agencies. Under the Obama Administration, agencies have gone further than ever before in overturning decades of regulatory precedent, acting without statutory authorization, and otherwise abusing the rulemaking process to create de facto laws without going through Congress.
Changing the Unionization Process
- Majority Threshold: In 2009, the President's appointees to the National Mediation Board (NMB) changed union election rules that had been in place for 75 years under the Railway Labor Act so that union certification required only a majority of the employees who vote in the election (as opposed to the majority of all employees). This change made it easier to form a union. But, the NMB conveniently left in place the arduous process under the Railway Labor Act to decertify a union. Congress ultimately responded with provisions included in the FAA Modernization and Reform Act (P.L. 112-95) to address the President's changes by requiring: (1) Any new NMB rulemakings be subject to public hearings; (2) Elections to either unionize or vote out a union are conducted on an equal footing; and (3) GAO to conduct regular and substantive oversight of the NMB, which the Board has previously lacked.
- Ambush Elections: In June 2011, the National Labor Relations Board (NLRB) proposed sweeping changes to the rules governing union elections. Under the proposal, union elections could take place in as little as 10 days, restricting an employer's right to communicate with his or her employees and undermining workers' ability to make an informed decision. This past May a federal judge overturned the NLRB regulation citing that the agency lacked the legal quorum necessary when it approved the measure.
- Creating Micro-Unions: In August of 2011, the NLRB discarded decades of precedent in order to adopt a biased standard for determining which group or “unit” of employees can vote in a union election. Union leaders have long tried to organize smaller units of employees as an incremental step toward organizing an entire business. In an effort to preserve unity in the workplace and keep labor costs low, employers often seek to expand the unit to include a greater number of employees. Under the board's new standard, it will be virtually impossible for employers to challenge the group of employees handpicked by the union. The new standard empowers union leaders to manipulate workplaces for their own gain, with dramatic consequences in the real world. Affected employers will be constantly engaged in costly labor disputes. For example, a grocer could be negotiating one day with his cashiers and the next with those who stock the shelves.
In November of 2011, in response to these harmful Obama Administration regulations and edicts, the House passed the Workforce Democracy and Fairness Act.
Telling Businesses Where They Are Allowed to Locate
Choosing where to set up shop and hire workers is a fundamental business decision. Bureaucrats at the National Labor Relations Board (NLRB) believe they should have a say in that decision. In April of 2011, the NLRB filed a complaint against The Boeing Company for building an assembly line in South Carolina despite the fact the NLRB could not demonstrate that Boeing was breaking any law. The NLRB tried to force Boeing to move the work to Washington State from the non-union facility in South Carolina. Ultimately the NLRB backed down and dropped their case against Boeing, only after their coercive efforts caused Boeing to modify its agreement with a Washington-based union.
In September of 2011, in response to the NLRB, the House passed the Protecting Jobs from Government Interference Act.
Imposing “Propaganda” Mandates on Employers
Despite the fact that Congress has never provided the National Labor Relations Board (NLRB) with the authority to require employers to provide general notice posting in the workplace, last year the NLRB finalized a new rule that requires nearly every private employer to post in the workplace a vague and biased notice of employee “rights.” What the poster really represents is a marketing campaign by Big Labor mandated by its allies at the NLRB. This new unfunded mandate on business is currently the subject of litigation.
Telling Federal Contractors Who They Have to Hire
Shortly after taking office, President Obama issued an Executive Order that would limit employer flexibility and increase costs by forcing federal contractors that perform services previously performed by another contractor to offer jobs to the predecessor's employees. While Congress had previously legislated issues related to successor contractors, Congress never required or even authorized the imposition of this new mandate on whom private employers are required to hire.
Regulation of Hydraulic Fracturing
The states have always had primacy to regulate oil and gas activity, including hydraulic fracturing, on state and private lands. This relatively new technology represents the largest area of growth towards American energy independence. With respect to hydraulic fracturing specifically, the federal government expressly codified this primacy, leaving the EPA with limited authority to regulate fracturing. The Agency, in a March 2011 letter to Senator Cardin, admits that “EPA's authority to regulate or respond to natural gas exploration and production activities is limited by exemptions established under several of the principal environmental statutes we administer...”
EPA seems undaunted by this admitted lack of Congressionally-granted authority, and instead is looking for ways to overcome this limitation without Congressional consent. To this end, EPA's Office of Science Policy within the Office of Research and Development (ORD) recently stated that the Agency is doing “a pretty comprehensive look at all the statutes” to determine where “holes” may allow for additional oversight or regulation.
In response, several House Committees held hearings to examine the negative impact that will result from the Obama Administration's regulation of hydraulic fracturing on energy development, job creation and economic growth.
Establishing a National Ocean Regulatory Policy
On July 19th, 2010 President Obama signed Executive Order 13547 to adopt the final recommendations of the Interagency Ocean Policy Task Force to implement a new National Ocean Policy, which includes a mandatory Coastal and Marine Spatial Planning initiative to “zone” the oceans. In this unilateral action, he established a top-down, Washington, D.C.–based approval process that will hinder rather than promote ocean and inland activities and cost American jobs.
Without clear statutory authority, the policy sets up a new level of federal bureaucracy with control over the way inland, ocean and coastal activities are managed. This has the potential to inflict damage across a spectrum of sectors including agriculture, fishing, construction, manufacturing, mining, oil and natural gas, renewable energy, and marine commerce, among others. The Administration took this action despite the fact that in four separate Congresses, legislation has been introduced to implement similar far-reaching ocean policies, and to-date NO bill has passed the House or even been reported out of a Committee.
The House Natural Resources Committee held several hearings to examine the President's National Ocean Policy.
Creating a New Land Regulation Program
In 2010, Secretary of the Interior Ken Salazar announced a “Wild Lands” Secretarial Order. This new Wild Lands policy would effectively allow the Administration to circumvent the strictly congressional authority of designating wilderness areas. By treating these new Wild lands as de facto wilderness, millions of acres of public land could be placed off-limits from their original multi-use purpose. Congress ultimately stepped in and prohibited the Department of the Interior from using funds to carry-out this policy.
Global Warming Regulations
The Obama Administration's EPA is developing global warming regulations that have the potential to be the most complex, far-reaching, and expensive in the agency's history.
At a November 2010 White House Press Conference, President Obama said of Congress' rejection of a cap-and-trade bill, “cap-and-trade was just one way of skinning the cat, it was not the only way. It was a means, not an end. And I'm going to be looking for other means….”
The Obama Administration is using the regulatory process to “skin the cat,” implementing major aspects of the 2009 cap-and-tax legislation despite the fact that it was rejected by Congress.
Network Neutrality Regulations
In recent years technology has been one of our nation's strongest economic growth areas, yet the Federal Communications Commission (FCC) has sought to impose new network neutrality rules on the internet. In 2010, a Federal court struck down the FCC's first attempt to regulate the internet; noting that the FCC lacked authority to issue such regulations. Then-Energy & Commerce Committee Chairman Henry Waxman (D-Calif.) introduced legislation to provide such authority. Despite the fact that the legislation was not enacted, the FCC proceeded anyway with new net neutrality rules. Businesses negatively impacted by these new regulations have been forced to go to court once again to defend against regulations that the agency has no authority to issue.
In April, the House passed a Resolution of Disapproval, H. J. Res. 37, to overturn the FCC's controversial internet rules that stifle small business growth and investment in order to promote freedom and innovation.
Auto Efficiency Mandate
The Obama Administration is imposing costly vehicle efficiency standards more than a decade into the future under the regulatory auspices of an agency not authorized to establish such standards. Congress set up the CAFE program in the 1974 Energy Policy and Conservation Act (EPCA), but the Administration's rule violates most of that statute's key provisions.
- Regulatory Agency: It is clear that Congress wanted the National Highway Traffic Safety Administration (NHTSA) to be the sole federal agency setting these standards, and that states were preempted from going their own way. Yet the Obama administration has given EPA the lead role and has allowed California to wield significant influence, in effect allowing California to dictate an auto standard for all other states. Under this administration's rules, NHTSA is a decidedly junior partner despite being the only one with any expertise on fuel economy standards.
- Stringency and Regulatory Timeline: The stringency of the rule, 54.5 mpg by 2025, goes far beyond what Congress envisioned when it last spoke on the matter in the 2007 energy bill. The fact that standards are being locked in all the way out to model year 2025 is something Congress never authorized.
- Cost: EPA concedes that its mandate will cause sticker prices to rise $3,000 by 2025, while the National Association of Auto Dealers predicts even higher vehicle cost increases – this arguably violates NHTSA's obligation under EPCA to take economics into account.
- Vehicle Safety: There is no indication that the 54.5 mpg by 2025 mandate has taken into consideration vehicle safety concerns, despite the fact that safety is a statutory requirement in establishing such standards.
Several House Committees have held hearings to examine fuel economy standards for light and heavy duty vehicles, and the Obama Administration's recent agreement to raise fuel economy standards for model years 2017-2025.
Claiming the Power to Define What Constitutes Religious Employment
The Administration's Equal Employment Opportunity Commission (EEOC) took the position that the Administration has the power to declare what religious staff positions at a religious institution are “religious enough” to enjoy the protections from government interference guaranteed by the First Amendment. Ultimately, the Supreme Court decided 9-0 against the Obama Administration's position. Even President Obama's two Supreme Court appointees found the Administration's position untenable.
Draconian Regulation of Coal
The Clean Air Act's “Good Neighbor” provision gives the EPA the authority to reduce interstate pollution that interferes with the attainment and maintenance of the national ambient air quality standards protecting public health. A previous regulation coordinated states' implementation plans addressing interstate pollution, but that regulation was remanded by the court for further analysis. Under the guise of responding to that court remand, the Obama EPA misused the Good Neighbor provision to impose more stringent emissions reductions under federal implementation plans in the Cross-State Air Pollution Rule (“CSAPR”). CSAPR was a thinly veiled attempt to impose such draconian reductions on coal-fired power that the only option for some was a shutdown of electric generation plants and a loss of jobs at coal mining operations. In an August 2012 decision vacating EPA's “Cross-State Air Pollution Rule,” the D.C. Circuit Court of Appeals stated the following---,
- “EPA has transgressed statutory boundaries.”
- “EPA pursues its reading of the statutory text down the rabbit hole to a wonderland where EPA defines its target after the States' chance to comply with the target has passed.”
- “EPA's authority to issue these [Federal Implementation Plans] rests on our accepting its rickety statutory logic. We decline the invitation.”
