The President and the Bureaucracy

In the strict constitutional sense, the U.S. president has few powers. However, as popular expectations of an active president have grown—which some scholars attribute to the modern media’s disproportionate focus on the presidency—U.S. presidents have sought to augment their office with additional powers. Since at least FDR, presidents have sought a greater role in crafting and influencing legislation. The Constitution’s unambiguous grant of legislative authority to Congress (and Congress’ tendency to jealously guard its prerogatives) limits the scope of presidential involvement in that sphere. However, since at least Nixon, U.S. presidents have focused their energies on consolidating control over the executive branch where, as that branch’s nominal head, the limits of presidential power are less obvious and where cumulative congressional delegations have created an attractive repository of discretionary authority.

Though mostly creatures of Congress and guarded by the courts, executive agencies have proven susceptible to various forms of presidential influence. Presidents have employed several strategies to influence the actions of other government officials—such as “going public” with their proposals to pressure officials, issuing executive orders, and altering legislative mandates through the use of signing statements (See Kernell 1997, Waterman 2009). One tool of presidential control of the bureaucracy is discussed below: regulatory review through the Office of Management and Budget (OMB). For reasons I discuss below, where the President’s preferences conflict with other institutional actors, OMB may only prove useful as a tool of negative agenda control.

The formal powers of the presidency can be found in Article II of the U.S. Constitution. Section 1, known as the Vesting Clause, declares that “The executive Power shall be vested in a President of the United States of America” (U.S. Const., Art. II, Sec. 1). In Section 2, the president is declared Commander in Chief of the U.S. Armed Services, given limited power of appointment, pardon, and the ability to make treaties. Only the pardon power is unaccompanied by an explicit congressional check. In addition to appointing the heads of governmental departments, the president “may require the Opinion, in writing, of the principal Officer in each of the executive Departments, upon any Subject relating to the Duties of their respective Offices” (Id. at Sec. 2). Finally, in Section 3, in what is known as the Take Care Clause, the president is charged to “take Care that the Laws be faithfully executed” (Id. at Sec. 3). Though light on explicit grants of substantive authority, there is enough vagueness—especially in the vesting and take care provisions—for proponents of expansive presidential power to argue for the constitutionality of presidential control over administration generally.

But presidents have not always been understood to have much more than a coordinating role in the administrative sphere. Elena Kagan points out in her widely cited article, “Presidential Administration” (2001), that in 1979,

an influential report by the American Bar Association had noted that Presidents historically “ha[d] shunned direct intervention” in rulemaking and that they “ha[d] been loath to let it appear that they were influencing regulatory agencies, even those within the executive branch, to write their regulations one way rather than another” (Kagan 2001, 2277).

Kagan also details the evolution of the administrative presidency. In 1921, Congress, after a succession of presidential complaints, enacted the Budget and Accounting Act which established the Bureau of the Budget. Housed within the Treasury but directly linked to the President, the Bureau’s purpose was to oversee and coordinate all agency budget requests and provide the President with a fiscal lever over administrative policy. In 1937, following the Brownlow Committee Report finding that increasing demands on the President required greater administrative tools, the Executive Office of the President was formed and within it was placed an enhanced Bureau of the Budget. In 1949, following the Hoover Commission Report, several other reforms were adopted “to ‘cut[] through the barriers that have in many cases made bureaus and agencies practically independent of the Chief Executive,’ and to create ‘a clear line of command from the top to the bottom, and a return line of responsibility and accountability from the bottom to the top’” (Id. at 2275).

Consolidation of presidential power over the bureaucracy continued through presidential orders even apart from Congress. In 1970, President Nixon redesignated the Bureau of the Budget as the Office of Management and Budget (OMB) and began to bring nonbudgetary matters under its aegis. The OMB soon began circulating rules proposed by agencies to other agencies for comment before sending the rule back to the initiating agency for further review, a substantial precedent for presidential involvement in individual rulemakings. Ford and Carter continued this practice and increasingly began insisting on regulatory cost analysis and the exploration of alternative approaches to solving certain problems.

But it was in the Reagan era that the OMB really grew teeth. As Kagan explains,

Executive Order 12,291, issued during Reagan’s first month in office, established the system: the order required executive—but not independent—agencies to submit to OMB’s Office of Information and Regulatory Affairs (OIRA) for pre-publication review any proposed major rule, accompanied by a “regulatory impact analysis” of the rule, including a cost-benefit comparison. The order also outlined substantive criteria to govern agency rulemaking: “to the extent permitted by law,” an agency could regulate only if the benefits of doing so exceeded the costs and the choice among alternatives “involv[ed] the least net cost to society.” Although the order and the legal opinion supporting it explicitly disclaimed any right on the part of OMB, or the President himself, to dictate or displace agency decisions, the order effectively gave OMB a form of substantive control over rule- making: under the order, OMB had authority to determine the adequacy of an impact analysis and to prevent publication of a proposed or final rule, even indefinitely, until the completion of the review process (Id. at 2277-78).

Reagan used his assumed OIRA-mediated review authority to review major rules and put the burden on the agencies to justify their proposed course of action in strict cost-benefit terms, which often meant severe delay, substantial alteration of proposed rules, and often the abandonment of rulemakings altogether. It should be observed that OMB retained its ability to oversee annual budget requests to Congress by executive agencies (as well as some of the independent regulatory agencies) even as it began executing centralized regulatory review through OIRA (See Moe 1982).[1]

With the twin powers of centralized review and budget control, the OMB appears to be an important tool of presidential control over the bureaucracy. Wood and Waterman (1991) observe that “The OMB monitors the activities of bureaucracies, both their efficiency and their compatibility with the president’s program…” (805) But the actual impact of the OMB is still unclear. Through its ability to send a rule back for review or alter an agency’s budget requests, the OMB might be better suited for obstructing agency action inconsistent with presidential priorities than directing agency activity. Eisner et al report that, during the 1980’s, Reagan was able to use OMB to bring the EPA to a practical standstill: “over half the agency’s proposed regulations were rejected or revised, and several cost-benefit analyses were manipulated for admitted political ends in an effort to scuttle environmental regulations” (Eisner et al 2006, 158). Hence, “the pace of issuing regulations at the EPA dropped dramatically under EO 12291 and the intense scrutiny these regulations received from the OMB” (Id. at 159).

OMB-Seal

http://www.whitehouse.gov/omb/

While the EPA example demonstrates the power of the OMB to obstruct agency action, there are two reasons not to read too much into the usefulness of the OMB even as a tool of negative agenda control. First, as Eisner and his coauthors indicate, even to pull off the budgetary reduction, Reagan required help from his political appointee at the agency. Anne Gorsuch-Burford not only “supported the president’s budgetary requests,” but “crippled the EPA’s enforcement apparatus, and stressed voluntary compliance with pollution laws—all radical departures from the strategies of her predecessors” (Id. at 158). So it seems it was the appointment power (which is shared with Congress) that proved more decisive in Reagan victory over the EPA, not mere OMB review.

This observation is supported by another empirical study of the period. Wood and Waterman (1991) used time series analysis to study variation in agency output across seven agencies (including the EPA) during the late Carter and early Reagan administrations. Though they do not explicitly measure the impact of OMB review, they do include changes in budget along with an assortment of other political control variables. They found only a limited impact from budgetary changes, but “the case studies demonstrate that political appointment—a shared tool of the president and Congress—is very important. In five of the seven programs we examined, agency outputs shifted immediately after a change in agency leadership” (822).

The EPA example provides another reason to doubt even the obstructive power of the OMB: the capacity of other institutional actors to counter. Rank and file members of the agency alerted Congress, and members of the agency’s constituency rallied to pressure enforcement of applicable environmental laws through the courts and in the media. In response, Congress passed significant amendments to the CERCLA and CWA which constrained the agency’s discretionary enforcement of environmental standards and held Gorsuch-Burford in contempt of Congress. When she resigned, the Reagan administration nominated William Ruckelshaus, a conciliatory replacement, to ensure confirmation. This bit of history highlights the fact that Congress creates and authorizes agency activity and, through selective enfranchisement of constituencies (discussed in my post “The Congress and the Bureaucracy”), empowers other interested watchdogs to seek recourse, often through the courts (See Rathbun 2009; See also Cann 2006, 22-23 where he highlights a similar example of court-mediated interest group pushback surrounding NHTSA rulemakings in the 1990’s).

The president is thus one of several principals and the OMB one of many tools of control in a very competitive policy environment. The importance of the OMB probably depends a lot on the president’s goal with respect to agency action as well as the number, vitality, and vigilance of other actors in the policy subsystem. If the president seeks merely to halt or slow rulemakings in a given policy arena, and the issue is not very salient or attended by selectively enfranchised groups, he may largely have his way indefinitely (See Gormley & Balla 2013, esp. Ch. 5). But affirmatively directing agency action through the OMB seems unlikely, and obstruction of rulemakings in policy domains with vital and active subgroups with statutory standing to challenge may prove unsustainable. OMB review and budgetary power perhaps works best at the margins of rulemaking where its actions are routinized, rationalizable, and, for most outsiders, obscure. OMB review under George W. Bush and Barack Obama—each with their own version of Reagan’s EO 12291—permit the consideration of factors other than strict cost-benefit analysis (See Chu & Shedd 2012). This softens the strict standard of Reagan-era review and perhaps makes OMB action less controversial and therefore easier to sustain.

A.K.


[1]See Harvard law professor (though better-known for his career at U Chicago) and author of Nudge, Cass Sunstein, discuss his tenure as OIRA’s administrator:

 

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One thought on “The President and the Bureaucracy

  1. Pingback: Immigration Battle and the Proper Role of Administrative Agencies | Economics & Institutions

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