Notice & Comment

Regulatory Reform and Political Vetoes, by Todd Phillips

Medicare and Medicaid were enacted in 1965, and for more than four decades, advocates fought for universal health insurance largely without success. Then, in 2009, the first major priority of the Democratic-controlled House, 59-vote Democratic majority Senate, and Democratic President was to enact the Affordable Care Act, bringing health insurance to millions. These politicians passed major legislation when they had the chance, even though the law had nothing to do with fixing the financial crisis that helped sweep them into power (the Dodd-Frank Act was passed the next year, in 2010). The incentives are clear: if a politician or appointee can accomplish a political or policy goal, they should accomplish it without delay. “You never want a serious crisis to go to waste,” President-elect Obama’s Chief of Staff Rahm Emanuel is quoted as saying in 2008.

Advocates fought for more than four decades to make this policy a reality, but the American political system (by design) makes enacting large legislative changes extremely difficult. The number of individuals who can single-handedly kill a piece of legislation is astronomical. For all but the most extreme cases, a bill needs approval of the following for it to become a law: the House committee chair; a majority of the House committee; the Speaker of the House; the House Majority Leader; a majority of the House; the Senate committee chair; the majority of the Senate committee; the Senate Majority Leader; a 60-vote, filibuster-proof majority of the Senate; and the President. These are 10 “veto points” where a bill can die, and only if a bill is assigned to only one committee in each of the House and Senate.

In the regulatory process, similar veto points exist. A deputy assistant secretary hoping to implement a policy not only must show statutory authority for the policy but may also require buy-in from the assistant secretary, secretary, other agencies, Domestic Policy Council, Office of Information and Regulatory Affairs, and perhaps the President himself.

This is all to say that passing a single law or promulgating a single regulation is extremely difficult and that changing the status quo happens rarely.

Several recent proposals to reform the regulatory process attempt to double these veto points by making it much, much easier for future politicians to revert policy back to the status quo. Although advocates use the language of “good government” to describe why these proposals should be implemented, enacting or implementing these proposals would make achieving permanent change even more difficult.

Two examples jump immediately to mind: regulatory pilot programs and program sunsets.

With a pilot, policymakers can test whether a specific policy will achieve desired benefits with acceptable costs or risks. They can tweak a pilot until they are able to achieve the right balance of benefits and costs or learn that a policy is ineffective or too costly before applying it more broadly. However, it takes time to develop and run a pilot and analyze its results, and it invariably ends. This process could take years, which is problematic for elected officials who may have only a single two-year period to legislate or political appointees who must contend with extensive and time-consuming notice-and-comment requirements. Further, even if a pilot is effective at achieving its intended results, those in power when the pilot ends may have different priorities and could easily end the pilot without effort or fuss.

Similar to pilots, sunsets end a policy after a certain period of time. Policymakers must act to continue the policy, which provides them an opportunity to analyze whether the policy was effective at achieving its goals and whether the policy should be continued, modified, or ended. However, as with pilots, there is no guarantee that supporters of the policy’s goals will be in power when the policy sunsets, regardless of its efficacy.

Both pilots and sunsets require a policy to be reenacted lest policy revert to the status quo, allowing one future veto point to overturn a policy that advocates previously worked to enact. In addition, both pilots and sunsets allow a policy’s opponents to end it without affirmatively acting or explaining their decision (e.g., voting to end a policy in Congress, permitting judicial review to ensure a regulatory policy change was the result of reasoned decision-making). Further, even if policymakers support a policy when its pilot ends or it sunsets, affirmatively reenacting the policy takes time (e.g., staff time in agencies and Congress, floor time in Congress) at the expense of other, perhaps more pressing issues. Finally, although pilots and sunsets are intended to provide an opportunity for policymakers to reevaluate a policy after it has been in operation, neither is required for policymakers to undertake such an evaluation. Policymakers may always review the efficacy of an ongoing policy and determine whether it should be modified or ended.

None of this is to say that policy pilots or sunsets should never be used. They can, of course, be useful for collecting information, forcing reevaluation, or achieving political compromise. They can be especially useful in testing improvements to agency procedures; the Office of Personnel Management, for example, recently conducted pilot programs to speed government hiring procedures. The agencies involved hired qualified candidates 64% to 76% more quickly than under normal hiring procedures.

Yet pilots and sunsets, much like other recent regulatory process reforms, must be considered in the political system in which they would operate. In the U.S., that means passing ten or more veto points to implement even the most minor change to the most minor law or regulation. Even if process proponents argue that their reforms would make the administrative state more effective, more efficient, and more responsive to the will of the public, policymakers considering whether or not to implement these reforms should be well aware they may serve to frustrate large policy changes and ensure that the status quo will be that much more likely, even after a policy has been enacted.

Todd Phillips is a government lawyer in Washington, DC. This post expresses the author’s personal views alone.