Thank you, everyone, for joining us. My name is Paul Rea. I lead the Roe Institute at the Heritage Foundation, where we focus on economic, regulatory, and budget policy issues. Before joining Heritage, I led the Office of Information and Regulatory Affairs in the Office of Management and Budget within the White House. OIRA, as my old office is abbreviated, is the central White House regulatory office charged with leading regulatory policy across the federal government.

Today, I’m here to talk with you about regulations. Specifically, I’d like to talk about the administrative agencies that issue regulations and the challenges they present to our system of ordered liberty. My purpose is to diagnose some of the problems with the administrative state so you can work to change it in any future political position you may hold. In the eyes of many in the world, this every 4 year ceremony we accept as normal is nothing less than a miracle. In America, we understand that a nation is only living as long as it is striving.

Only a few generations have been granted the role of defending freedom in its hour of maximum danger. This great nation will endure as it has endured, will revive, and will prosper. Whether we go forward together with courage or turn back to policies that weakened our economy, diminished our leadership in the world, America’s future will be in your hands. You may not know it, but you have already encountered dozens of regulations today. For example, the electricity you’re using to watch this video comes to you through transmission regulated by the Federal Energy Regulatory Commission, or FERC.

The emissions of the power plants that produce that electricity are regulated by the Environmental Protection Agency. If you ate breakfast today, your food is regulated by the Food and Drug Administration, the US Department of Agriculture, or both. If you have a job, your workplace is likely regulated by the Department of Labor. And if you’re in school, the Department of Education likely has a lot to say about your educational experience. Federal regulations touch every aspect of American life.

Now what is a regulation? At first glance, it may look like a law. Both laws and regulations command or prohibit some sort of action. Both usually include penalties for those who violate them. If you went down to the local library, you would find that even the books that contain regulations look like the books that contain the laws.

So what’s the difference? The difference is that laws are enacted by Congress and regulations are issued by agencies. Now as an aside, there is a third category in addition to laws and regulations. This is what we call guidance. Like regulations, guidance is issued by agencies.

Unlike regulations though, guidance doesn’t carry penalties for violation. A guidance document is just an agency’s advice about what to do. The problem is that regulated parties often really want to stay on the regulator’s good side, so they do whatever agency guidance says. This means that even though guidance is not legally binding, it often has the same effect as a binding agency regulation. So what is an agency?

It’s an arm of the federal executive branch, the branch headed by the president. There are many, many agencies ranging from the Department of Defense with 100 of 1000 of civilian employees who ensure US Armed Forces are prepared to defend the nation against armed to foreign aggression, down to the tiny Presidio Trust, whose handful of employees preserve a single San Francisco area park. As my example of the Department of Defense shows, agencies just do much more than just issue regulations. They also enforce the law, adjudicate cases, make loans and grants, conduct scientific research, manage public buildings and land, carry out foreign relations, conduct espionage and anything else you can think of. Today, I’m going to talk just about regulations.

But you need to keep in mind that regulating is only one thing the agencies do, and that regulating interacts in important ways with their other activities. There are 19 agencies whose heads sit on the president’s cabinet. These tend to be very large agencies with tens or hundreds of thousands of employees. There are also many other agencies whose heads do not sit on the cabinet. The most important of these are several commissions such as the Securities and Exchange Commission or SEC, and the Federal Communications Commission or FCC, which have extensive powers over particular sectors or issues.

The president appoints the heads of agencies and commissions with the advice and consent of the Senate. The president can fire the heads of cabinet agents agencies whenever he wants, but Congress has enacted statutes that restrict his ability to fire the heads of many of the commissions. One of my colleagues will talk with you about the regulatory process. Here, I just want to know that agencies’ regulatory authority comes from Congress. The agencies have only the authorities Congress gives them.

Once Congress has given authority, someone must decide whether and how to exercise it. A decision about whether to issue a regulation, as well as about what that regulation will command or prohibit, can come from the agency or from the White House. It is likely to come from the agency if the regulation is run of the mill and doesn’t really raise important policy questions. It’s likely to come from the White House if the regulation is high profile or implicates one of the president’s policy priorities or campaign promises. Decisions about the most important regulations are sometimes made by the president himself, often in executive orders.

The exception to all this is regulations by the independent commissions, which enjoy partial, but by no means total, protection from presidential oversight. Now I’d like to conduct a thought experiment. I’d like to invite each of you to be an agency staffer for a day and ask you, why would you regulate? One reason is that you might see a problem that you think you can fix. Let’s say, for instance, workplace dangers or consumer fraud.

In my experience, this is a very common reason agencies regulate. Indeed, many people who work at agencies do so because they believe their agency can make an important difference in the world. So if you worked at an agency, you would probably be predisposed to see problems that you think you can fix using your agency’s powers. At the same time, you would likely not have to live under the regulations you issued. For instance, if you worked at the US Department of Agriculture, you would regulate farmers, but you would not yourself be a farmer.

If you worked at the Food and Drug Administration, you would regulate pharmaceutical companies and, indirectly, the patients who use their drugs, but you would not be a pharma company worker, nor are you likely to use most of the drugs you regulate. For that reason, what counts as a problem in need of fixing may seem very different to you as an agency staffer than if you worked or lived under the regulations you issue. And the solutions you devise may not be the ones that those who live under the regulations would agree to. This is just because, as an agency staffer, you will be disposed to view your mission as the most important thing even if the people don’t view it that way. Let’s say your job were preventing workplace accidents.

If it were, you would probably be inclined toward regulations that prioritize workplace safety. But workers who live under workplace regulations don’t value just safety. They also value the ease of doing their job and productivity for the sake of the jobs it creates. An agency tasked just with promoting workplace safety is unlikely to strike the same balance between safety and productivity that the people would. If you worked at an agency, another reason to regulate would be to further your own plans for the future.

Usually, agency heads have ambitions. They want to be promoted to a more powerful agency or elected to congress or appointed as a judge. And lower level agency staff may want to make money in the private sector one day and so need the approval of future private sector employers. Either way, if you worked at an agency, you might be tempted to issue regulations that pave the way for your future admissions. We all know from our own experience that when we want something for ourselves, it can be easy to convince ourselves that it’s also the right thing to do for others.

The point of this thought experiment is to show some ways in which the interests and perspectives of agency staff diverge from the interests and perspectives of the people who must live under the regulations they issue. I want to emphasize that my point is not that agency staff are up to no good. While they are bad apples at agencies as elsewhere, There are also many principled public servants who pass up lucrative opportunities in the private sector because they want to serve their country. Rather, my argument is that because agency staff often have interests and perspectives that differ from the people they regulate, they may, despite the best intentions, issue regulations that are not best for the people. Indeed, sometimes, the agencies have interests opposite to those of the people.

That’s because the agencies get to enforce the rules they make, but the people must live under them. You may not be surprised to hear that agencies tend to value regulations that enhance their own power in one way or another, even when those regulations make it hard for people to live under them. For example, agencies sometimes favor rules that are open ended and so preserve their enforcement options over rules that would provide clarity for people who live under them. For another example, agencies sometimes issue guidance that is functionally indistinguishable from regulations, but that because it’s technically guidance rather than a rule, cannot be challenged in court. This approach makes a lot of sense from an agency’s perspective, because it saves the resources of the agency, which no longer has to go through the costly full regulatory process, and also because agency guidance is much less likely to be challenged in court than is a regulation.

The problem is that the lack of judicial review leaves the American people without a path to argue that the agency’s demands are inconsistent with Congress’ will as expressed in statute. The problem of mismatched incentives that I have described is similar to one of the concerns underlying the American Revolution. The colonists worried that the British parliament had different or even opposite interests and perspectives from the colonists’ own because the colonists could not vote for members of parliament. The colonists reasoned that parliament had no business taxing or making law for the colonies. Of course, Americans can no more vote for agency staff than American colonists could vote for members of parliament.

I think that state of affairs would have gravely concerned our founding fathers. Now we do vote for the president, and the president exercises some control over agency regulations. That control is imperfect. The presidentially appointed leaders of an agency may wish to pursue their own policy preferences rather than the president’s, and agency career staff may fail to follow the orders that their own leaders give. But even so, presidents have a variety of powerful ways to influence agency behavior, which is why presidents tend to get the regulations they want on the issues they care most about.

But presidential control of agencies raises its own problems, which I want to highlight briefly. We can see what those problems are with another thought experiment. This time, you get to be president for a day. If you were the president, why would you direct agencies to regulate? The president’s reasons are basically the same as the reasons of an agency head.

Presidents often want to do the right thing, but they don’t have to live under their own regulations. They also are ambitious. Although there are no higher jobs for them to be promoted to, they do want to be reelected, or for their chosen successor to be elected if they’re termed out, or for members of Congress from their party to be elected to further their reg their policy agenda. It’s tempting for any president to use his powers to achieve his ambitions, and this temptation can make it very easy for a president to believe that what he wants would also serve the best interests of the American people. In particular, presidents are tempted to persuade undecided voters and swing states to vote for them by using regulations that benefit those voters at the expense of other Americans whose votes will not swing the election.

The temptation to use government power to favor some citizens at the expense of others would have sounded very familiar to the founding generation. They called this behavior factionalism, and it was one of the primary concerns of founders like James Madison. Factionalism leads to tyranny by rendering some citizens mere instruments for the good of others, and it destabilizes any regime in which it finds a home as citizens break into rival blocs with no reasons to cooperate. One of the founders’ greatest innovations was a means of taming faction. As Madison explained in the famous Federalist 10, Americans pursue a staggeringly diverse array of economic, social, geographic, and political interests.

The requirement that federal legislation pass a majority of the House and Senate therefore means that it must garner the support of Americans pursuing a wide variety of interests. Few measures of public policy can do that, mostly just those that advance interests that all Americans share or that appeal to Americans’ shared sense of justice. The legislative process is designed to foster such measures rather than those that benefit some Americans at the expense of others. Now we can see why the president is able to engage in faction far more than in Congress as the founders conceived it. Unlike laws, which require the agreement of hundreds of legislators pursuing a wide variety of interests, regulations can be issued to the will of a single person, the president.

He is therefore able to direct the issuance of regulations to help his supporters at the expense of his enemies in a way Congress cannot. And because dozens of agencies report to him, the president can balance interests across the country and across time in a way that Congress cannot. It is therefore much easier for him to assemble a suite of factious measures commanding majority support at minority expense. We’ve talked a bit about why federal regulations, whether chosen by agency staff or by the president, would have raised concerns with the American founders. The basic idea is that the regulations that the agency or the president choose are not the best ones for the American people.

In the time remaining, I want to focus on another concern the regulatory regime raises, one that has more to do with the way regulations are issued than with their content. I’d like to begin by pointing to an ideal that most of us have. When we think about the kind of life we would most like to live, we think of some contribution that we can make to our communities. The kind of contribution varies. For some of us, it’s serving in public office.

For others, it’s teaching or preaching. For still others, it’s building a business that offers important goods or services to our neighbors. These things and others have something in common. They all consist in employing our initiative and our practical wisdom to make our communities better. The people we most admire, people like Abraham Lincoln and Winston Churchill, Billy Graham or Pope John Paul the second, or maybe even our own parents, are people who devoted their lives to making an important difference in the lives of others, whether just a few or many.

To find why this way of living appeals so strongly to us, I wanna go back to 2 famous philosophers, Aristotle and Thomas Aquinas. Aristotle famously observed that all reasonable human choices aim at what he called a being at work of some kind. The point of our decisions, if they are reasonable, is to lead to actions that are worthwhile for their own sake. And Thomas Aquinas pointed out that one activity worthwhile for its own sake is causing good in ourselves and the world around us. To work to bring goodness into existence is worth choosing.

It’s simply better to live this way, working for the good of ourselves, our friends and family, our neighbors and country and world, than not doing so. Causing goodness in ourselves and others through our own initiative and practical wisdom is something that makes human life worth living. It’s a form of human thriving. We achieve this kind of thriving by deliberating and deciding about matters that affect us and our communities. Deliberation and decision are possibilities open to us by virtue of our possession of reason, the defining attribute of mankind that the founders had in mind when they said that all men are created equal.

Now, we can deliberate and decide in many places, in our churches, schools, neighborhoods, and especially our families. We can also do it in our political communities, through holding office ourselves and through voting for the best candidates for office. If you read Tocqueville’s classic account of life in the early American republic, you find that America was a society shot through with opportunities for ordinary men and women to deliberate and decide about their common affairs. In the first place, Tocqueville explains that there was very little administrative centralization in early America. Most government occurred at the local level, and local responsibilities were divided among a large number of officials and assemblies, which drew many people into public roles.

The result was opportunities for many people to contribute to their communities by their own initiative and good judgment. These opportunities were not limited to government service. Tocqueville also explained that early Americans love to assemble together to take on work they could not handle alone. Indeed, he even said that Americans had a science association. Men and women would come together in religious and charitable associations, in business enterprises, and in groups of all other sorts to contribute to causes they believed in.

They were able to do this because government at all levels was limited, leaving space for private people to take on important tasks. Now reflect on what happens under bureaucracy. When agencies or the president set policy on a question, no one else in the community gets to the gets the chance to contribute their initiative and wisdom to it. Their job is just to obey. They become mere cogs in a machine that carries out the decisions of others rather than deliberating and deciding for themselves.

They are thus excluded from an important aspect of human thriving. And that, I would suggest, is the most troubling effect of the regulatory regime. Over the last few minutes, we’ve seen a few problems that the federal regulatory system poses to the American tradition of ordered liberty. First, it allows rule making by agency staff who do not share the interests and perspectives of the people who must live under the rules they make. 2nd, it allows the president to engage in factionalism, pity Americans against each other by using the regulatory system to favor some Americans over others.

3rd, it forecloses opportunities for Americans to thrive by contributing their initiative and practical wisdom to building up their communities. How we got here is mostly a topic for another day. Suffice it to say that while we have spent a lot of time talking about the federal executive today, the root of the problem lies with Congress, which is responsible for giving the agencies the broad powers they enjoy. To be sure, agencies in the White House often read those statutes for all they’re worth. They try to exploit ambiguous provisions to increase their power.

But the statutes are susceptible of these broad readings only because Congress writes them that way. And many statutes are basically void of content altogether, allowing the agencies to issue whatever rules they like. Nor have the courts helped. It’s the courts that have allowed Congress to take on a vast number of tasks beyond those spelled out for it in the constitution. Congress can delegate so much power to the agencies because it has first annexed that power to itself, in derogation of the constitution’s limits.

Further, the courts often defer to agency interpretations of ambiguous statutes they administer, which is about like letting the fox guard the hen house. So what’s to be done? Well, the most serious reforms must come from Congress and the courts, which is where the trouble started. But executive officials can do some important things to remedy these problems with the administrative state. 1st, officials should be sure to adopt the perspective of the people when regulating.

They should always ask, what would it be like to live and work under this regulation? Too often, regulation sacrifice clarity, stability, and other rule of law values to achieve the agency’s own objectives more effectively. But officials who have the people’s best interests at heart must remind themselves that Americans need to make plans if they are to be effective agents in their own lives. And the rule of law, in addition to each agency’s own mission, must therefore loom large in the mind of regulators. 2nd, officials should hew carefully to the law when issuing regulations.

This mean this means sticking closely to both the substance of each agency’s organic statute and the rule making procedures that Congress has enacted in the Administrative Procedure Act and elsewhere. By doing so, officials respect the will of the people as expressed through their elected representatives in Congress. Of course, sticking to the statute means accepting constraints on agency power. Sometimes, these constraints will bar agencies from addressing real world problems. It’s vital to remember that in such situations, these often pressing problems are not all that’s at issue.

So too is the ability of the American people to govern themselves. Self governance is a reality only if executive officials respect the people’s decisions in the constitution about where to vest the legislative power. 3rd and relatedly, before issuing guidance documents, officials should ask whether the substance of the document they intend to issue is regulatory. That is, whether in substance, it will tell the regulated public what they must or must not do. If so, then respect for the will of Congress as set forth in the Administrative Procedure Act means that the document should issue as a regulation rather than as guidance.

4th, it can be tempting when in office to do favors for this or that special interest group. It is absolutely essential that each and every regulation serve the interests of the American people as a whole rather than special interests. Executive officials must not use their positions of power to engage in faction. By abstaining from doing favors for special interests, executive officials advanced toward the goal charted by James Madison and other founders of a federal authority that respects the rights and interests of all Americans. 5th, within the bounds of the law, executive appointees must carry out the decisions of the president about regulatory policy.

Even though the president’s democratic mandate is inferior to Congress’ own, he is a far better channel for the people’s deliberation and decision than our executive officials pursuing their own visions of good policy. I hope this brief overview of the perils presented by the administrative state equips you to do your part as a member of a future presidential administration. Thank you for watching.