Cross-posted From AEIdeas and authored by Peter J. Wallison.
After Donald Trump’s speech yesterday, many on the left hastened to note that the president doesn’t really have the power to stop the regulatory juggernaut as Trump promised. They are wrong.
It was certainly true, before the Obama administration, that presidents encountered spirited opposition if they ever attempted to interfere with the independent regulatory agencies. Most of the opposition came from Congress, which was jealous of its powers and resented presidential policy pressure on the independent regulatory agencies.
But that was then and this is now. Under the Dodd-Frank Act, all the heads of all the federal financial regulatory agencies — from the Federal Reserve to the SEC, the FDIC, and the CFTC — have been gathered together in the Financial Stability Oversight Council and placed under the chairmanship of the Secretary of the Treasury, a political officer who reports directly to the president. This was a confection of the Democratic Congress, which was happy to do this — heedless of the future — when there was a Democratic president in the White House. A President Trump could easily use the Council to stop regulatory activity. He will have appointed all the heads of these regulatory agencies, and they will be convened under his Treasury secretary. The Democrats in Congress will howl, but they created this administrative Frankenstein.
The Democrats in Congress will howl, but they created this administrative Frankenstein.
In addition, several times during the Obama administration the president called the heads of federal regulatory agencies together and told them what he wanted them to do. There was no outcry from Congress or the media. The idea that these agencies were supposed to be independent was completely discarded during the Obama administration. The media saw nothing amiss in this.
Now, if Donald Trump is elected president, he will call these independent agencies together and tell them to stop enforcing regulations. He might even cite President Obama’s efforts to stop enforcing the immigration laws as his authority for doing this. He will indeed have a pen and a phone.
Again, Congress will howl, and those of us who protested what the Obama administration was doing will agree, but it will be too late. Congress, and sadly the media, too — for wholly partisan reasons — has abandoned the principle that independent agencies are supposed to be independent, and that principle will not easily be reclaimed when a Republican president makes use of it.