Biden needs a battle plan to defend modern government – The Advocate

Cass R. Sunstein, Bloomberg

Some conservative legal thinkers speak of a "Lost Constitution" or "Constitution in Exile." By that they mean the Constitution as it was understood before President Franklin D. Roosevelt's New Deal helped form the modern regulatory state.

Their Constitution in Exile would invalidate key parts of contemporary government. Some conservatives want to revive the long-dead "nondelegation doctrine," which was once taken to forbid Congress from granting broad discretion to regulatory agencies.

The Supreme Court made a strong movement in the direction of the Constitution in Exile in its most recent term, when it ruled that the Consumer Financial Protection Bureau may not be made independent of the president.

The court stopped well short of upending the regulatory state. But it was just a preliminary skirmish. Bigger battles are brewing. Those who want to defend modern government - including Democrats if they regain power in November - will need to think hard about appropriate reforms if the Supreme Court begins to invalidate larger features of the U.S. government as it exists today.

A Supreme Court bent on resuscitating the nondelegation doctrine would put important parts of the Clean Air Act, the Occupational Safety and Health Act and the National Traffic and Motor Vehicle Safety Act in jeopardy.

Those who believe in the Constitution in Exile also have trouble with the idea of independent agencies, such as the National Labor Relations Board, the Federal Reserve Board, the Federal Communications Commission and the Federal Trade Commission. The president has limited control over the heads of such agencies; he cannot fire them simply because that's what he wants to do.

Critics of independent agencies argue that the Constitution gives the president unlimited power to remove and control officials who are in charge of implementing federal laws - a power that, in their view, the Constitution grants to the president alone and that Congress cannot compromise. If the Supreme Court agrees with them, American government is in need of radical reform - by constitutional mandate.

The Federal Reserve Board might become the president's pawn. That would be a problem because it could end up playing partisan politics with the economy and perhaps ensure a sitting president's re-election. And if the president had full control over the FCC, he could undermine freedom of expression by ordering the agency to punish his political enemies.

The court did not go so far as to say that independent agencies are unconstitutional in its ruling last month on the Consumer Finance Protection Bureau, an agency created by Congress in 2011 to guard against abuses by banks and credit-card companies; it left that question for another day. But it concluded that because the CFPB is headed by a single person, and not a multi-member commission, it cannot stand.

Let's put the technicalities to one side and note two pressing questions: What's the legal status of the CFPB, exactly? Should Congress try to change it?

The first question is easy. All of a sudden, the CFPB is an executive agency, just like the Departments of State, Treasury and Transportation. It is fully under the president's control, whether his last name is Trump or Biden.

A less obvious point is that the CFPB's rule-making activity can be made subject to the process of review overseen by the Office of Information and Regulatory Affairs, which is part of the Office of Management and Budget. (Disclosure: During President Barack Obama's first term, I served as an Administrator of OIRA.)

In practice, that means that the CFPB won't be able to issue new rules unless they survive careful scrutiny, usually including sustained attention to both costs and benefits. It also means that any presidential effort to promote deregulation, typically overseen by the regulatory-affairs office, can be applied to the CFPB as well.

From the standpoint of President Donald Trump, this isn't a problem. Actually it's a gift. The White House can supervise and manage the CFPB however it wants.

But what about from the standpoint of the presumptive Democratic presidential nominee, former Vice President Joe Biden, or congressional Democrats who are enthusiastic about the bureau's mission? Before long, they might call for new legislation turning the CFPB back into an independent agency. As a matter of law, Congress can probably do that simply by replacing the single director with a five-member commission.

That's tempting, but it's a good temptation to resist.

If Biden is elected, he can immediately shift the CFPB in his preferred direction, not only by choosing its head, but also by supervising its policy decisions. He can give the agency new energy.

Those who like the idea of independence might respond that it makes sense to empower a less political body, free of the White House, to protect consumers from financial misconduct. But independence is a matter of degree.

Before the Supreme Court's decision, the CFPB was an independent agency, and because Trump appointed its director (first Mick Mulvaney and now Kathy Kraninger), its decisions and approaches were generally aligned with his policy preferences. That's generally true of independent agencies headed by multi-member commissions, simply because the sitting president gets to appoint the chair (and to fill vacancies).

All things considered, it's probably best for Democrats, and others who embrace consumer protection, to allow the CFPB to remain an executive agency - and not to stress all that much about presidential control over its decisions.

But make no mistake about it: This is just an early strategic choice that defenders of modern government have to make in response to the emergence of the Constitution in Exile. The next ones are likely to be tougher.

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Sunstein is a Bloomberg Opinion columnist. He is the author of "The Cost-Benefit Revolution" and a co-author of "Nudge: Improving Decisions About Health, Wealth and Happiness."