Freedom at Risk. James L Buckley
in the Bill of Rights, whose Tenth Amendment reads as follows: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
Even with those safeguards in place, the Founders understood that the preservation of our liberties ultimately depended on the American people’s continuing exercise of what was then referred to as “republican virtue”—the subordination of personal advantage to the public good. Hence Benjamin Franklin’s answer to the woman who, at the close of the Constitutional Convention in Philadelphia, asked him what form of government the American people were to have: “A republic, madam, if you can keep it.” The ultimate responsibility for preserving the Republic would lie with the people.
The Founders’ division of governmental labors accords with the venerable principle of subsidiarity, which recognizes a hierarchy of responsibilities, beginning with the individual. Thus, under that principle, you and I are expected to earn our own livings and provide for our own families, and governmental responsibilities are allocated to the lowest levels able to exercise them. Thus, the governmental decisions most immediately affecting people’s lives are to be made by those who are the closest to them and have the most intimate knowledge of the relevant facts and conditions.
This design served us well during the first 150 years of our national existence—so well that in commenting on the American Constitution, the eminent British historian Lord Acton declared that “by the development of the principle of federalism, it has produced a community more powerful, more prosperous, more intelligent, and more free than any other which the world has seen.” The Supreme Court, however, has proven an unreliable guardian of constitutional virtue. Over the years, decisions expanding the reach of the Constitution’s Commerce Clause have effectively repealed the Tenth Amendment. As a consequence, our nation has been converted into an administrative state overseen by a fourth, extra-constitutional branch of government in which unelected officials write rules that reach into every corner of American life.
Few appreciate the speed with which this transformation has taken place. Federal statutory law is to be found in the United States Code. In 1935, at the outset of the New Deal, the Code consisted of a single volume containing 2,275 pages of statutes. This was the work product of Congress since it first met in 1789. Today, the Code consists of thirty volumes of statutory law. But the expansion of the Code’s Title 42 provides the most telling evidence of the nature of the changes that have been taking place. In 1935, Title 42 was labeled “Public Education” and contained just eighteen pages. Eleven years later, Title 42 had been renamed “Public Education and Welfare” and had grown to 128 pages. Thanks to Lyndon Johnson’s Great Society, by the time the 1970 edition was published, Title 42 had exploded to 3,022 pages.
Over the next thirty years, that number more than doubled—and that is just the tip of the iceberg. Those and a host of other federal statutes are administered by bureaus and agencies that in turn issue streams of marching orders that have the force of law. By 2010, the Code of Federal Regulations consisted of 225 volumes containing 35,367 pages of detailed, fine-print regulations. This expansion of federal controls has reached a point where I sometimes indulge a fantasy in which America’s extraordinarily productive society wakes up one day, like a latter-day Gulliver, to find itself immobilized by the last regulatory strands that bureaucratic Lilliputians have spun over it during the night.
What is of particular interest is the degree to which the federal government has intruded on the responsibilities of the states. In the ten years from 1966 to 1976, for example, federal grants to state and local governments, each with its own set of marching orders, grew from $13 billion to $56 billion. By 2010, these grants-in-aid programs cost over $236 billion. Worse still are the unfunded mandates by which Congress commands the states to spend their own money to meet Washington’s priorities rather than their own.
It is hard to conceive of a more dramatic departure from the Founders’ plan. But setting aside the propriety of the Supreme Court decisions that made these intrusions on state authority possible, the question before us is whether transforming the federal government into a European-style administrative state will lead to a better life for most Americans. In arriving at an answer, we need to consider three things: first, the competence of a central government to handle other than the kinds of core responsibilities contemplated by the Constitution; second, the financial consequences; and third, the impact on Congress’s ability to do anything that can be described as truly thoughtful.
In addressing the first, one must keep in mind that government is by nature monopolistic, rigid, and political. A federal bureau or agency is immune to the disciplines of the marketplace that, in the private sector, promote efficiency and weed out losers. If costs exceed budget, government will raise taxes or borrow money to pay for the overruns; and if a program fails to achieve its goals, the congressional response is to throw more money at it. Congress will rarely admit that a program was ill advised and cancel it: to the contrary, even the worst of them is protected by the “iron triangle” consisting of the legislators who created it, the bureaucrats who administer it, and the groups that benefit from the status quo, however flawed. Moreover, while private enterprises and individuals are able to respond overnight to new circumstances and act quickly to correct errors in judgment, once a regulatory regimen is locked in place, it is enormously difficult to change. All federal programs are subject to congressional oversight, of course, but Congress is too preoccupied with current agendas to scrutinize the management of more than a fraction of the programs it has created.
Then there is the matter of politics. Because Congress is a political animal, it is inevitable that where there is a conflict between politics and common sense or Economics 101, politics will usually decide the issue. Career legislators are extremely reluctant to take any action that would offend important constituencies. To cite some typical examples: It is conceded (and the experience of states like Texas confirms) that tort reform would reduce medical costs by tens of billions of dollars, but, lest tort lawyers be offended, that most obvious reform was ignored by congressional committees intent on a trillion-dollar restructuring of our health-care system; sugar-beet farmers are kept in business by restrictions on the importation of cane sugar that cost 300 million American consumers over $1.9 billion a year; and to protect manufacturers in their constituencies, Republican and Democratic congressmen exhibit rare bipartisanship in continuing the production of weapons that the Pentagon no longer needs or wants.
Misguided political decisions are to be found, of course, in state governments as well as in Washington, D.C.; but one of the virtues of federalism is that the states serve as laboratories that are able to test a variety of approaches to shared problems. If one state makes a costly mistake, only its own citizens will suffer the consequences. On the other hand, if an initiative proves successful, other states can profit from the example. Furthermore while Washington issues one-size-fits-all regulations to states as diverse as North Dakota and Hawaii, state governments are able to tailor their directives to the specific conditions that obtain in their states.
The 2008 housing meltdown is a classic example of what the costs can be when Congress imposes an ill-conceived policy on the entire nation. Under the original understanding of our federal system, a concern for expanding home ownership might be appropriate for the states, but it is not appropriate for the federal government. A few years ago, however, Congress decided this should be a national priority and enacted a succession of laws that pressured lenders into making improvident loans while providing them, courtesy of Fannie Mae and Freddie Mac, with an open-ended market for the high-risk mortgages they had financed. Imaginative Wall Street marketers in turn packaged the obligations and distributed them around the globe. As Harvard economist Jeffrey Miron notes, “[P]rivate forces jumped willingly on a runaway train, but it was government that built the train and drove it off the cliff.” Such are the costs that can be imposed when government interferes with the workings of Adam Smith’s “invisible hand” on a national scale.
Unfortunately, Congress’s failure to anticipate the practical consequences of its actions is not surprising. Few of those drawn to elective office have had any significant personal exposure to the disciplines of the marketplace. Thirty-odd years ago, when I was in the Senate, I witnessed such an astonishing display of economic innocence in a floor debate that I checked the biographies of my colleagues in the Congressional