The Administrative State Is Under Assault And That’s A Good Thing

The “administrative state” has been in the news of late. Few Americans can define it though.

The administrative state describes a form of government that uses an extensive professional class to provide oversight over government, the economy and society. It stands in stark contrast to a representative democracy with limited powers and reach.

The quintessential example of the administrative state are the 220,000 federal regulators working with a regulatory budget of about $63 billion who write and enforce 185,000 pages of rules that cost the economy in the neighborhood of $1.9 trillion annually. For perspective, $1.9 trillion is about what the federal government raises each year from individual and corporate income taxes.

Alexis de Tocqueville only spent nine months in America in 1831, but that trip gave this keen observer of political systems and people enough to pen “Democracy in America.” Understanding American character, he warned of a future where excessive government regulation “…compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.”

It took another 80 years before America started to accelerate towards the administrative state with its, as Tocqueville described, “network of small complicated rules” bringing about what he would call soft tyranny.

President Woodrow Wilson played big role in establishing and growing the administrative state as well as criticizing the Constitution as a roadblock to his vision of robust government.

Commenting on representative democracy, Wilson said, “The problem is to make public opinion efficient without suffering it to be meddlesome.” Investing unelected bureaucrats with great power, then insulating from representatives accountable to voters, goes a long way towards efficiently interpreting public opinion while in reality largely ignoring it.

In the Federalist Papers No. 51, James Madison, the architect of the Constitution and our fourth president, wrote that the human tendency to accumulate power required a government with checks and balances “…to control the abuses of government.” Madison sagely observed, “If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.”

Wilson scoffed at the idea of checks and balance, writing, “No living thing can have its organs offset against each other, as checks, and live.” Wilson elaborated, “The Constitution was founded on the law of gravitation. The government was to exist and move by virtue of the efficacy of ‘checks and balances.’ The trouble with the theory is that government is not a machine, but a living thing. It falls, not under the theory of the universe, but under the theory of organic life. It is accountable to Darwin, not to Newton. It is modified by its environment, necessitated by its tasks, shaped to its functions by the sheer pressure of life.”

By Franklin Roosevelt’s presidency, the Federal Register, a compendium of federal rules, was created and the administrative state was off to the races.

Since 1960, the federal rule book proscribing American activities large and small has grown from 22,000 pages to 185,000 pages—ObamaCare regulations alone consume about 10,000 pages of that total. As the United States was created, there were some half-dozen federal laws such as treason and counterfeiting that could send you to prison. Now, violate any one of the estimated 300,000 rules—even if you’re completely unaware of the rule—and you may be sent to the federal slammer in what is referred to as “overcriminalization.”

Over the past 57 years, the ranks of the regulatory bureaucracy, many of them lawyers and other highly trained workers, swelled from 57,000 to more than 185,000.

Every dollar spent at the direction of the federal government is a dollar not spent by Americans exercising their own priorities. Federal spending dictated 17.2 percent of the economy in 1960. In the last full year of the Obama administration, it grew to command 20.9 percent of the economy.

The federal tax code runs to 2,600 pages requiring 70,000 pages to explain. Its complexity and rates largely shape economic activity. Although tax rates jumped in 2013, they were lower than they were in 1960, thanks to major tax cuts from the Kennedy and Reagan years.

These four factors: the size of federal regulations, the number of federal regulators, federal spending as a share of the economy, and tax rates can be combined and presented in a chart to track the ebb and flow of the administrative state, creating a “Soft Tyranny Index.”

For the past 57 years, soft tyranny has grown unless seriously challenged. There have only been four periods where the growth of federal power has been reversed: President Kennedy’s tax cuts in 1963; in the early 1980s with President Reagan’s tax and regulatory reforms; the 12 years of spending restraint following the Republican takeover of Congress in 1994; and today, with President Trump’s battle against the federal “swamp” which appears to be set to move the soft tyranny back to levels not seen in a decade.

If Congress reforms and cuts taxes and President Trump follows through on his deregulatory push, the Soft Tyranny Index may plunge to levels not seen since the Reagan presidency 30 years ago. Should that happen, look for an extended period of economic growth and higher wages.