Abolish the ATF Act

— 873 — Federal Trade Commission of Article II of the Constitution; it is for this reason that conservatives have long believed in either ending law enforcement activities of independent agencies or ending their independent status. The Supreme Court ruling in Humphrey’s Execu- tor12 upholding agency independence seems ripe for revisiting—and perhaps sooner than later.13 Others think that the post–New Deal expansion of the administrative state has had baleful effects upon our society and earnestly share the hope that it can be greatly curtailed if not eliminated—or that its authority can be returned to the states and other democratically accountable political institutions. But, until there is a return to a constitutional structure that the Founding Fathers would have rec- ognized and a massive shrinking of the administrative state, conservatives cannot unilaterally disarm and fail to use the power of government to further a conserva- tive agenda. As experience shows, the administrative state will grow and further its own agenda, often at odds with conservative thought, even under conservative leadership. Unless conservatives take a firm hand to the bureaucracy and marshal its power to defend a freedom-promoting agenda, nothing will stop the bureaucra- cy’s anti–free market, leftist march. ESG Practices as a Cover for Anticompetitive Activity and Possible Unfair Trade Practices. It has long been suspected, and is now increasingly documented, that corporate social advocacy on issues ranging from “Diversity, Equity, and Inclusion” (DEI) to the “environmental, social, and governance” (ESG) movement also serves to launder corporate reputation and perhaps obtain favorable treatment from government actors. In a recent Senate Judiciary hear- ing, Senator Josh Hawley asked FTC Chair Lina Khan if the FTC had conditioned merger reviews on ESG or critical race theories adopted by the firms involved. Khan responded by saying that she turned down deals when firms offered social justice policies in return for approving unlawful deals. In response to a similar question from Senator Tom Cotton, Khan responded that firms try to come to the FTC to get out of antitrust liability by offering climate, diversity, or other forms of ESG-type offerings, but that there is no ESG loophole in the antitrust laws.14 Her comments suggest that there is a movement of firms attempting to use both ESG and DEI as a sort of reputational laundering to avoid enforcement of potentially criminal activity. The FTC should set up an ESG/DEI collusion task force to investigate firms—particularly in private equity—to see if they are using the practice as a means to meet targets, fix prices, or reduce output. l Congress should investigate ESG practices as a cover for anticompetitive activity and possible unfair trade practices. The business of American business is business, not ideology. The privileges extended to corporations in American society come with the expectation that — 874 — Mandate for Leadership: The Conservative Promise they will pursue profits for shareholders, bringing about economic growth. Managers, particularly in publicly traded corporations, who use their power to advance sets of fashionable moral beliefs, such as ESG/DEI, introduce agency problems into the shareholder relationship and appropriate corporate wealth for their own benefit. Milton Friedman recognized this problem decades ago when answering the question whether businesses have ethical or social obligations, as was mentioned above. Contrary to his detractors, Friedman did not defend “greed is good.” Rather, according to Friedman, socially responsible activities conducted by a corporation distort economic freedom because shareholders do not decide how their money will be spent—increasing the possibility for fraud or management opportunism. This is especially the case in concentrated industries with market power.15 Managers who insert their own values into underwriting agreements, contracts for professional services, or other business transactions coopt shareholder value for their own personal utility. This is an unfair trade practice, particularly when it occurs in industries that enjoy market power and special privileges or relationships with the government. Cancel Culture, Collusion, and Commerce. As a corollary, businesses that make general offers of service to the public forego profits by refusing to service a lawful activity, i.e., fossil fuel extraction or gun manufacturing, raising similar concerns. When banks or internet platforms refuse customers based on their political or social views (as distinguished from religious views), they forgo profits. While such decisions are often justified on public relations, marketing, or branding grounds—and normally such decisions, reflecting business judgment, should and would receive deference, this presumption is harder to make in a highly parti- san, ideologically divided America. This type of behavior can rise to the level of an unfair trade practice when the business is (1) publicly traded; (2) highly regulated; (3) enjoys legal privileges; (4) enjoys market power; and (5) appears to engage in its own political or social agenda that is unrelated to any conceivable branding concerns. The government, as guided by democratically passed laws, already reg- ulates activities such as fossil fuel extraction and gun manufacturing. Businesses, particularly those that enjoy certain government privileges or relationships and/ or market power, should not replace democratic decision-making with their own judgment on controversial matters. A related concern is the degree to which concentration of industries, particu- larly in pharmaceuticals, health care, and the internet, encourages government collusion that undermines democratic institutions. Collusion can be explicit, in the case for example of government working with social media companies to censor politically harmful news, or more implicit—for example, regulatory requirements so burdensome that they deter market entrance by smaller entities without the resources to bear them.

— 634 — Mandate for Leadership: The Conservative Promise These shortcomings have been documented over many decades by the Govern- ment Accountability Office and DOT Inspector General. One peer-reviewed study for the Hudson Institute by scholar Robert Poole identified the ATO’s underlying problems as including an overly cautious culture, a growing lack of technological and managerial expertise, the inability to finance major capital projects with rev- enue bonds, and overdependence on aerospace/defense contractors.12 All of these problems are interrelated. Because of the ATO’s lack of top-notch engineers and program managers, it has become dependent on aerospace contrac- tors, unlike counterparts in Canada and the United Kingdom. Operating within the constraints imposed by the annual congressional appropriations process—and with no bonding authority—the ATO is forced to implement major projects piecemeal over many years. The ATO’s overly cautious culture appears to stem from its being embedded in a safety regulatory agency rather than being regulated at arm’s length (as are airlines and airports). Three organizational changes, all requiring legislation, offer the likelihood of dealing with these problems based on the experiences of air traffic providers in Canada and Europe. They could be implemented one at a time or together. l Separate the ATO from the FAA and relocate it to separate headquarters outside the District of Columbia. l Shift from aviation user taxes to fees for air traffic services paid directly to the ATO. l Allow the ATO to issue long-term revenue bonds for major projects. Shorter-term reforms could include implementing user fees for unconventional airspace users (for example, advanced air mobility, space launch, and recovery) and giving the ATO a deadline after which it could not authorize or fund any more nondigital/remote control towers. These reforms would also require legislation. FEDERAL TRANSIT POLICY The definition of “mobility” continues to evolve dramatically with the rise of new multimodal concepts, traveler needs, and emerging capabilities. These fun- damental changes in the way transportation services are offered also influence the form of our communities. New micromobility solutions, ridesharing, and a possible future that includes autonomous vehicles mean that mobility options—particularly in urban areas— can alter the nature of public transit, making it more affordable and flexible for Americans. Unfortunately, DOT now defines public transit only as transit pro- vided by municipal governments. This means that when individuals change their

— 634 — Mandate for Leadership: The Conservative Promise These shortcomings have been documented over many decades by the Govern- ment Accountability Office and DOT Inspector General. One peer-reviewed study for the Hudson Institute by scholar Robert Poole identified the ATO’s underlying problems as including an overly cautious culture, a growing lack of technological and managerial expertise, the inability to finance major capital projects with rev- enue bonds, and overdependence on aerospace/defense contractors.12 All of these problems are interrelated. Because of the ATO’s lack of top-notch engineers and program managers, it has become dependent on aerospace contrac- tors, unlike counterparts in Canada and the United Kingdom. Operating within the constraints imposed by the annual congressional appropriations process—and with no bonding authority—the ATO is forced to implement major projects piecemeal over many years. The ATO’s overly cautious culture appears to stem from its being embedded in a safety regulatory agency rather than being regulated at arm’s length (as are airlines and airports). Three organizational changes, all requiring legislation, offer the likelihood of dealing with these problems based on the experiences of air traffic providers in Canada and Europe. They could be implemented one at a time or together. l Separate the ATO from the FAA and relocate it to separate headquarters outside the District of Columbia. l Shift from aviation user taxes to fees for air traffic services paid directly to the ATO. l Allow the ATO to issue long-term revenue bonds for major projects. Shorter-term reforms could include implementing user fees for unconventional airspace users (for example, advanced air mobility, space launch, and recovery) and giving the ATO a deadline after which it could not authorize or fund any more nondigital/remote control towers. These reforms would also require legislation. FEDERAL TRANSIT POLICY The definition of “mobility” continues to evolve dramatically with the rise of new multimodal concepts, traveler needs, and emerging capabilities. These fun- damental changes in the way transportation services are offered also influence the form of our communities. New micromobility solutions, ridesharing, and a possible future that includes autonomous vehicles mean that mobility options—particularly in urban areas— can alter the nature of public transit, making it more affordable and flexible for Americans. Unfortunately, DOT now defines public transit only as transit pro- vided by municipal governments. This means that when individuals change their — 635 — Department of Transportation commutes from urban buses to rideshare or electric scooter, the use of public transit decreases. A better definition for public transit (which also would require congressional legislation) would be transit provided for the public rather than transit provided by a public municipality. The COVID-19 pandemic caused a substantial decline in usage for all forms of transportation. Mass transit has been the slowest mode to recover, with October 2022 ridership reaching only 64 percent of the level seen in October 2019. The sustained increase in remote work has caused changes in commuting patterns. Since facilitating travel for workers is one of the core functions of mass transit systems, a permanent reduction in commuting raises questions about the viability of fixed-route mass transit, especially considering that transit systems required substantial subsidization before the pandemic. Regrettably, the 2021 Infrastructure Investment and Jobs Act13 authorized tens of billions of dollars for the expansion of transit systems even as Americans were moving away from them and into personal vehicles. Lower revenue from reduced ridership is already driving transit agencies to a budgetary breaking point, and added operational costs from system expansions will make this problem worse. The Capital Investment Grants (CIG) program is another example of Washing- ton’s tendency to fund transit expansion rather than maintaining or improving current facilities. The CIG program, which began in 1991, funds only novel transit projects. These can include new rail lines (regardless of the demand for preexisting rail in the area) and costly operations such as streetcars. Because Americans have demonstrated a strong preference for alternative means of transportation, rather than throwing good money after bad by continuing federal subsidies for transit expansion, there should be a focus on reducing costs that make transit uneconomical. The Trump Administration urged Congress to eliminate the CIG program, but the program has strong support on Capitol Hill. At a minimum, a new conservative Administration should ensure that each CIG project meets sound economic standards and a rigorous cost-benefit analysis. The largest expense in transit operational budgets is labor. Compensation costs for transit workers exceed both regional and sector compensation averages. This is driven by generous pension and health benefits rather than by exorbitant wages. Since workers value wages more than they value fringe benefits, this has led to a perverse situation in which transit agencies have high compensation costs yet are struggling to attract workers. The next Administration can remove the largest obstacle to reforming labor costs. Section 10(c) of the Urban Mass Transportation Act of 196414 was initially intended to protect bargaining rights for workers in privately owned transit sys- tems that were being absorbed by government-operated agencies. The provision has mutated into a requirement that any transit agency receiving federal funds cannot reduce compensation, an interpretation that far exceeds the original statute.