Legislative Branch Agencies Clarification Act

— 79 — Central Personnel Agencies: Managing the Bureaucracy What is needed at the beginning is a freeze on all top career-position hiring to prevent “burrowing-in” by outgoing political appointees. Moreover, four fac- tors determine the order in which employees are protected during layoffs: tenure, veterans’ preference, seniority, and performance in that order of importance. Despite several attempts in the House of Representatives during the Trump years to enact legislation that would modestly increase the weight given to performance over time-of-service, the fierce opposition by federal managers associations and unions representing long-serving but not necessarily well-performing constituents explains why the bills failed to advance. A determined President should insist that performance be first and be wary of costly types of reductions-in-force. Impenetrable Bureaucracy. The GAO has identified almost a hundred actions that the executive branch or Congress could take to improve efficiency and effec- tiveness across 37 areas that span a broad range of government missions and functions. It identified 33 actions to address mission fragmentation, overlap, and duplication in the 12 areas of defense, economic development, health, homeland security, and information technology. It also identified 59 other opportunities for executive agencies or Congress to reduce the cost of government operations or enhance revenue collection across 25 areas of government.20 A logical place to begin would be to identify and eliminate functions and pro- grams that are duplicated across Cabinet departments or spread across multiple agencies. Congress hoped to help this effort by passing the Government Perfor- mance and Results Act of 1993,21 which required all federal agencies to define their missions, establish goals and objectives, and measure and report their per- formance to Congress. Three decades of endless time-consuming reports later, the government continues to grow but with more paper and little change either in performance or in the number of levels between government and the people. The Brookings Institution’s Paul Light emphasizes the importance of the increasing number of levels between the top heads of departments and the people at the bottom who receive the products of government decision-making. He esti- mates that there are perhaps 50 or more levels of impenetrable bureaucracy and no way other than imperfect performance appraisals to communicate between them.22 The Trump Administration proposed some possible consolidations, but these were not received favorably in Congress, whose approval is necessary for most such proposals. The best solution is to cut functions and budgets and devolve respon- sibilities. That is a challenge primarily for Presidents, Congress, and the entire government, but the OPM still needs to lead the way governmentwide in managing personnel properly even in any future smaller government. Creating a Responsible Career Management Service. The people elect a President who is charged by Article 2, Section 3 of the Constitution23 with seeing that the laws are “faithfully executed” with his political appointees democratically linked to that legitimizing responsibility. An autonomous bureaucracy has neither — 80 — Mandate for Leadership: The Conservative Promise independent constitutional status nor separate moral legitimacy. Therefore, career civil servants by themselves should not lead major policy changes and reforms. The creation of the Senior Executive Service was the top career change intro- duced by the 1978 Carter–Campbell Civil Service Reform Act. Its aim was to professionalize the career service and make it more responsible to the democrat- ically elected commander in chief and his political appointees while respecting the rights due to career employees, very much including those in the top positions. The new SES would allow management to be more flexible in filling and reassigning executive positions and locations beyond narrow specialties for more efficient mission accomplishment and would provide pay and large bonuses to motivate career performance. The desire to infiltrate political appointees improperly into the high career civil service has been widespread in every Administration, whether Democrat or Republican. Democratic Administrations, however, are typically more successful because they require the cooperation of careerists, who generally lean heavily to the Left. Such burrowing-in requires career job descriptions for new positions that closely mirror the functions of a political appointee; a special hiring authority that allows the bypassing of veterans’ preference as well as other preference categories; and the ability to frustrate career candidates from taking the desired position. President Reagan’s OPM began by limiting such SES burrowing-in, arguing that the proper course was to create and fill political positions. This simultane- ously promotes the CSRA principle of political leadership of the bureaucracy and respects the professional autonomy of the career service. But this requires that career SES employees should respect political rights too. Actions such as career staff reserving excessive numbers of key policy positions as “career reserved” to deny them to noncareer SES employees frustrate CSRA intent. Another evasion is the general domination by career staff on SES personnel evaluation boards, the opposite of noncareer executives dominating these critical meeting discussions as expected in the SES. Career training also often underplays the political role in leadership and inculcates career-first policy and value viewpoints. Frustrated with these activities by top career executives, the Trump Adminis- tration issued Executive Order 1395724 to make career professionals in positions that are not normally subject to change as a result of a presidential transition but who discharge significant duties and exercise significant discretion in formulating and implementing executive branch policy and programs an exception to the com- petitive hiring rules and examinations for career positions under a new Schedule F. It ordered the Director of OPM and agency heads to set procedures to prepare lists of such confidential, policy-determining, policymaking, or policy-advocating positions and prepare procedures to create exceptions from civil service rules when careerists hold such positions, from which they can relocate back to the regular civil service after such service. The order was subsequently reversed by President

— 64 — Mandate for Leadership: The Conservative Promise Senate, often serves as a presidential emissary to the Senate and thus can be espe- cially helpful in securing passage of the President’s legislative agenda. To the extent that he or she desires, a Vice President can have a direct role in shaping Administration policy. A Vice President who regularly attends meetings and disperses staff across the interagency and policy councils is a Vice President whose voice will be heard. AUTHOR’S NOTE: Special thanks to those who contributed to this chapter: Stephen Billy, Scott Pace, Casey Mulligan, Edie Heipel, Mike Duffey, Vance Ginn, Iain Murray, Laura Cunliffe, Mario Loyola, Anthony Campau, Paige Agostin, Molly Sikes, Paul Ray, Kenneth A. Klukowski, Michael Anton, Robert Greenway, Valerie Huber, James Rockas, Paul Winfree, Aaron Hedlund, Brian McCormack, David Legates, Art Kleinschmidt, Paul Larkin, Kayla Tonnessen, Jeffrey B. Clark, Jonathan Wolfson, and Bob Burkett. — 65 — Executive Office of the President of the United States ENDNOTES 1. U.S. Constitution, Article II, Section 1, https://www.law.cornell.edu/constitution/articleii#section1 (accessed January 30, 2023). 2. James Madison, The Federalist Papers No. 47, January 30, 1788, https://founders.archives.gov/documents/ Madison/01-10-02-0266 (accessed January 30, 2023). 3. 31 U.S.C. §§ 1341(a)(1)(A) and 1341(a)(1)(B), https://www.law.cornell.edu/uscode/text/31/1341 (accessed January 30, 2023); § 1342, https://www.law.cornell.edu/uscode/text/31/1342 (accessed January 30, 2023); and § 1517(a), https://www.law.cornell.edu/uscode/text/31/1517(a) (accessed January 30, 2023). 4. President William J. Clinton, Executive Order 12866, “Regulatory Planning and Review,” September 30, 1993, in Federal Register, Vol. 58, No. 190 (October 4, 1993), pp. 51735–51744, https://www.govinfo.gov/content/pkg/ FR-1993-10-04/pdf/FR-1993-10-04.pdf (accessed March 9, 2023). 5. Brent J. McIntosh, General Counsel, Department of the Treasury, and Neomi Rao, Administrator, Office of Information and Regulatory Affairs, Memorandum of Agreement, “The Department of the Treasury and the Office of Management and Budget Review of Tax Regulations Under Executive Order 12866,” April 11, 2018, https://home.treasury.gov/sites/default/files/2018-04/04-11%20Signed%20Treasury%20OIRA%20MOA.pdf (accessed January 31, 2023). 6. See Steven A. Engel, Assistant Attorney General, Office of Legal Counsel, “Extending Regulatory Review Under Executive Order 12866 to Independent Regulatory Agencies,” 43 Op. O.L.C. __ (Oct. 8, 2019), https:// www.justice.gov/sites/default/files/opinions/attachments/2020/12/30/2019-10-08-extend-reg-review.pdf (accessed January 31, 2023). 7. Office of Management and Budget, Circular A-4, “Regulatory Analysis,” September 17, 2003, https:// www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf (accessed January 31, 2023). 8. President Donald J. Trump, Executive Order 13891, “Promoting the Rule of Law Through Improved Agency Guidance Documents,” October 9, 2019, in Federal Register, Vol. 84, No. 199 (October 15, 2019), pp. 55235– 55238, https://home.treasury.gov/sites/default/files/2018-04/04-11%20Signed%20Treasury%20OIRA%20MOA. pdf (accessed January 31, 2023). 9. President Donald J. Trump, Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” January 30, 2017, in Federal Register, Vol. 82, No. 22 (February 3, 20170, pp. 9339–9341, https://www.govinfo. gov/content/pkg/FR-2017-02-03/pdf/2017-02451.pdf (accessed January 31, 2023). 10. President Donald J. Trump, Executive Order 13777, “Enforcing the Regulatory Reform Agenda,” February 24, 2017, in Federal Register, Vol. 82, No. 39 (March 1, 2017), pp. 12285–12287, https://www.govinfo.gov/content/ pkg/FR-2017-03-01/pdf/2017-04107.pdf (accessed January 31, 2023). 11. See note 8, supra. 12. President Donald J. Trump, Executive Order 13892, “Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication,” in Federal Register, Vol. 84, No. 199 (October 15, 2019), pp. 55239–55243, https://www.govinfo.gov/content/pkg/FR-2019-10-15/pdf/2019-22624.pdf (accessed January 31, 2023). 13. President Donald J. Trump, Executive Order 13893, “Increasing Government Accountability for Administrative Actions by Reinvigorating Administrative PAYGO,” October 10, 2019, in Federal Register, Vol. 84, No. 200 (October 16, 2019), pp. 55487–55488, https://www.govinfo.gov/content/pkg/FR-2019-10-16/pdf/2019-22749. pdf (accessed January 31, 2023). 14. President Donald J. Trump, Executive Order 13924, “Regulatory Relief to Support Economic Recovery,” May 19, 2020, in Federal Register, Vol. 85, No. 100 (May 22, 2020), pp. 31353–31356, esp. 31355, https://www.govinfo. gov/content/pkg/FR-2020-05-22/pdf/2020-11301.pdf (accessed January 31, 2023). 15. President Donald J. Trump, Executive Order 13979, “Ensuring Democratic Accountability in Agency Rulemaking,” January 18, 2021, in Federal Register, Vol. 86, No. 13 (January 22, 2021), pp. 6813–6815, https:// www.govinfo.gov/content/pkg/FR-2021-01-22/pdf/2021-01644.pdf (accessed January 31, 2023). 16. President Donald J. Trump, Executive Order 13980, “Protecting Americans from Overcriminalization Through Regulatory Reform,” January 18, 2021, in Federal Register, Vol. 86, No. 13 (January 22, 2021), pp. 6817–6820, https://www.govinfo.gov/content/pkg/FR-2021-01-22/pdf/2021-01645.pdf (accessed January 31, 2023).

— 839 — Financial Regulatory Agencies On February 27, 2023, the Supreme Court granted the petition for a writ of certiorari.51 The Court should issue its final decision by 2024. The CFPB is a highly politicized, damaging, and utterly unaccountable federal agency.52 It is unconstitutional. Congress should abolish the CFPB and reverse Dodd–Frank Section 1061, thus returning the consumer protection function of the CFPB to banking regulators53 and the Federal Trade Commission. Provided the Supreme Court affirms the Fifth Circuit holding in Community Financial Ser- vices Association of America, the next conservative President should order the immediate dissolution of the agency—pull down its prior rules, regulations and guidance, return its staff to their prior agencies and its building to the General Services Administration. Until this can be accomplished, however, Congress should: l Ensure that any civil penalty funds not used to recompense wronged consumers go to the Department of the Treasury. The funds should not be retained by the Bureau to be dispensed at the pleasure of the Director— potentially to political actors. Moreover, the CFPB should not have a financial incentive to impose penalties. l Repeal Dodd–Frank Section 1071. This section, which relates to small- business data collection, imposes requirements on financial institutions’ lending to small firms, raises costs, and limits small businesses’ access to capital.54 l Require that no CFPB funds are spent on enforcement actions that are not based on a rulemaking that complies with the Administrative Procedure Act.55 l Require that respondents in administrative actions be allowed to elect whether an adjudication occurs in an administrative law court or an ordinary Article III federal court.56 l Specify the nature of “deceptive, unfair, and abusive” practices to define the scope of the CFPB mission more precisely. — 840 — Mandate for Leadership: The Conservative Promise ENDNOTES 1. H.R. 5480, Securities Act of 1933, Public Law No. 73-22, 73rd Congress, May 27, 1933, https://govtrackus. s3.amazonaws.com/legislink/pdf/stat/48/STATUTE-48-Pg74.pdf (accessed February 20, 2023). 2. H.R. 9323, Securities Exchange Act of 1934, Public Law No. 73-291, 73rd Congress, June 6, 1934, https:// govtrackus.s3.amazonaws.com/legislink/pdf/stat/48/STATUTE-48-Pg881a.pdf (accessed February 20, 2023). 3. Mark T. Uyeda, Commissioner, U.S. Securities and Exchange Commission, “Remarks at the 2022 Cato Summit on Financial Regulation,” November 17, 2022, https://www.sec.gov/news/speech/uyeda-remarks- cato-summit-financial-regulation-111722 (accessed February 20, 2023); Hester M. Peirce, Commissioner, U.S. Securities and Exchange Commission, “It’s Not Just Scope 3: Remarks at the American Enterprise Institute,” December 7, 2022, https://www.sec.gov/news/speech/peirce-remarks-american-enterprise-institute-120722 (accessed February 20, 2023); comment letter from David R. Burton to Vanessa A. Countryman, Secretary, Securities and Exchange Commission, “Re: The Enhancement and Standardization of Climate-Related Disclosures for Investors [File No. S7-10-2; Release No. 33-11042; RIN 3235-AM87],” June 17, 2022, https://www. sec.gov/comments/s7-10-22/s71022-20131980-302443.pdf (accessed February 20, 2023). 4. Size would probably be measured best by public float or the number of beneficial owners. 5. See David R. Burton, “Securities Disclosure Reform,” Heritage Foundation Backgrounder No. 3178, February 13, 2017, https://www.heritage.org/sites/default/files/2017-02/BG3178.pdf; David R. Burton, “Offering and Disclosure Reform,” Chapter 11 in Reframing Financial Regulation: Enhancing Stability and Protecting Consumers, ed. Hester Peirce and Benjamin Klutsey (Arlington, VA: Mercatus Center at George Mason University, 2016), pp. 277–315, https://www.mercatus.org/research/books/reframing-financial-regulation (accessed February 20, 2023); Andrew N. Vollmer, “Investor-Friendly Securities Reform to Increase Economic Growth,” Securities Regulation & Law Report, Bloomberg BNA, Vol. 49, June 5, 2017. 6. See, for example, David R. Burton, “Reforming the Securities and Exchange Commission,” Heritage Foundation Backgrounder No. 3378, January 30, 2019, https://www.heritage.org/sites/default/files/2019-01/ BG3378.pdf; Andrew N. Vollmer, “Testimony on Workforce Management Disclosures and Other SEC Issues,” submitted to the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, Committee on Financial Services, U.S. House of Representatives, December 6, 2022, https://www.congress.gov/117/ meeting/house/115227/witnesses/HHRG-117-BA16-Wstate-VollmerA-20221208.pdf (accessed February 20, 2023); David R. Burton, “Reforming FINRA,” Heritage Foundation Backgrounder No. 3181, February 1, 2017, https://www.heritage.org/sites/default/files/2017-02/BG3181.pdf; Hester Peirce, “The Financial Industry Regulatory Authority: Not Self-Regulation After All,” Mercatus Center at George Mason University Working Paper, January 2015, https://www.mercatus.org/research/working-papers/financial-industry-regulatory- authority-not-self-regulation-after-all (accessed February 20, 2023); Thaya Brook Knight, “Transparency and Accountability at the SEC and at FINRA,” Chapter 11 in Prosperity Unleashed: Smarter Financial Regulation, ed. Norbert J. Michel, (Washington: The Heritage Foundation, 2017) https://www.heritage.org/sites/default/ files/2017-02/11_ProsperityUnleashed_Chapter11.pdf. 7. Reorganization Plan No. 10 of 1950, U.S. Code Title 5—Appendix, Reorganization Plans, http://uscode.house. gov/view.xhtml?req=granuleid:USC-prelim-title5a-node84-leaf114&num=0&edition=prelim (accessed February 20, 2023). 8. The board or commission should evaluate the regulatory functions of the National Securities Exchanges, Registered Securities Future Product Exchanges, Registered Clearing Agencies (such as the Depository Trust Company (DTC), the National Securities Clearing Corporation (NSCC) and the Options Clearing Corporation (OCC)), the Municipal Securities Rulemaking Board (MSRB) and the National Futures Association (NFA). This board or commission should have a broad composition and permit minority reports. 9. Boyden Gray & Associates, Comments Submitted on Behalf of Alliance for Fair Board Recruitment Concerning the Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change to Adopt Listing Rules Related to Board Diversity, Amendment No. 1, File No. SR-NASDAQ-2020-081, April 6, 2021 https://www.sec.gov/ comments/sr-nasdaq-2020-081/srnasdaq2020081-8639478-230941.pdf (accessed February 20, 2023); David R. Burton, “Nasdaq’s Proposed Board-Diversity Rule Is Immoral and Has No Basis in Economics,” Heritage Foundation Backgrounder No. 3591, March 9, 2021, https://www.heritage.org/sites/default/ files/2021-03/BG3591_0.pdf. The SEC is contemplating at least two rules that can be expected to require differential treatment based on race, sex, ethnicity, and so on. See Executive Office of the President, Office