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Showdown with the Fourth Branch

Showdown with the Fourth Branch
AP Photo/J. Scott Applewhite

Dear Reader —

The tax debate was partly overshadowed this week by a curious turn of events at the Consumer Financial Protection Bureau — the regulatory agency created during the Obama years as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Agency head Richard Cordray resigned before Thanksgiving, naming his colleague Leandra English as acting head. President Trump, meanwhile, tapped OMB Director Mick Mulvaney for the position. English promptly filed suit, citing the Dodd-Frank law, which allows the deputy director to act as director when the latter is “absent or unavailable.” 

Each claims to have the law on its side: English and her lawyers cite Dodd-Frank, while Trump and his administration have appealed to the 1998 Vacancy Reform Act, which, they claim, gives the president power to fill the spot. At root, however, is a substantive question of constitutionality. This goes all the way back to 1789, when Congress empowered the president to remove the secretary of state at will, as legal scholar Peter Schuck points out in a recent New York Times op-ed. It has since been understood that while Congress “controls the creation, powers, structure and budgets of the executive agencies,” these agencies fall within the purview of the president’s executive power. The question is: How extensive is that power?

Shuck himself does not think it goes far enough to override Cordray. On the contrary, he believes that this episode is a healthy illustration of the separation of powers — whereby Congress can exert some measure of control over the president. But casting the controversy in this light is misleading. The CFPB is effectively as independent of the legislative branch as it is of the executive — exemplified by the highly unusual and apparently unconstitutional fact that, as Shuck himself puts it, it is funded “not in the usual way through Congress but through the Federal Reserve (itself independent in many ways).” Thus the tension is not between Congress and the executive so much as between the president and a purportedly independent agency. 

Considered in this light, the president does not have a statute on his side so much as the Constitution itself. As constitutional scholars Akhil Reed Amar and Steven G. Calabresi point out, the widely accepted principle of the unitary executive — which basically holds that the president has control over the entire executive branch — makes President Trump the “decider-in-chief on this issue.” On Tuesday, a federal judge sided with Trump, pending an appeal. Meanwhile, English still considers herself acting head and has directed the CFPB staff accordingly.

Legal issues aside, it is worth considering this debacle from the perspective of political strategy. The Left claims the mantle of democracy in its movement of “resistance” to an allegedly autocratic executive. It would do far better — both on principle and in fact — to appeal to the democratic First Branch in its opposition to President Trump, rather than the undemocratic fourth.

These are some of the many issues taken up at RealClearPolicy over the past two weeks. Below you will find just a few highlights.

— M. Anthony Mills, editor | RealClearPolicy

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True Tax Reform Takes Time & Bipartisanship. The bipartisan organization No Labels contrasts today’s one-party legislative push with the lengthy negotiations that led to the Tax Reform Act of 1986. 

Tax Reform: What Does It Mean for Health Care? In RealClearHealth, Shea McCarthy details this potential impact of the tax overhaul.

Democrats Must Heed Voices of Color. Daniella Gibbs Léger and Constance Torian draw lessons from Democrats’ recent electoral victories.

Decentralize Financial Regulation. Alexander Salter and Vlad Tarko make the case that centralized oversight of the financial sector creates instability. 

The GOP Tax Bill Would Hit Trump Supporters Hardest. Sam Berger spotlights the effects of automatic spending cuts that could be triggered by the legislation.

The GOP Is Right to Ignore Pay-As-You-Go. James C. Capretta argues that an Obama-era law may inadvertently create pressure for bipartisan spending restraint in Congress.

What the AT&T-Time Warner Suit Says About Antitrust. Thomas M. Lenard explains how the government’s merger review process works.

Fiscal Reform Lessons from the Anglosphere. Sean Speer and Alex Brill contend that the experiences of Canada, New Zealand, Australia, and the United Kingdom should be instructive to U.S. lawmakers.

Will the Tax Overhaul Hurt Home Values? Benjamin Harris considers the potential impact of tax reform on housing. 

Republicans Are Right to Reform Higher Ed’s Tax Breaks. In RealClearEducation, Andrew Wilford defends the controversial provision. 

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