How to “drain the swamp”

Drain the Swamp?

Trump wants to “drain the swamp” mainly because the vast majority of federal workers are democrats. He won’t succeed. Trump feels that lower level federal employees work against his agenda and effectively sabotage his agenda. He wants to attack mid level employees by instituting something called Schedule F which makes it easier to fire federal workers. However, Schedule F would only affect 50,000 of the 2.5 million workers. Any effort to impose it would be tied up in court and not adjudicated until long after Trump had left office. Moreover, just like Biden who rescinded Trump’s prior Schedule F orders, any democrat president would also rescind it. So Trump is wasting his time. More effective are the Supreme Court actions to disable Chevron – the Supreme Court ruling that empowered the regulatory agencies to write regulations somewhat implied by enabling legislation. Recently, the republican AGs have sued the Biden Administration claiming that the regulators have been exceeding their legislative authority. It is curious that the republican House of Representatives has essentially sat on its thumbs allowing Biden to run roughshod over the economy.

Recently the Supreme Court has ruled on cases that affect Chevron. The first case involved New Jersey fishermen being forced to pay for third party on board monitors by the National Oceanic and Atmospheric Administration. The fishermen contended that this was done without authorization from Congress. The Supreme Court agreed. In so doing, the court overturned Chevron. Chief Justice Roberts wrote “Perhaps most fundamentally, Chevron’s presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do.” The second blow to the administrative state came in a ruling that the Securities and Exchange Commission cannot bring a charge of a violation and then prosecute it in house. The court ruled that defendants have the right to have their case heard by a jury. The government had argued that it was enforcing a “public right” created by Congress and given to the administrative state. Of course, the vote was 6-3 with Justice Sotomayor lamenting that court was dismantling the administrative state. Would that be true.

Thus, the court is a much more effective way of dismantling the administrative state, i.e. the swamp, than the clumsy use of Schedule F. However, this does not mean that Trump cannot do something about the administrative state. He can move the agencies out of Washington. He does not need congressional approval to do so. A case in point is my old agency the National Credit Union Administration. When I was there in the early 1980s the agency moved within DC. Twenty years later it moved to Virginia. It did not ask permission of the congress. It just moved. I believe that the credit unions benefited with the move. Although some credit union managers grouse about treatment from examiners, on the whole the agency has become more responsive to the needs of the credit unions and the millions they serve.

When I studied the Fed as a young economist, I found that the actions and recommendations of the reserve bank presidents on the Open Market Committee were starkly different from those of the Governors. The difference likely emanated from the reserve bank presidents being located around the country while the governors all resided in the DC MSA. The presidents work and live around people with real jobs while the governors live around those whose sole existence is due to the presence of the federal government. A reserve bank president is more likely to hear his neighbor talk about the local football game while the governor’s neighbor is more interested in the rate of inflation and interest rates. Also the reserve bank presidents get monthly reports from their directors who are nongovernment citizens – bankers, lawyers, academics, business executives – and those reports influence their decision making. I saw that first hand when I served on the Atlanta Fed’s branch board in Nashville. I believe that federal decision making would be less harmful if the agencies left the swamp and went where real people did real jobs for a living. So where should they go? I would leave Defense, Treasury and State in DC. As to the other cabinet agencies:

Homeland Security – Eagle Pass, TX (the epicenter of the illegal crisis)

Interior – Juneau, AK (large percentage of federal land ownership)

Agriculture – Ames, IA (second in agriculture production)

Commerce – Boston

Labor – Detroit 

Health and Human Services – Jackson, MS (the poorest state)

Housing and Urban Development – Philadelphia (part of the most urbanized area)

Transportation – Seattle (home of Boeing)

Energy – Houston

Education – Little Rock (I like Huckabee Sanders school choice initiative)

Veterans Affairs – Bedford, VA (site of the D-Day Memorial)

What about the Fed? Send it to Kansas City (middle America and great BBQ)