Editorial-Opinion January 2017

The eruption in the stock market since the election of Donald Trump has been nothing short of stunning. In no small part, this financial enthusiasm stands on the belief that business will advance; doubling the current growth rate of 2 percent. A 4 percent growth rate would do wonderful things for all.

Vital to this increase in growth is a decrease in regulation. Regulations are difficult things to rework because there is a lengthy and complicated way of making federal regulations, and the unmaking of such regulations follows exactly the same process.

For the past eight years, that regulatory process has been, in some instances, bypassed using something called “Executive Order.” Unlike real regulations, executive orders are relatively easy to reverse; not easy, but relatively easy.

Whether or not you agree that some recent rules have had a greater cost than benefit, it is interesting to review how such rules might be altered.

If you are among those who like the existing rules, the most effective tools to delay any change to existing rules is the process itself. Changes, including terminating rules, have to be announced publicly in the federal register. Then proposals have to be studied and reports published. By rule, all of these steps require public notice and, in some instances, a period of public notice and comment. In short, “un-regulation making” can require at least as much time as regulation making itself.

But there is another way. Based on all I have seen as the new cabinet positions are filled, I wonder if the table is being set to activate this other way.

This other way was deployed first during the Clinton presidency. Clinton placed many liberal activists in his cabinet. They ran federal agencies—the agencies charged with enforcing the regulations then in place.

In a quite creative way, these activists, now secretaries of Interior, Labor, Agriculture, et al., and especially the Director of the Environmental Protection Agency (EPA), would work informally with their old companies and nonprofit groups to neuter any rule they did not like.

Their formula was simple and very effective. First, they would find the worst example of something that the government was doing, that they wanted to stop or change. Second, they would “judge shop,” to find a federal court that would likely support the position of the nonprofit. Then, the nonprofit would sue the federal government. Often, this would put the former head of the nonprofit sitting across the table from his replacement, negotiating the terms of a “settlement” of the suit without it ever going to trial.

Now comes the magic of the Clinton solution.

The nonprofit and the federal agency would craft and present to the judge their plan to change the way the government enforced its rules.

This agreement would essentially carry the weight of a court order. It was faster than any normal regulatory process and did not have to go out for any public comment or review.

It carried other important benefits to the feds, and to the suing nonprofit.

The government agency benefitted by effecting the change it wanted more quickly than it might have, and without going through the public process.

The suing nonprofit really benefitted in a number of ways. As part of the agreement, the federal government agreed to reimburse the nonprofit for its expenses preparing the suit.

The government then contracted with the nonprofit to pay it to watch over the implementation of the terms of the settlement. This expanded both the budget and the work force of the nonprofit.

Then the federal agencies used the court order as a blanket ruling to alter its rules nationwide, because they did not want to expose themselves to another law suit. They were simply following a federal court order.

This was the recipe used to expand federal regulation under the Clinton administration. It proved so effective that some Ivy League law schools agreed to zero student loans to graduates who worked two years for such nonprofits. It also explains why “environmental” nonprofits so vehemently opposed Trump, and now send daily fund-raising pleas that double as propaganda to delegitimize Trump’s presidency.

I don’t know how the incoming administration may operate, but the Clinton method was the most efficient and least transparent process I have ever seen. We will see how it goes.