Presidents and the Politics of Agency Design: Political Insulation in the United States Government Bureaucracy, 1946-1997

By David E. Lewis

The administrative state is the nexus of American policy making in the postwar period. The vague and sometimes conflicting policy mandates of Congress, the president, and courts are translated into real public policy in the bureaucracy. As the role of the national government has expanded, the national legislature and executive have increasingly delegated authority to administrative agencies to make fundamental policy decisions. How this administrative state is designed, its coherence, its responsiveness, and its efficacy determine, in Robert Dahl’s phrase, “who gets what, when, and how.” This study of agency design, thus, has implications for the study of politics in many areas.

The structure of bureaucracies can determine the degree to which political actors can change the direction of agency policy. Politicians frequently attempt to lock their policy preferences into place through insulating structures that are mandated by statute or executive decree. This insulation of public bureaucracies such as the National Transportation Safety Board, the Federal Election Commission, and the National Nuclear Security Administration, is essential to understanding both administrative policy outputs and executive-legislative politics in the United States.

This book explains why, when, and how political actors create administrative agencies in such a way as to insulate them from political control, particularly presidential control.

• Language: English
• Publisher: Stanford University Press
• Release date: Sep 2, 2004
• ISBN: 9780804766913

David E. Lewis

David E. Lewis was born and educated in South Australia. He received his B.Sc. (chemistry, 1972), Ph.D. (organic chemistry, 1980) and D.Sc. (chemistry, 2012) degrees from the University of Adelaide. In 1976, he moved to the U.S. as a Research Associate at the University of Arkansas. Following temporary faculty positions at Arkansas and Illinois, Lewis pursued his independent career at Baylor University (Assistant-Associate Professor; 1981-1988) and South Dakota State University (Associate-Full Professor; 1989-1977) before moving to the University of Wisconsin-Eau Claire in 1997 as Professor of Chemistry. Lewis' research interests are in physical and synthetic organic chemistry, where his recent work has focused on the synthesis of useful molecules based on the 4-amino-1,8-naphthalimide chromophore. He also has an international reputation as an expert in the history of organic chemistry in Russia. He is the author of 100 papers and books, including several Essays in the history of chemistry for Angewandte Chemie, and is the holder of 18 U.S. Patents. Lewis is a Fellow of the Royal Australian Chemical Institute and the Royal Society of Chemistry, and is a former Chair of the Division of the History of Chemistry of the American Chemical Society (HIST). He was awarded the 2018 HIST Award for Outstanding Achievement in the History of Chemistry, and is one of three 2019 Markovnikov Medal Laureates. His collected works in the history of chemistry were translated into Russian in 2016.

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Stanford University Press

Stanford, California

© 2003 by the Board of Trustees of the Leland Stanford Junior University

Printed in the United States of America

on acid-free, archival-quality paper

Library of Congress Cataloging-in-Publication Data

Lewis, David E.

Presidents and the politics of agency design : political insulation in the United States government bureaucracy, 1946-1997 /

David E. Lewis.

p. cm.

Includes bibliographical references and index.

9780804780261

1. Administrative agencies—United States. 2. Bureaucracy—United States. 3. Presidents—United States. 4. United States—Politics and government—1945-1989. 5. United States—Politics and government—1989- I. Title.

JK411 .L49 2003

351.73’09’045—dc21

2002006929

Original Printing 2003

Last figure below indicates year of this printing:

12 11 10 09 08 07 06 05 04 03

Designed by James P. Brommer

Typeset in by Heather Boone in 10.5/14.5 Caslon

For G-ma and G-pa

Table of Contents

Copyright Page

Dedication

Acknowledgments

INTRODUCTION - Agency Design in American Politics

1 - Separation of Powers and the Design of Administrative Agencies

2 - Moving from Insulation in Theory to Insulation in Reality

3 - Presidents and the Politics of Agency Design

4 - Testing the Role of Presidents: Presidential Administrative Influence

5 - Testing the Role of Presidents: Presidential Administrative and Legislative Influence

6 - Political Insulation and Policy Durability

CONCLUSION - What the Politics of Agency Design Tells Us About American Politics

APPENDICES

REFERENCE MATTER

Index

Acknowledgments

This project is the culmination of four years of hard work. Terry Moe originally turned me on to the topic of agency design. Terry’s work on the politics of bureaucratic structure was this project’s starting point. Terry’s argument in some ways is simple: the design of administrative agencies is political. Agencies are not designed to be effective, rather they are the result of a political bargain among interested parties. What amazed me throughout my research and what still amazes me is just how prescient, just how right Terry was, not only in the simple truth about the politics of the process, but also in his more complex explanation of how the process works. Terry’s imprint is all over this research, the ideas, the writing, and the methods. I’m a better political scientist for Terry’s pedagogy, careful criticism, and friendship.

I also benefited from the comments and criticisms of Jon Bendor and John Cogan. I hold Jon Bendor in very high esteem as a teacher and scholar. I consider him a model. I benefited from his comments and criticisms on the theoretical part of this project. I was never fully able to incorporate all his comments and suggestions, and this project is the less for it. John Cogan kindly provided data, his knowledge about the budget process, and methodological insights to the project.

This project benefited from the insightful, penetrating, but friendly criticism of Dick Brody. Dick and I had lunch about once a month during the writing and researching. We sort of had a deal. Dick would show me a good place to eat in Palo Alto, and I would get to ask him about my research. As you can see, this was a pretty lopsided arrangement. To make matters worse, Dick also picked up the check too many times. Dick’s knowledge of presidential politics, his ability to go straight to the weaknesses in my argument, and his encouragement were invaluable.

Walt Stone has been a mentor and friend since my time at the University of Colorado. One of his greatest assets is his ability to think clearly and cut away unnecessary material from an argument. He has been a great encouragement to me, making me believe that I could succeed. He has also taught me a lot about what it means to be a professional, coaching me through the publication process, the job process, and grad school. For these things I am grateful. He is a good friend.

Sean Theriault has readjust about everything I have written. His boundless optimism and his willingness to share with me the joys and disappointments I’ve experienced have made this process easier. I am thankful for his friendship, his copyediting, and his keen analytic eye. Some day we will collaborate on something. In the meantime I am more than satisfied just being his friend.

I would also like to thank other friends and colleagues for their encouragement, help, and patience. In particular, Dom Apollon, Kelly Chang, Josh Clinton, Alex George, John Gilmour, Erica Gould, Doug Grob, Will Howell, Simon Jackman, Nolan McCarty, Dan Osborn, Ricardo Ramirez, Ron Rapoport, Michael Strine, Mike Tierney, Shawn Treier, Barry Weingast, and Alan Wiseman all deserve more credit than they are getting here. I would also like to thank my friends at the College of William & Mary, a place where any scholar can have success both as a researcher and as a teacher. I have learned a lot about making a life, a career, and friendships thanks to the Rapoports, McGlennons, Tierneys, Schwartzes, and Bills.

Without resources no project like this succeeds. I am grateful for the financial support of the College of William & Mary, the Stanford University Department of Political Science, the Budde family, the Social Science History Institute, and the Harvey Fellowship Program run by the Mustard Seed Foundation. I appreciate that latter for marking me and helping me realize that all this work isn’t for me. Thanks also to Amanda Moran and Kate Wahl at Stanford University Press, who adopted the project.

Thanks to my kin for their encouragement: Mom and Johnnye, Dad and Barbara, Ineke and Jos, the West Coast Lewises, Jen, Paul, Pam, and Daniel, and the de Konings. Finally, I am thankful for my wife, Saskia, and my daughter, Julianna, and my new son, little Dave, who are a constant reminder that my life is a success whether I succeed or fail in my chosen profession. I cannot count their numerous allowances, special gifts, and acts of love, but they mean more to me than any book or successful career ever could.

I dedicate this book to my grandparents Lois and Waldo Gossard. G-ma and G-pa provided loving guidance and instruction to my brother and me throughout our formative years. Their prayers, their example, and their quiet, selfless manner shaped us immensely. I learned about unconditional love from them, and I learned what the scriptures taught by seeing it embodied in their day-to-day lives. I thank God for them.

INTRODUCTION

Agency Design in American Politics

In reality, bureaus are among the most important institutions in every part of the world. Not only do they provide employment for a very significant fraction of the world’s population; but they also make critical decisions that shape the economic, educational, political, social, moral, and even religious lives of nearly everyone on earth. . . . Yet the role of bureaus in both economic and political theory is hardly commensurate with their true importance.

—Anthony Downs, Inside Bureaucracy

Not many people find the study of American bureaucracy a provocative or compelling subject. Discussion of American politics generally revolves around the actions of Congress, the president, and, to a lesser extent, the courts. This oversight is unfortunate. The administrative state is the nexus of policy making in the postwar period. The vague and sometimes conflicting policy mandates of Congress, the president, and courts get translated into real public policy in the bureaucracy. The fourteen cabinet departments and fifty-seven independent agencies or government corporations make important policy decisions affecting millions. As the role of the national government has expanded, the national legislature and executive have increasingly delegated authority to administrative agencies to make fundamental policy decisions. These agencies make important decisions, such as whether RU-486 should be available to American women, whether race-based educational and employment practices are permissible, and what levels of sulfur dioxide are permissible from smokestacks. Their decisions are published in the seventy thousand to eighty thousand pages of the Federal Register, and they represent to many citizens the exercise of public authority. For many people, their only concrete experience with the national government is their contact with an administrative agency like the Social Security Administration, the Immigration and Naturalization Service, or the Internal Revenue Service.

How this administrative state is designed, its coherence, its responsiveness, and its efficacy determine, in Robert Dahl’s phrase, who gets what, when, and how. From direct income transfers like social security to less direct policies with redistributive consequences like environmental regulations, the assignment of broadcasting frequencies, and law enforcement, the bureaucracy is the vehicle of public authority. Thus the study of the administrative state is extremely important for understanding American politics and policy. To comprehend how the administrative state works, we must first examine how agencies get created and designed. Before any appointee is nominated, before any executive order is issued, and before any budget is enacted, political actors have deliberated over, bargained about, and struggled for specific agency designs.

Given the importance of the bureaucracy for making important public policy decisions, it should be no surprise that agency design is more the product of politics than of any rational or overarching plan for effective administration. Agency design is fundamentally and inescapably political. As Terry Moe (1989, 267) famously argued, American public bureaucracy is not designed to be effective. The bureaucracy rises out of politics, and its design reflects the interests, strategies, and compromises of those who exercise political power. With the increasing importance of the bureaucracy as a creator and instigator of public policy, modern political actors recognize how important agency design is.

But the political nature of agency design goes deeper, rooted in the very Constitution that shapes the American governing system. The framers and ratifiers of the Constitution were more concerned with the abuse of government power and authority than with empowering an administrative state. They designed the constitutional system to restrict the use of power. They divided power among the branches and between the federal and state governments. They added the Bill of Rights to give individuals protections against the abuse of federal power. By neither describing nor empowering an administrative state, the Constitution’s framers granted political actors in legislative and executive branches the power to create and design the administrative state based upon their own interests. Thus their actions guaranteed that the administrative state would be the product of interests shaped by the unique institutional perspective of each branch’s occupants and their partisan disagreements.

WHY STUDY AGENCY DESIGN?

To understand agency design is to understand something fundamental about American politics, namely that forces set in motion at the nation’s founding shape modern politics, modern choices, and modern political behavior. Embedded in American politics are perspectives and incentives shaped by constitutional institutions as they have been interpreted over time by the interaction of the three branches. Each branch is endowed with a perspective based upon a unique role in the American separation-of-powers system and a unique constitutionally shaped political constituency.

But understanding agency design also gives us insight into politics in its most basic form. If the Founders did not foresee that national decision making would be shaped by political opinion rather than high-minded political deliberation, political practitioners did. Their calculations about the proper design of administrative agencies are shaped less by concerns for efficiency or effectiveness than by concerns about reelection, political control, and, ultimately, policy outcomes. Their design decisions boil down to base calculations such as Is someone who thinks like me going to be in control or someone with a different view? and What impact will the likely agency head have on policy? They care more immediately about the policy consequences of their choices than about the aggregate coherence of the administrative state they are building.

A study of agency design tells us something fundamental about who will create and implement public policy, about power and who will exercise it. Agency design determines, among other things, the degree to which current and future political actors can change the direction of public policy by nonlegislative means. Some structural arrangements allow more control by political actors than others do. Agencies like the independent regulatory commissions, for example, are insulated from political control by commission structures that dilute political accountability, party-balancing requirements that diminish the impact of changing administrations, and fixed terms for commissioners that limit the influence of any one administration on commission policy. If we want to understand why bureaucracy is too politicized or, conversely, pathologically unresponsive, the appropriate place to begin is the start: the choice of administrative structure.

Presidents and Public Accountability

Agency design determines bureaucratic responsiveness to democratic impulses and pressure, particularly those channeled through elected officials like the president. It can determine the success or failure of modern presidents in meeting constitutional and electoral mandates. One of the central concerns of presidency scholars beginning with Richard Neustadt (1960) has been increasing public expectations of presidents (Lowi 1985; Skowronek 1993). The president is held accountable for the success or failure of the entire government. When the economy is in recession, when an agency blunders, or when some social problem goes unaddressed, it is the president whose reelection and historical legacy are on the line (Moe and Wilson 1994). Presidents have responded to these increased expectations in a number of ways, including increased public activities, the development of the Executive Office of the President, and attempts to politicize the bureaucracy and centralize its control in the White House. With so much policy-making authority delegated to executive branch actors, coupled with the difficulty of legislative action during a period largely characterized by divided government, presidents have powerful incentives to influence policy administratively (Nathan 1975, 1983).

Presidents seek control of the bureaucracy not only to influence public policy and meet public expectations but also because presidents are held accountable for their performance as managers. The chief executive is charged with the responsibility to see that the law is faithfully executed and is held accountable electorally. As such, presidents care about government structure and responsiveness. Every modern president has attempted to reshape the bureaucracy by eliminating overlapping jurisdictions, duplication of administrative functions, and fragmented political control (Arnold 1998; Emmerich 1971). Modern presidents have also sought to increase their institutional resources to facilitate this control (Burke 1992). Agencies that are insulated from their control, and the increasing bureaucratic fragmentation that results from that insulation, significantly constrain the president’s ability to manage the bureaucracy and satisfy public expectations.

For example, one way agency design influences the ability of presidents to control the administrative state is through political appointments. But we know very little about this part of the appointments process. Broadly conceived, there are three sets of research questions on administrative appointments (see Figure 0.1). The first is the design and institutional structure of administrative agencies. Each agency is designed differently, and an agency’s distinctive characteristics shape the appointment process in un-derappreciated ways. For example, boards or commissions govern some administrative agencies, whereas administrators govern others. The appointment of some administrative officials with commensurate responsibilities requires Senate confirmation, whereas others do not. Some political appointees serve fixed terms, and others serve at the pleasure of the president. Limitations, based on background or political party, are sometimes placed on the types of persons that may be appointed.

e9780804780261_i0002.jpg

FIGURE 0.1 Three Sets of Research Questions

The second set of questions is about the appointment itself. A great deal of past work explains the motivations of presidents, legislators, and interest groups in the appointment process. From the presidential perspective, some of these works explain presidential goals and strategies in the nomination of public officials (Mackenzie 1981; Moe 1985). Other works focus on the confirmation of nominees in the Senate by examining legislative preferences and appointment outcomes (see, e.g., Segal, Cameron, and Cover 1992). In general, research in this area examines the approval or rejection of some appointees, the varying confirmation times, and the appointment of some types of individuals rather than others.

The final set of questions concerns the impact of a political appointment on policy outcomes. Past research in this area explains how political appointments affect administrative policy (Clayton 1992; Moe 1982; Randall 1979; Stewart and Cromartie 1982; Wood 1990; Wood and Anderson 1993; Wood and Waterman 1991, 1994). It explains how political appointees differ from civil servants and the difficulty political appointees have in orchestrating policy change (Downs 1967).

An extensive appointments literature connects the choice of appointments to policy outcomes. However, this research fails to recognize that the choice of institutional structures, which occurs prior to appointment, has a large impact on both the choice of appointments and policy outcomes. Because political actors choose structure carefully, with the intention of shaping both the appointment and policy-making process (Horn 1995; McCarty 1999; McCubbins, Noll and Weingast 1989; Moe 1989, 1990b; Moe and Wilson 1994), we cannot understand appointments and administrative policy making without understanding how the original institutional choices shape, constrain, and direct the politics of appointments and policy outcomes. As Richard Waterman (1989, 40) argues, Organizational structure is not neutral. The manner in which an agency or department is organized can have a major impact on policy outcomes.

Agency Design and Bureaucratic Effectiveness

By allowing political actors in Congress and the presidency to jointly create the administrative state, the Constitution’s framers guaranteed that agencies would be created more directly in response to political considerations than any notion of effectiveness. This is not to suggest that political actors care nothing about effectiveness. Rather it is to suggest that if effectiveness is not the primary goal, it will probably not be the primary outcome. If we want to understand the pathologies of the modern administrative state, we must understand the politics of its creation.

In 1936, President Franklin Delano Roosevelt appointed a commission of academics to study organizational problems in the executive branch. Part of Roosevelt’s response to the Depression had been to convince Congress to pass a substantial amount of New Deal legislation. Along with this new authority, Roosevelt advocated the creation of scores of new administrative agencies to implement it.¹ Some of these agencies were standard bureaus placed within the existing cabinet structure. A significant portion of the New Deal bureaucracy, however, was created outside the normal cabinet structure to remove it from what Roosevelt perceived as the conservative bias in the bureaucracy. Many of the new agencies were designed as commissions or hybrid agencies like government corporations. The admittedly dramatic and haphazard expansion of the administrative state led Roosevelt to acknowledge in 1936 that some study of executive administration would be helpful.

One of the conclusions of the President’s Committee on Administrative Management (1937), as it was called, was that the Executive Branch . . . has . . . grown up without a plan or design like the barns, shacks, silos, tool sheds, and garages of an old farm. The implication of this conclusion was that the ramshackle nature of agency creation had led to organization problems and fragmentation of control.

Organization Problems

It is somewhat controversial in modern public administration to argue that duplication and overlapping responsibilities are necessarily bad. Indeed, some amount of redundancy and duplication can be desirable in large organizations in order to take auxiliary precautions in case some important bureaucratic process breaks down or to induce competition among agencies that will improve performance among all.² Yet what is equally true is that agencies that are not designed to be effective probably will not be, and most of the duplication, fragmentation, and overlap in the administrative state is not purposefully chosen to take auxiliary precautions or improve effectiveness via competition. It is chosen most immediately to remove certain policies from presidential political influence.

When agencies are most directly created in response to political concerns, organization problems naturally follow in the executive branch because of overlapping missions, conflicting goals, or unclear jurisdictions.³ Agencies created under such conditions are more likely to have missions similar to those of other agencies. By the time of the Johnson administration, Senator Abraham Ribicoff (D-Conn.) counted 150 federal agencies providing aid to cities, states, and individuals through 456 different programs. There are four different government agencies regulating banking activity: the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Reserve, and the Federal Deposit Insurance Corporation. There