natural-gas bill. After a meeting with President Carter, the chief executives of some of our largest gas-consuming companies suddenly dropped their open opposition to the bill. According to the article, what the executives had heard from the president was some “not-so-subtle threats” involving matters pending before such agencies as the FTC and the SEC. The article noted that “the excuse for such [corporate] pusillanimity is that the fifteen-foot shelf of federal regulations passed by Congress has put a vast arsenal of weapons for punishment in any administration’s hands.”
It seems to me that any comprehensive program for regulatory reform must include, as a matter of first priority, a specific plan for pruning back the size of that arsenal while providing citizens with more effective weapons to protect themselves against bureaucratic aggression. Let me suggest just a few ways in which we can begin to achieve those goals.
First, we can narrow the scope of administrative discretion by sharpening the focus of congressional mandates and requiring that they be strictly interpreted. We can also harness economic incentives and disincentives to achieve specific goals. The Environmental Protection Agency is now finalizing a study to examine this alternative, which was mandated by an amendment I authored to the Clean Air Act. Among the EPA’s conclusions is that a system of pollution taxes or permits should be able to control nitrogen-oxide emissions from stationary sources at a tenth to a quarter the cost of the conventional regulatory approach.
Second, we should recognize that a civil servant is as capable of abusing authority as any other human being. Therefore, we should provide individuals and businesses that are subject to regulation with the kinds of procedural protections that are conjured up by the words “due process.” A taxpayer, for example, ought not to be presumed guilty until proven innocent, and a federal bureaucracy or agency ought to be required to prove its case before it can invoke the sanctions at its disposal.
Third, we should require government agencies to be as accountable for their actions as anyone else in our society. This would require the waiver of sovereign immunity so that anyone suffering a loss as a result of bureaucratic negligence or abuse could sue the federal government for damages.
And fourth, we can, to a degree, mitigate the element of cost as a deterrent to challenging the actions of a federal agency. This can be done by enacting legislation entitling any successful contestant in a civil or administrative action to reimbursement of any reasonable costs incurred in presenting his case. This would encourage those who feel they have a legitimate grievance to defend or enforce their rights against the federal government, and, in the process, it would help define the limits of governmental authority, which ought to be a major goal of any free society.
These and other reforms designed to curb the abuse of regulatory power will of course be resisted by all who in their heart of hearts applaud the fact that we have empowered a Washington-based elite to impose its enlightened views on a benighted citizenry. But citizens are growing tired of being pushed around by so-called public servants who are hellbent on imposing policies on the public that the public doesn’t want, and who are adept at throwing needless roadblocks in the way of productive citizens trying to make a living in an increasingly regulated world.
There is an enormous body of support for the kinds of measures I have suggested, some of it in surprising places. I know this because I was able to persuade two Senate committees to incorporate important elements of two of them in pending legislation. The 1976 law extending the life of the Consumer Product Safety Commission provides, on an experimental basis, for the payment of damages for losses resulting from gross negligence on the part of the commission. That same year, the Public Works Committee adopted my proposal for the reimbursement of costs incurred by anyone successfully challenging the EPA under amendments to the Clean Air Act. I was able to succeed in each instance because even regulation-prone senators had come to recognize, through the sheer volume of constituent complaints, the extent of a citizen’s helplessness in the face of even the most obvious examples of bureaucratic muddle-headedness, or indifference, or downright bullying.
It is on the basis of this experience that I so firmly believe that the reforms I speak of are politically attainable. Given the necessary effort, the power of a runaway bureaucracy can be curbed and elementary fairness restored to the regulatory process. If we make progress on this one front, we will have gone some way towards renewing the American people’s confidence that ours is a system in which the citizen continues to count, one in which public servants will remain precisely that: servants, not masters.
As might be expected in this imperfect world, the regulatory reforms I urged in these remarks have not been enacted, and, despite the efforts of Presidents Reagan and Bushes I and II to roll back the regulatory tide, the fifteen feet of fine-print federal regulations to which I referred have grown to twenty-five feet—and these do not include the additional yard or so that will be added to implement Obamacare. To compound the injury, Congress has developed the habit of imposing criminal penalties for breaches of regulations, however obscure; and to make matters even worse, it has dispensed at times with the common-law requirement that the accused know he has violated the law. We are all familiar, of course, with the principle that a person is presumed to know the law. Fair enough in the days when crimes consisted, essentially, of offenses against variations on the Ten Commandments. But today, citizens cannot rationally be presumed to know the intricacies of all the regulations that increasingly affect their lives—and can land them in jail.
The New York City Fiscal Crisis
New York’s chronic mismanagement caught up with City Hall in early 1975, when Mayor Abraham Beame acknowledged that the city was on the brink of bankruptcy. As has become all too customary when any significant part of the American body politic is faced with a fiscal crisis of its own making, he turned to Washington for a bailout. This put me on a very hot political spot because I saw no constitutional or prudential justification for such a bailout. The following paper deals with the crisis and my role in it. The paper itself is something of a mystery. I had obviously put a great deal of work into it; but when I came across it in my files, I had no recollection of it. I must have written it for publication sometime in early 1977, but I don’t know whether it was ever published. I believe, though, that it raises important points about state and local responsibilities and the dangers of looking to Washington for help.
One school of thought has it that a single year-old headline cost Gerald Ford the presidency. It appeared in the October 30, 1975, issue of the New York Daily News, and it read: “FORD TO CITY: DROP DEAD.” As for my own role in the city’s financial crisis, a widespread perception was summarized in a New York Times editorial as follows: “When this City was about to lurch into bankruptcy, he ... bestirred himself enough to wave the City on to its apparent doom.” I suggest that this was a bum rap; and so, lest the medium be the entire message, I think it useful to record some of the facts and issues as I saw them unfold in the fall of 1975, with special emphasis on the all-important distinction between what was in the best interests of New York City’s people and what was in the interests of its politicians and creditors.
Now, the first part of wisdom in coming to understand the causes of New York City’s desperate condition is to realize that the city was the victim not of impersonal forces, but of its own breathtaking mismanagement sustained year after year. During the preceding decade, the city had run up its overhead costs to levels impossible to sustain. Between 1966 (the beginning of John Lindsay’s tenure as mayor) and 1975 (the second year of Abraham Beame’s tenure), the budget had more than trebled, with labor costs alone increasing from an estimated $2.1 billion to $6.4 billion. The cost of higher education had gone from $92.5 million to $585 million. Even with sharply increased taxes, City Hall had to borrow ever-larger amounts to make ends meet, with the result that by 1976 debt-service costs had reached $1.9 billion a year, exceeding the combined cost of the police force, the fire department, and sanitation services.
Yet when the banks at long last shut their credit windows in the spring and summer of 1975, Mayor Beame presented himself and the city as very much the aggrieved parties. No further economies were possible, he warned, without jeopardy to essential services; the fears expressed by the city’s bankers were wholly unjustified; the city could and would get by, if only