EITM Controlling the Bureaucracy

1. EITMControlling the Bureaucracy John Aldrich Duke University Arthur Lupia University of Michigan

2. Implications of MultipleBranch • K. Shepsle and B. Weingast, “The Institutional Foundations of Committee Power,” • N. McCarty and T. Groseclose. 2000. “The Politics of Blame: Bargaining before an Audience,” • B. Weingast and M.Moran, “Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission,” • R. Kiewiet and M. McCubbins, “Presidential Influence on Congressional Appropriations Decision.”

3. Shepsle and Weingast, Institutional Foundations of Committee Power • M: Why might congressional committees be powerful if, in the end, bills are (typically) amended on the floor and (always) passed by a majority on the floor? • NH: Committees are not really powerful. They anticipate the will of the floor and propose only what a floor majority prefers.

4. Shepsle, Weingast • P: • There are two chambers with two committees. • Committees act as (collective) individuals, seeking to get desired outcomes [at least those in the “preferred to” set]. • Conference committees are limited to bargaining over sets of policies defined by House and Senate extremes. • Managers from each chamber must agree by majority vote on the conference report. • Conference report governed by closed rule on chamber floor. • Win set and preferred to set technology.

5. Shepsle, Weingast • C: • Gatekeeping, proposal power, and informational advantages of committees, all of which are underlaid by deference to committee expertise and reciprocity among chamber members, are able to be sustained by the ex post veto from control of conferences. • Observed behavior of floor anticipates potential of ex post sanction. • Question: How to explain changes in committee powers, given constancy in conference procedures? • Note the Krehbiel commentary and Shepsle-Weingast response

6. Kiewiet and McCubbins, “Presidential Influence on Appropriations” • M: Understand the basis of executive power over legislation. President proposes, Congress disposes, especially on appropriations, but why might the president be influential if Congress can revise? Is veto credible, useful ex post sanction? • NH: Congress appropriates what it wants.

7. Kiewiet and McCubbins • P: • Single chamber; single agency up for funding; single dimension of choice. • Complete information about game and preferences. • Set of appropriations is X, a real number. • All preferences are convex (hence single-peaked in one dimension). • Structure: Congress proposes a bill, b, the president either accepts b as outcome or vetoes. If overridden, b results. If sustained, c<b obtains.

8. Kiewiet and McCubbins • C: • President has no influence if he prefers to spend more than the median member. If so, the floor median prevails. • Presidential veto affects congressional appropriations if he prefers less than the median member and if he prefers the reversion level to that median member’s position.

9. Groseclose, McCarty, “The Politics of Blame” • M: In equilibrium, we should never see a presidential veto; nor should we see a veto cast that is overridden. We should not observe, as we do, more vetoes near elections and under divided government. • NH: These actors are non-strategic, so that they sincerely vote/veto independent of consideration of consequences at next stage of legislating.

10. Groseclose and McCarty • P: Structure of Game: Three-Stage Game • C, congress, proposes a bill, b, in R1. • P, president, either signs bill, b, or vetoes and the status quo, yo, remains in effect. • V, the voter, chooses an approval level for assessing the president based on policy outcome.

11. Groseclose and McCarty • Preferences: • C has preferences -|x-c| • P is type t, drawn from uniform distribution over T • P and C observe t, with -|x-t| as presidential preferences over policy space. • Strategies are sub-game perfect • V’s beliefs consistent with c, p strategies and with Bayes’ Law.

12. Groseclose and McCarty • C: Three major propositions of various equilibrium possibilities. • Helps explain: • Congress plays “blame game” for electoral purposes. • Vetoes occurring more often in election year and under divided government. • Explains gridlock (different from Krehbiel, etc.). • Explains why state budget deficits higher under divided government.

13. Weingast and Moran • M: “Congressional Dominance” – Absence of Behavior does not Demonstrate Absence of Effect • NH: Agency Discretion Dominant • P: Congressional Committee Dominance Equates with Congressional Dominance; “Interrupted Time Series” • C: Change in FTC Behavior due to Change in Senate Committee Membership

14. McNollGast (1989) • M. How is legislation implemented? • NH. Agents’ superior information allows substantial bureaucratic drift. • P. • The choice of “structure and process” is guided by political concerns. • Legislators use S&P to achieve desired policy outcomes. • Ex ante control is better than ex post. • C. S&P creates an environment where agents respond to constituents. S&P causes delays.

15. McNollGast Implications • The “mirroring” principle – administrative law will be structured to mirror the political balance of power in place at the time of passage. • Deck stacking. S&P will favor constituents of the legislative coalition. • Autopilot – frees legislatures from having to write new laws to achieve desired policy outcomes.

16. Moe (1989) • M. “American public bureaucracy is not designed to be effective.” • NH: Bureaucratic problems are technical problems, not political ones. • P: Interest groups have distinct preferences about bureaucratic activity. Interacting these preferences with the distribution of political power produces bureaucratic designs. • C: Optimal technical design of bureaucratic institutions differs from politically-generated designs.

17. Moe (1989) Implications • There is no reason to expect coherence in administrative design. • Bureaucracies do not emerge from analytical exercises in applied theory. • Interest groups need not demand efficient designs. • The winning group must usually compromise with the losing group. • Presidents can impose their own layer of structure. • Things will get worse as society gets more complex.

18. Epstein and O’Halloran (1994) • M. Institutional design: What is the optimal amount of discretion for Congress? • NH. Delegation is abdication. Ex post controls are necessary. • P. Two players, one dimension, incomplete information, quadratic utilities, principal-agent framework, Bayes Nash equilibrium. • C. Clarify the optimal amount of discretion.

19. Epstein-O’Halloran Premises • M. To acquire informational gains from agency expertise, legislators risk distributive losses from bureaucratic drift. • Premises • Congress’ ideal point C=0. Agent’s ideal point A>0. • Uc(X)= -(X-C)2. UA(X)= -(X-A)2. • X=p+  where policy X= and  is uniform on [-1,1] • Congress chooses level of discretion d. • The agent learns . • The agent chooses policy |p|d. • Congress observes p and ; makes a veto choice.

20. Discretionary floor If 0A1/3d*=1-A. If 1/3A1d*=2/3. Veto preference Congress always prefers to have a veto. For large A, the agent prefers the same. The veto implies freedom. Uncertainty. Change policy range from [1,1] to [-R,R] As R grows, d grows. If asymmetric change.  –R (rel to R)   d. If R grows more and A>1/3, d shrinks. Epstein-O’Halloran Conclusions

21. Epstein-O’Halloran (1996) • M. Does divided government affect policy? • NH. Divided government does not affect the bureaucracies. • P. Existing literature focuses on legislation, it should also attend to the bureaucracy. • C. Divided government yields less discretion.

22. Epstein-O’Halloran Premises • Premises • Congress’ ideal point C=0. President’s ideal point P>0. Agent’s ideal point A. • Ui(X)= -(X-i)2. • X=p+  where X= and  is initially uniform on [-1,1] • Congress chooses SQ and level of discretion d. • President chooses A. • The agent learns . • The agent implements policy |p|d.

23. Epstein-O’Halloran Conclusions • Theory: President: A=P, Congress: SQ=0, As P & C diverge, d. • Empirical: US Trade Policy 1890-1990. • Change variables, delegation is binary. • Divided govt makes delegation less likely. • Greater discretion yields lower tariffs.