As I argue in class, and have pointed out in previous posts, the expansion of executive power does not always happen because of aggressive executives. Just as often it can occur because the legislature defaults and hands hard choices off to the executive. This is rational, at least in terms of pure vote seeking, because hard choices make enemies and enemies tend to want to vote office holders out of office.
Since executive officials, especially those in charge of independent agencies such the Federal Reserve Board, do not have to face the voters at all (perhaps indirectly through the president) they are in a position to make hard choices and not feel the immediate backlash from an angry population. If these hard choices are necessary choices, like cutting popular programs or raising taxes, then this process can help government be effective. It helps explain why individuals like Alexander Hamilton supported life time appointments for presidents and senators.
So it seem to be inevitable that the executive branch will expand power over time. In many cases the dynamic involves the legislature delegating power to the executive in order to handle a crisis, and taking a back seat while it implements the vague legislation it passes, all the while putting itself in a position where it can oversee or criticize the decisions the executive makes after the fact.
This dynamic seems to be continuing during the ongoing financial crisis:
THE longer the financial crisis runs, the more policy makers at the Treasury, the White House and the Federal Reserve are working around Congress rather than with it.
It’s not that anyone is behaving illegally or unconstitutionally, but rather that Congress seems to want to be circumvented and to delegate more power to the executive branch as well as to the Fed, at least temporarily.
While Congressional leaders are consulted on the major policies, Congress is keeping its distance, perhaps to minimize voter outrage. This way, Congress can claim credit if a recovery comes, but deny responsibility if the price tag ends up higher than advertised or if banks seem to be receiving unfair benefits from the government.
Trillions of dollars of financial commitments have been made without explicit Congressional approval. For instance, the Federal Reserve has promised up to $1 trillion in “quantitative easing,” namely, using monetary policy to buy assets other than traditional Treasury securities. Not only will this have a big impact on the real economy but it also could prove costly selling those assets when the time comes. The Fed has also lent hundreds of billions of dollars to banks and issued over $500 billion in potential guarantees to money market funds. Its Term Asset-Backed Securities Loan Facility eventually could involve up to $1 trillion in purchasing securities backed by credit cards, student loans and other assets.
The traditional division of labor among policy makers was that the Fed determined the quantity of money in the economy — it set monetary policy — and Congress decided precise government expenditures — it handled fiscal policy. These new programs blur that distinction and, in essence, the Fed is running some fiscal policy.
Is this good news or bad news. Is Congress better suited to make appropriate choices or is the executive branch? Of course one might want to argue neither, these decisions should be made by the private sector, but that begs the question whether private sector actions led to the problem to begin with.
