Can Democrats Stop McConnell and Trump’s Quiet Regulatory Takeover?

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Senate Majority Leader Mitch McConnell speaks on Capitol Hill. 

Aincreasing number of progressives are frightened by how effectively Mitch McConnell has packed federal courts. In President Obama’s final two years, McConnell blocked the nomination of Judge Merrick Garland to the Supreme Court and abused the Senate’s blue slip procedure, limiting Obama’s mark on the federal judiciary. With Donald Trump in office, McConnell went “nuclear” to ensure the installation of right-wing ideologues Neil Gorsuch and Brett Kavanaugh, did a 180 on blue slips by ignoring their deployment by Democrats, and reduced debate time for lower-court judges to just two hours. All of this has given Trump more impact on the courts in two years than Obama had in his first four.

But the judiciary is not the only terrain upon which Trump and McConnell have deployed metaphorical nuclear arms. Beneath the radar, they are also trampling norms to reduce the influence of Democratic appointees at critical independent agencies which protect consumers, workers, and the broader economy. And while Democrats are waking up to the consequences of Republican court-packing, they have required prodding to even notice this other right-wing takeover. Until Democrats recognize these hardball tactics from Trump and McConnell, they are unlikely to develop a legal or political plan to confront them.

Powerful five-member independent agencies such as the Federal Deposit Insurance Corporation (FDIC), the Securities and Exchange Commission (SEC), and the Federal Communications Commission (FCC) typically include statutory rules like this (from the law that created the SEC): “Not more than three of such commissioners shall be members of the same political party.”

For decades, each party has acted upon a shared agreement to interpret that language to allow the Senate leadership of the party that is not the president’s (e.g., Harry Reid under George W. Bush, McConnell under Obama, or Chuck Schumer under Trump) to choose the “minority” commissioners. For example, FCC Chairman Ajit Pai, who led the effort to roll back Obama priorities such as his signature net neutrality rule, is nominally an “Obama appointee,” even as all close observers know he was really chosen by Mitch McConnell.

But as with so many better-known Washington practices in this era, McConnell and Trump are undermining the norm of allowing the opposition party to work its will on minority nominees for independent agencies.

Rarely are these agencies viewed in the aggregate, making it difficult to appreciate the scale of the administration’s obstruction. Using the Revolving Door Project’s Independent Federal Agency Monitor, however, it is possible to view the problem holistically. Of the 148 positions across 30 agencies requiring political balance, 70 are presently either vacant or expired. While those seats are nearly evenly distributed (36 Republican seats, 34 Democratic), there are only 9 pending nominations for Democratic seats, versus 18 for Republican ones.

In fact, the lone vacancies on several boards with inordinate impact on the economy, like the FDIC, SEC, and the National Labor Relations Board (NLRB), are Democratic. That does not seem like an accident. Rather, these persistent vacancies likely represent a coordinated assault by advocates of corporate power against the regulatory state.

An administration that respected norms could have easily avoided these vacancies. For instance, Trump and McConnell could have paired the renomination of Democratic NLRB commissioner Mark Pearce with Republican John Ring. Instead, Ring was confirmed, while Pearce wasn’t renominated until the day after his term expired and he had to vacate his seat. Eventually Pearce withdrew from consideration. Similar stories have unfolded at the Equal Employment Opportunity Commission (EEOC) and the United States Postal Service (USPS).

While each of these imbalances is potentially harmful on its own, when viewed together, the implications for regulations and the public interest are disastrous. Elite corporate lawyers have taken gleeful note of how the SEC’s 3-1 Republican advantage benefits those who violate securities laws. The SunTrust/BB&T mega-bank merger—the largest since the financial crash—appears set to achieve unwarrantedly easy FDIC approval. A key reason for its swift passage? One Democrat recommended for an FDIC seat (Graham Steele) has been stuck on Trump’s desk since last year. Another Democrat (Martin Gruenberg) is serving lawfully, but is de facto fireable “at will” (antithetical to the intended structure of “independent” agencies), since his spot on the board technically expired in December 2018.

Allison Lee, a Democratic nominee for the SEC, waited nine months after Schumer recommended her to formally get that nomination; she had a hearing earlier this week in the Senate Banking Committee, but it’s unclear when she’ll reach the Senate floor for a vote. This is the second level of delay: After Trump slow-walks the nomination, McConnell slow-walks the confirmation.

It is only a matter of time before creative plaintiffs seek a legal ground to challenge Trump’s failure to “take care” to maintain the partisan balance mandated by the statutes creating these agencies. When at the D.C. Circuit Court of Appeals, Kavanaugh wrote an opinion in 2016 ruling that a single individual running the Consumer Financial Protection Bureau (CFPB) undermines the constitutionally significant protections offered when independent agencies have multiple directors representing “divergent interests.” While Kavanaugh’s opinion is problematic in many ways, it was appropriate for him to quote esteemed (and progressive) senior D.C. Circuit Judge Harry Edwards, who wrote in 2003 that “collegiality plays an important part in mitigating the role of partisan politics and personal ideology by allowing judges of differing perspectives and philosophies to communicate with, listen to, and ultimately influence one another in constructive and law-abiding ways.” Independent agencies are constructed to embody the view that collegial decisions are preferable to narrowly partisan ones.

As Trump’s role in this mess seems to be intentional (remember, he has also praised the “flexibility” of avoiding the Constitution’s appointment clause for cabinet secretaries), one wonders how an intentional subversion of the statutory prohibition on partisan dominance for these agencies undermines agency work product. For instance, courts are supposed to “hold unlawful and set aside agency action, findings, and conclusions” which result from actions “not in accordance with law.”

Regardless of whether the courts eventually offer relief, Democrats need to be elevating Trump and McConnell’s devious stealth nuclear option right now. In the short run, if Republicans blow up the norms surrounding these appointments, they should be forced to own the reputational consequences rather than quietly proceed. One upcoming opportunity is the hearing the House Financial Services Committee announced to look into the proposed SunTrust/BB&T merger being reviewed by the hobbled FDIC.

In the long run, Democrats running for president must decide whether or not to return to bipartisan norms of the past as if they have continued uninterrupted. Blithely forgetting the current slow-walking of minority agency appointments, rather than applying consequences to Republicans for Trump and McConnell’s partisan undermining of independent agencies, would only encourage more such extreme actions by Republicans in the future.

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