by John Yoo
According to Brownlow, the President's political responsibilities did not match his formal authorities. "While he now has popular responsibility for this direction," the committee reported, "he is not equipped with adequate legal authority or administrative machinery to enable him to exercise it."61 Brownlow and FDR, who approved the report, held the usual concern that the administrative state was wasteful, redundant, and contradictory, but more importantly, they worried that it would become so independent as to lose touch with the people. The administrative state suffered from a democracy deficit.
The Brownlow Committee concluded that Congress must give the President more management resources, while keeping the chief executive at the center of decision-making. It advised that to make "our Government an up-to-date, efficient, and effective instrument for carrying out the will of the Nation," presidential control must be enhanced. It recommended the creation of a new entity, the Executive Office of the President (which would house the Bureau of the Budget), six new White House assistants to the President, centralization of the government's budgets and planning, and the merger of independent agencies into the cabinet departments. Brownlow's report did not call for a professional secretariat that would supervise the activities of the government, as existed in Great Britain. Rather, the new assistants to the President and the Bureau of the Budget would provide information to the President and carry out his orders, with Roosevelt still making all critical policy decisions.62 By centralizing the administrative state under the Presidency, it would become directly accountable to Congress and the American people. "Strong executive leadership is essential to democratic government today," the report concluded. "Our choice is not between power and no power, but between responsible but capable popular government and irresponsible autocracy."63
FDR had the report's recommendations distilled into a bill he presented to the congressional leadership in January 1937. In a four-hour presentation, FDR personally laid out the plan and declared: "The President's task has become impossible for me or any other man. A man in this position will not be able to survive White House service unless it is simplified. I need executive assistants with a 'passion for anonymity' to be my legs."64 Even though the 75th Congress began with a two-thirds Democratic majority, it was wary of FDR's plans and less than thrilled at the prospect of greater presidential influence over the New Deal state. Roosevelt's plan undermined the benefits to Congress of delegation, because it would weaken Congress's influence over agency decisions while expanding the President's authority over what was essentially lawmaking.
Brownlow's report landed before Congress at the same time as FDR's court-packing plan. While the two plans addressed different problems, they both fed fears of presidential aggrandizement at the expense of the other branches. Key congressional leaders had not been consulted or briefed on the reorganization plan, which they proceeded to attack as another step toward despotism, or a power grab by the university intellectuals who no doubt would run the new agencies, all at a time when totalitarianism was raising its ugly head in Europe. In 1938, the bill failed in the House and was replaced by a more modest bill that gave FDR a limited ability to reorganize government.65 Under that authority, FDR still managed to locate the Bureau of the Budget within a new Executive Office of the President. As the Office of Management and Budget, it today exercises central review over the economic costs and benefits of all federal regulation, one of the President's most powerful tools for rationalizing the activities of the administrative state.66
FDR also expanded the resources within the White House, an institution now separate from the Executive Office of the President, which enabled him to gain more information and control over the cabinet agencies. Still, the independent agencies remained outside the cabinet departments. FDR never successfully established any single entity to coordinate the activities of the entire administrative state, and his failed bill demonstrates the enduring constitutional checks on the Presidency. Only Congress could pass the laws needed to reorganize the cabinet departments, reshape the jurisdiction and structure of the independent agencies, and provide the funds and positions in a new, revitalized White House.67
While FDR suffered defeats at the hands of Congress, he continued to claim and exercise inherent executive authority that went beyond mere control of personnel. He signed statements to object to riders inserted into needed spending bills, which he believed to be unconstitutional. Congress, for example, attempted to force the President to fire three bureaucrats it believed were "subversives" by specifically barring any federal funds to pay their salaries. Roosevelt signed the bill but objected to its unconstitutional end run around the President's power over the removal of executive branch officials. Ultimately, the officials left within months, but they sued for their back pay all the way to the Supreme Court, which agreed that Congress had violated the Constitution.68
President Roosevelt also followed Lincoln's example in using his executive power to fight racial discrimination. Although Lincoln had relied on his power as Commander-in-Chief to free the slaves, the Southern states imposed racial segregation in the years after the Civil War, ultimately with the approval of the Supreme Court.69While FDR did not take segregation head on, he issued an executive order in 1941 to prohibit racial discrimination in employment on federal defense contracts.70 Roosevelt had no statutory authority to order the federal government to provide fair treatment in employment to all, regardless of race. He could rely only upon his constitutional authority as President to oversee the management of federal programs. Once war began, President Roosevelt could clarify that his orders were taken under his power as both Chief Executive and Commander-in-Chief in wartime.71 FDR's orders would not be the first, nor the last, time that the cause of racial equality would depend on a broad understanding of presidential power.
The New Deal depended upon broad theories of the Presidency and the role of the federal government in national life. What remains less clear is whether FDR's fundamental reorientation of the government into a positive, active instrument of national policy was worthwhile. Contemporary critics of the modern Presidency question whether Chief Executives, acting alone, have led the nation into disastrous wars. We need also ask, but rarely do, whether the expansion of executive power at home has benefited the nation. To the extent we debate the desirability of the administrative state, most American scholars today bemoan the fact that the New Deal did not go far enough. They argue that the New Deal failed because it did not achieve a full-fledged European welfare state, or that FDR's coalition fragmented and failed to follow through on the promise of liberal reform.72 These critics, who usually are those most likely to criticize the President in foreign affairs, cry out for more executive power domestically.
Vesting the President with more authority to control the government's regulation of the economy may make sense during an emergency, but it did not work in solving the Great Depression. Economists recognize today that the New Deal neither put an end to high rates of unemployment nor restored consistent economic growth. FDR's monetary and fiscal policy often pursued the opposite of what was needed, and full employment would return only with American rearmament in the first years of World War II. Other New Deal policies were counterproductive, such as allowing industry to set production quotas, reduce production to raise prices, and restrict employment by raising minimum wages. Economists similarly doubt whether the creation of national regulation of the securities markets and other industries contributed to the eventual economic recovery, even though it was certainly valuable for postwar prosperity. If, as Milton Friedman argues, the Great Depression would have proven to be only a normal recession with some deft monetary policy from the Federal Reserve, it bears asking whether the permanent bureaucracy was needed at all.
Decades later, American Presidents would campaign against the excessive regulation set in place by the New Deal. The administrative state we have today failed to end the Great Depression. Was the administrative state worth the price? There is little doubt
that the explosion in the size and power of the administrative state has transformed the nature of American politics.
The federal government has dramatically expanded the scope of regulation to include not just national economic activity, such as workplace conditions and minimum wages and hours, but also the environment and endangered species, educational standards, state and local corruption, consumer product safety, communications technology and ownership, illegal narcotics and gun crimes, and corporate governance. It has produced less deliberation in Congress, which now delegates sweeping powers to the agencies, and has placed the initial authority to issue federal law affecting private individuals in administrative agencies. Those agencies are not directly accountable to the people through elections, except for the thin layer of presidential appointees at the very top. Special-interest groups have come to play a significant role in influencing both congressional committees and agencies, gaining economic "rents" for their members at the expense of the broader public.
This is not a plea to return to the laissez-faire capitalism of the 19th-century variety. The administrative state no doubt has produced social benefits, and there are important areas where the greater information and expertise held by the executive agencies improves government policy, but it remains an open question whether the centralization of economic and social regulation in the national government has been, on balance, a success. It is undeniable that the requirement of minimum national standards, most especially in the area of civil rights, was a necessary and long-overdue change. Equality under law should not have been a matter of legislative or executive discretion, but a requirement of the Reconstruction Amendments to the Constitution. National control of other economic and social issues, however, may not have been worth the cost in increased government spending, larger budget deficits, a permanent government apparatus of unprecedented size (at least in the American experience), the rise of interest-group politics, and interference with efficient market mechanisms.
Federal agencies may impose uniform rules, but they may not impose the best rules. In the absence of broad national regulation, states could enact a diversity of policies on issues such as the economy, the environment, education, crime, and social policy. People could vote with their feet by moving to states that adopt their preferred package of policies, while experimentation could identify the most effective solutions to economic and social problems. The New Deal's concentration of regulatory authority in Washington, D.C., sapped the vitality of the states, whose powers are only a pale imitation of those they held in the 19th century.73 FDR certainly deserves credit for restoring Americans' optimism and faith in government, and for alleviating the suffering inflicted by the Depression, but it remains doubtful whether the great wrenching in the fabric of our federal system of government and the expansion in the President's constitutional powers in the domestic realm can be justified by any limited advance in triggering a recovery. Despite its revolution in domestic presidential power and government structure, the New Deal appears to have had little impact on ending the worst economic collapse in American history.
THE GATHERING STORM
FDR'S CLAIM TO GREATNESS lies not in the New Deal, but his defeat of one of the greatest external threats our nation has faced, fascist Germany and Japan. FDR exercised farsighted vision in preparing the nation for a necessary war unwanted by a large minority, and arguably a majority, of Congress and the American people. In the process, the President skirted, stretched, and broke a series of neutrality laws designed to prevent American entry into World War II. Sometimes he went to Congress and the American people to seek support for his actions, sometimes he did not, but throughout the lead-up to war, FDR set national security policy within the executive branch.74
Debate has raged for decades over whether the Japanese attack on Pearl Harbor was a surprise, or whether FDR or the American government had advance knowledge of the attack. Some have suspected that FDR believed that the only way to rouse the American people to war was for the United States to be attacked first. In this respect, FDR had the same instincts as Lincoln. The conventional wisdom today attributes more of the blame for Pearl Harbor to incompetence by the field commanders and complacency in Washington, and has put to rest the idea that FDR actually knew that the Japanese would attack Pearl Harbor.75
Recent scholarly work suggests that FDR managed events to maneuver the Japanese into a corner, with a strong possibility that the Japanese would attack American interests somewhere in the Pacific, most likely the Philippines. Roosevelt's imposition of an arms, steel, and oil embargo against the Japanese Empire was designed to force Tokyo to either withdraw from China or attack American, British, and Dutch possessions in Asia for natural resources.76 FDR pressed Japan in order to bring the United States to bear against the greater threat of Germany.77 FDR could not have walked the United States to the brink of war without a broad understanding of the President's constitutional powers and the willingness to exercise them.
Roosevelt had laid claim to sweeping executive authority in foreign affairs even before war with Germany and Japan looked certain. One assist came from the hands of an unlikely source: Justice Sutherland. While Sutherland believed the New Deal state unconstitutionally trampled on the natural rights of individuals, as Hadley Arkes has argued, he still strongly supported presidential power in foreign affairs.78 This became clear in the case United States v. Curtiss-Wright Export Corporation.79
In 1934, Congress had delegated to the President the authority to cut off all U.S. arms sales to Bolivia and Paraguay, which were fighting a nasty border war, if he found the ban would advance peace in the region. FDR proclaimed an arms embargo in effect on the same day that Congress passed the law, and the next day the Justice Department prosecuted four executives of the Curtiss-Wright Export Corporation for trying to sell 15 machine guns to Bolivia. Curtiss-Wright, which traced its roots to the Wright brothers, would supply the engines for the DC-3 air transport and the B-17 Flying Fortress and build the P-40 fighter.80 Taking its case all the way to the Supreme Court, the company argued that the law had delegated unconstitutional authority over international commerce to the President. If Congress wanted to impose an arms embargo, it would have to do it itself, not just hand the authority to FDR.
In a remarkable and controversial opinion, Justice Sutherland declared that the constitutional standards that ruled the government's actions domestically did not apply in the same way to foreign affairs. The Constitution's careful limitation of the national government's powers, so as to preserve the general authority of the states, did not extend beyond the water's edge. In the arena of foreign affairs, Sutherland maintained, the American Revolution had directly transferred the full powers of national sovereignty from Great Britain to the Union. "The powers to declare and wage war, to conclude peace, to make treaties, to maintain diplomatic relations with other sovereignties," Sutherland wrote, "if they had never been mentioned in the Constitution, would have vested in the federal government as necessary concomitants of nationality."81 In words that could have been cribbed from Abraham Lincoln, the Court declared that the "Union existed before the Constitution," and therefore the Union could exercise the same powers over war and peace as any other nation.
An argument in favor of exclusive federal power over national security and international relations, however, does not dictate which branch should exercise it. Sutherland located that authority in the President because of the dangers posed by foreign nations and the executive branch's structural ability to act swiftly and secretly. "In this vast external realm, with its important, complicated, delicate and manifold problems, the President alone has the power to speak or listen as a representative of the nation." Echoing Hamilton and Jefferson, and quoting then-Congressman John Marshall, Sutherland declared, "The President is the sole organ of the nation in its external relations, and its sole representative with foreign nations."
It did not matter that, on the facts of Curtiss-Wright, FDR was acting pursuant to congressional dele
gation. "We are here dealing not alone with an authority vested in the President by an exertion of legislative power, but with such an authority plus the very delicate, plenary and exclusive power of the President," which does not "require as a basis for its exercise an act of Congress." Sutherland found great advantages to the United States in vesting these powers in the executive, rather than the legislature. The President, not Congress, "has the better opportunity of knowing the conditions which prevail in foreign countries, and especially is this true in time of war. He has confidential sources of information."
Another case gave Justice Sutherland the opportunity to deliver a second blessing to FDR's vigorous use of his presidential powers. In 1933, Roosevelt ended American efforts to isolate the Soviet Union and unilaterally recognized its communist government. As part of an executive agreement with the Soviets, the United States took on all rights and claims of the USSR against American citizens, such as those involving the expropriation of property. The federal government sued to recover money and property held by Russians in the United States, which were allegedly owed to the Soviet government. What made the recognition of the Soviet Union so remarkable was that FDR not only had set the policy of the United States and entered into an international agreement on his own, but the government used that agreement to set aside state property and contract rules -- all without any action of Congress or the Senate.
Property owners resisted. Augustus Belmont, a New York City banker, refused to turn over deposits held on behalf of the Petrograd Metal Works after the nationalization of all Russian corporations in 1918. FDR's executive agreement with the Soviets required that legal ownership of the profits be transferred to the United States government. Belmont's estate refused to turn the money over because, it claimed, the property law of New York state protected it.82