The Crippling Hold of Old Law

This article originally appeared on WSJ.com on April 1, 2016.

Government is broken. So what do we do about it? Angry voters are placing their hopes in outsider presidential candidates who promise to “make America great again” or lead a “political revolution.”

But new blood in the White House, by itself, is unlikely to fix things. Every president since Jimmy Carter has promised to rein in bureaucratic excess and bring government under control, to no effect: The federal government just steamed ahead. Red tape got thicker, the special-interest spigot stayed open, and new laws got piled onto old ones.

What’s broken is American law—a man-made mountain of outdated statutes and regulations. Bad laws trap daily decisions in legal concrete and are largely responsible for the U.S. government’s clunky ineptitude.

The villain here is Congress—a lazy institution that postures instead of performing its constitutional job to make sure that our laws actually work. All laws have unintended negative consequences, but Congress accepts old programs as if they were immortal. The buildup of federal law since World War II has been massive—about 15-fold. The failure of Congress to adapt old laws to new realities predictably causes public programs to fail in significant ways.

The excessive cost of American health care, for example, is baked into legal mandates that encourage unnecessary care and divert 30% of a health-care dollar to administration. The 1965 law creating Medicare and Medicaid, which mandates fee-for-service reimbursement, has 140,000 reimbursement categories today and requires massive staffing to manage payment for each medical intervention, including giving an aspirin.

In education, compliance requirements keep piling up, diverting school resources to filling out forms and away from teaching students. Almost half the states now have more administrators and support personnel than teachers. One congressional mandate from 1975, to provide special-education services, has mutated into a bureaucratic monster that sops up more than 25% of the total K-12 budget, with little left over for early education or gifted programs.

Why is it so difficult for the U.S. to rebuild its decrepit infrastructure? Because getting permits for a project of any size requires hacking through a jungle of a dozen or more agencies with conflicting legal requirements. Environmental review should take a year, not a decade.

Most laws with budgetary impact eventually become obsolete, but Congress hardly ever reconsiders them. New Deal farm subsidies had outlived their usefulness by 1940 but are still in place, costing taxpayers about $15 billion a year. For any construction project with federal funding, the 1931 Davis-Bacon law sets wages, as matter of law, for every category of worker.

Bringing U.S. law up-to-date would transform our society. Shedding unnecessary subsidies and ineffective regulations would enhance America’s competitiveness. Eliminating unnecessary paperwork and compliance activity would unleash individual initiative for making our schools, hospitals and businesses work better. Getting infrastructure projects going would add more than a million new jobs.

But Congress accepts these old laws as a state of nature. Once Democrats pass a new social program, they take offense at any suggestion to look back, conflating its virtuous purpose with the way it actually works. Republicans don’t talk much about fixing old laws either, except for symbolic votes to repeal Obamacare. Mainly they just try to block new laws and regulations. Statutory overhauls occur so rarely as to be front-page news.

No one alive is making critical choices about managing the public sector. American democracy is largely directed by dead people—past members of Congress and former regulators who wrote all the laws and rules that dictate choices today, whether or not they still make sense.

Why is Congress so incapable of fixing old laws? Blame the founding fathers. To deter legislative overreach, the Constitution makes it hard to enact new laws, but it doesn’t provide a convenient way to fix existing laws. The same onerous process for passing a new law is required to amend or repeal old laws, with one additional hurdle: Existing programs are defended by armies of special interests.

Today it is too much of a political struggle, with too little likelihood of success, for members of Congress to revisit any major policy choice of the past. That’s why Congress can’t get rid of New Deal agricultural subsidies, 75 years after the crisis ended.

This isn’t the first time in history that law has gotten out of hand. Legal complexity tends to breed greater complexity, with paralytic effects. That is what happened with ancient Roman law, with European civil codes of the 18th century, with inconsistent contract laws in American states in the first half of the 20th century, and now with U.S. regulatory law.

The problem has always been solved, even in ancient times, by appointing a small group to propose simplified codes. Especially with our dysfunctional Congress, special commissions have the enormous political advantage of proposing complete new codes—with shared pain and common benefits—while providing legislators the plausible deniability of not themselves getting rid of some special-interest freebie.

History shows that these recodifications can have a transformative effect on society. That is what happened under the simplifying reforms of the Justinian code in Byzantium and the Napoleonic code after the French Revolution. In the U.S., the establishment of the Uniform Commercial Code in the 1950s was an important pillar of the postwar economic boom.

But Congress also needs new structures and new incentives to fix old law.

The best prod would be an amendment to the Constitution imposing a sunset—say, every 10 to 15 years—on all laws and regulations that have a budgetary impact. To prevent Congress from simply extending the law by blanket reauthorization, the amendment should also prohibit reauthorization until there has been a public review and recommendation by an independent commission of citizens.

Programs that are widely considered politically untouchable, such as Medicare and Social Security, are often the ones most in need of modernization—to adjust the age of eligibility for Social Security to account for longer life expectancy, for example, or to migrate public health care away from inefficient fee-for service reimbursement. The political sensitivity of these programs is why a mandatory sunset is essential; it would prevent Congress from continuing to kick the can down the road.

The internal rules of Congress must also be overhauled. Streamlined deliberation should be encouraged by making committee structures more coherent, and rules should be changed to let committees become mini-legislatures, with fewer procedural roadblocks, so that legislators can focus on keeping existing programs up-to-date.

Fixing broken government is already a central theme of this presidential campaign. It is what voters want and what our nation needs. A president who ran on a platform of clearing out obsolete law would have a mandate hard for Congress to ignore.

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