• Allon Advocacy

Why 2023 Is Likely To Be Dominated By Regulations

An increasing likelihood of divided government in Washington next year likely means busier regulators -- and significantly more red tape.

The nation’s capital is currently a one-party town — at least in terms of control of the legislative and executive branch – with Democrats in control of the White House, the Senate, and the House of Representatives. But history tells us that probably won’t be the case at this time next year after the midterm elections. Indeed, oddsmakers give the GOP a 70 percent chance of taking control of both the House and Senate in this year’s midterm elections.

While we know President Joe Biden and Democrats will do all that they can to keep Republicans from winning majorities in Congress, administration officials also are almost certainly preparing for this increasingly likely outcome.

What will the White House focus on if there is divided government in 2023 and 2024? We’ll take a look this week, but first let’s examine how past Democratic administrations approached policymaking after losing control of Congress.

1994: Clinton Administration Initially Focuses on Regulatory Actions, Foreign Policy

As readers are almost certainly aware, the party that holds the White House traditionally loses seats in a president’s first midterm election cycle. And President Bill Clinton was one of history’s biggest midterm election losers. In 1994, two years into President Clinton’s first term, Democrats lost 54 House seats and eight Senate seats.

With Washington divided, the first-term president advanced his vision in other ways. In fact, a Clinton White House archive of major actions shows no major legislative accomplishments in 1995, but highlights significant regulatory, trade, and foreign policy actions.

In 1995, President Clinton:

  • Issued $20 billion in emergency loans to Mexico to stabilize the country’s financial markets. Mexico repaid the loans — with interest — three years ahead of schedule and U.S. taxpayers gained nearly $580 million from the deal.

  • Issued executive orders stepping up federal efforts to collect child support payments and preventing the federal government from contracting with businesses that hire permanent replacements for employees engaging in lawful strikes.

  • Signed a directive clarifying that students have a constitutional right to express their religious views, pray, and discuss religion at school in a non-disruptive and non-coercive manner and that teachers can discuss the importance of religion in art, literature, and history.

  • Proposed the first-ever comprehensive plan to reduce youth smoking. That initiative took effect when new Food and Drug Administration regulations were announced in August 1996.

  • Helped resolve the Bosnian civil war with a treaty that ended the four-year conflict.

As The New York Times explained at the time, President Clinton also vetoed Republicans’ budget proposal. Republicans responded by refusing to pass federal appropriations bills, leading to not one, but two government shutdowns. Despite the stalemate and the lack of legislative accomplishments, President Clinton ended 1995 in a stronger position than he was after the disastrous 1994 midterm elections. According to a Baltimore Sun in early 1996, the former president’s approval ratings went from the low 40s (only slightly higher than President Biden’s average rating right now) to the high 50s.

2010: President Obama Says “We Can’t Wait” Democrats also suffered brutal electoral losses in 2010 after President Barack Obama’s first two years in office. The 2010 midterm elections saw the Democrats lose 63 seats in the House and six in the Senate.

As a result, in 2011 the White House got a little fiercer in its efforts to use regulations and executive orders to enact the Obama agenda into law. That October, the president launched “We Can’t Wait,” a series of executive actions the White House said would help the middle class. The list of actions included:

  • Expediting major transit and energy projects.

  • Cracking down on certain institutions of higher education that the administration said preyed on veterans.

  • Enacting new rules to make it easier to repay student loans.

  • Making refinancing easier for Americans who had government-backed mortgages.

  • Introducing new rules to help responsible borrowers with little or no home equity to take advantage of current low mortgage rates.

  • Extending overtime and minimum wage protections.

The go-it-alone strategy lasted well into President Obama’s second term. In his 2014 State of the Union address, the president outlined his “pen and phone” strategy. Under this initiative, the president said he would not wait for Congress to send him legislation to sign. Instead, he’d use his pen to write executive orders and his phone to try to drive policy change wherever he could.

According to The Associated Press, in 2014 President Obama signed executive orders and directives to increase the minimum wage for workers on new federal contracts, increase fuel efficiency standards, and strengthen overtime pay protections. (At the time, Neera Tanden, then the president of a left-leaning think tank called the Center for American Progress, said workplace rules are one area where “you can have substantial policy change without legislation.” Tanden is now a senior advisor to President Biden.)

What about the “phone” part of the equation? As The Washington Monthly explained, President Obama used his powers of persuasion to push for change at the local and state level. As a result, “at least six major cities — Chicago, Philadelphia, Pittsburgh, Seattle, Tacoma, Wash., and Washington, D.C. —passed paid sick leave laws,” the magazine noted. Additionally, 17 states and six major cities increased their minimum wages.

Unlike President Clinton, President Obama was not politically rewarded for his efforts. Democrats lost 13 additional House seats in the 2014 midterm elections — along with nine in the Senate.

President Biden Getting His Pen Ready Now

As Vox explained in November 2020 (when it was still unclear whether or not Democrats would control the Senate) there are plenty of issues that a White House can tackle without the president’s party holding control of one or both houses of Congress. Vox suggested the Biden administration concentrate on environmental regulations, forgiving student debt, expanding immigration, and “cracking down on Wall Street.”

To some extent, the Biden administration has taken all of those steps even with Congress in hand. But if the party loses control of the House and/or Senate, we likely will see more of that. In fact, in a December 2021 White House blog post, Sharon Block, who is associate administrator for OIRA (Office of Information and Regulatory Affairs, the agency that oversees federal rulemaking), said, “This Administration is using every lever at its disposal — including regulatory action — to deliver on the President’s priorities.”

The White House released its biannual regulatory agenda the same month that blog post appeared. That agenda reported that 68 departments, agencies, and commissions have 3,777 regulations in the pipeline. Of these, 1,163 are deemed “significant.” The president’s top agenda items include regulating cryptocurrency and financial technology, boosting competition by strengthening antitrust rules, and addressing climate change through limits on emissions and restriction energy production.

True to the Center for American Progress’ advice during the Obama administration, the Biden administration also will try to reform workforce laws through regulation. In a statement issued after the agenda was released, U.S. Department of Labor (DOL) officials said it “is continuing our efforts to empower workers morning, noon and night. Through a careful process and public engagement, these regulatory actions will advance our mission to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States.”

Are there any areas where a Biden White House and a Republican Congress might be able to work together? According to Politico, GOP leaders don’t think there is much. Trade was the only policy issue Senate Minority Leader Mitch McConnell (R-Ky.) could think of, for example. And mark your calendars: if Republicans do take control of one or both chambers of Congress this November, they and the White House will have to work together early next year to raise the debt ceiling and stave off a catastrophic default of government debt.

Compromise Used To Be Easier

According to a 2017 paper in Social Science History, divided government has worked well throughout the course of American history, even resulting in significant legislation.

In a review of bills enacted from 1789 to 2010, researchers found divided government produced 8.12 significant bills per Congress on average. Unified governments produced only a slightly higher average: 8.66 significant bills. When examining total legislation, researchers found divided government actually corresponded to a slightly higher level of legislation, 414.16 bills enacted into law on average, than unified government (411.88 bills).

A 2000 study examining legislation from 1945 to 1994 was a little less favorable to divided government, but still, the results were impressive. Divided government did not impact the passage of less significant pieces of legislation and it reduced the likelihood of passage of so-called “landmark” legislation by only a third.

There also is this: while 1995 was not a productive year for the Democratic White House and the GOP Congress, as The Washington Post has made clear, the two parties worked together during President Clinton’s second term to produce significant pieces of legislation, including major tax and spending bills. And during the Obama administration, CQ Almanac called 2015 — the third year of President Obama’s second term — a “productive year” with passage of key health care legislation, a major highway bill, and the reauthorization of important trade rules.

If Republicans are successful this November, we expect Washington in 2023 to look a lot like Washington in 1995 and 2011 — more regulation than legislation. But that doesn’t mean that the two parties won’t ultimately be able to work together to enact significant legislation in the years to come.

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