The Progressive Playbook for Government Overreach

The U.S. has witnessed a daunting explosion of federal regulatory activity during the presidency of Barack Obama. To date, the administration has finalized nearly 28,000 rules. In the process, it generated $800 billion in new burden costs and added more than 509 million new hours of paperwork (at least for those rules that were quantified). Government-wide paperwork hours are now at an all-time high.

The expansion of the size and role of the federal government appears at odds with the long-standing American tradition of relying on the private sector. Even worse, this regulatory apparatus has become counterproductive, as the costs of regulations now outweigh the benefits.

In theory, one might imagine that there are some sectors of the economy where a stronger government presence is merited, for example, those in which the private sector fails. By the same token, we should expect the government’s reach to be scaled back in other areas where the private sector is succeeding. In reality however, the federal government has expanded just about everywhere. This is not because the private sector is “failing” everywhere, but, rather, because, in many cases, it was never given the chance to succeed in the first place. 

Consider just two examples.

First is the Department of Labor’s recent overtime rule, which expands the number of salaried workers covered by federal overtime standards. Why should the Department of Labor be dictating pay rates to begin with? Progressives answer that growth in labor productivity is outpacing growth in compensation, suggesting that the labor market is broken. If so, there may be good reason to expand overtime pay coverage as well as to raise the minimum wage, mandate paid family leave, and increase union membership.

Unfortunately, however, the assertion is based on faulty statistical analyses. If one does an apples-to-apples comparison and uses a consistent inflation-adjustment, real compensation has grown closely with labor productivity over the past fifty years. 

The progressive playbook is simple: “prove” that private labor markets don’t work — “the economy is rigged” — and then turn to intrusive government interference to “solve” the problem.

A similar episode occurred at the Federal Communications Commission (FCC). It is well known that Internet-based businesses have been a dynamic source of innovation, employment, and growth. Nevertheless, the FCC has chosen to regulate both the business and the residential Internet using an outdated and meddlesome regulatory apparatus laid out in the 1934 Communications Act. “Special access services” — data and voice services sold to businesses — had been deregulated in 1999. But now, as competitive fiber and cable providers have entered the market, the FCC is tightening the antiquated regulatory noose on this sector, too, thereby ignoring and endangering the potential advantages of innovation.

How did the Obama administration accomplish this U-turn on Internet regulation? The first step was to assert that the current system was failing. President Obama’s statement on the subject is a useful compendium of the kinds of straw men typically set up by progressives.

For example, he urges regulators to “keep the Internet free and open.” The use of “free” here is crucial. While most people can agree that the Internet should be a space of creative innovation, innovation does come at a cost. Progressives want that freedom to innovate to come at no cost. Hence the need for regulations to guarantee this “freedom.”

This notion of freedom is again deployed in the claim that there should be “no toll roads on the information highway.” It follows from this that there cannot be any specific charges for specific services, unlike a toll that covers the use of a particular road. So charging differentially for superior service — a standard business practice that’s important to data service for businesses — is summarily disqualified on the progressive Internet. 

Finally, we are told that the real problem is not with individuals but, rather, with companies. Something needs to be done to “to safeguard the incredible resource the Internet has become for all of us.” The solution? Strong regulation of both the business models and pricing of Internet-related companies. So the FCC, which began with network neutrality, has now shifted focus to the special access market. In the process, it seeks to impose a one-size-fits all approach inconsistent with basic business practice.

As these examples suggest, the regulatory onslaught of the past 7 years is hardly a coincidence but, rather, the inevitable outcome of a progressive playbook that systemically builds a biased case for government overreach.