1Delegation and Bureaucratic Policymaking with Competing Oversight♣ Alan E. Wiseman Department of Political Science The Ohio State University 2140 Derby Hall 154 N. Oval Mall Columbus, OH 43210-1373 [email protected] Abstract I develop a formal model of bureaucratic policymaking in which a legislature delegates authority to a bureaucratic agency that is subject to ex post review by an executive with diverse preferences. Equilibrium results identify conditions under which executive clearance of agency rulemaking can be pareto optimal for both branches of government, in comparison to legislative delegation without the prospect for executive review. This joint-desirability of executive review is more likely when the Legislature and Executive branches have relatively aligned preferences, and also when the Legislature and bureaucratic agency have relatively diverse preferences. Results also indicate that the impact of executive review on social welfare varies depending on the relative effectiveness of the executive’s oversight of agency policymaking. Such results offer insight for why mediating lawmaking institutions such as the Office of Information and Regulatory Analysis (OIRA) continue to survive in a separation of powers system despite their potential to advantage one branch of government at the expense of the other. ♣ The author thanks Steve Balla, Larry Baum, Jan Box-Steffensmeier, Ethan Bueno de Mesquita, Sean Gailmard, Stuart Jordan, Keith Krehbiel, Dean Lacy, David Lewis, Forrest Maltzman, Kathleen McGraw, Adam Meirowitz, Matthew Stephenson, Michael Ting, Craig Volden, Jack Wright, and seminar participants in the Ohio State Department of Political Science RAP workshop for helpful comments on this project.2The Office of Management and Budget is probably the most powerful agency in the federal government. Because of the Office’s carefully maintained low profile, however, the public is generally unaware of OMB’s influence on federal policy. A wide array of powers has made OMB an influential, near omnipresent force within the executive branch. (Olson 1984, 5) The word most often used to describe the office to which Professor Graham has been nominated—the Office of Information and Regulatory Affairs—is “obscure”. Few are aware of OIRA, or of just how powerful the position of “regulatory czar” really is. But this office—this senior White House staff position—exercises enormous authority over every major federal regulation that the government has under consideration. --Prepared Statement of Senator Richard Durbin (D-IL) at confirmation hearing of John D. Graham to be the Administrator of the Office of Information and Regulatory Affairs at the Office of Management and Budget. May 17, 2001. Introduction One of the most fundamental and enduring conflicts in American politics is that between the legislative and executive branches of national government. With the growth of the American administrative state over the past 200 years, this conflict has increasingly been played out in the federal bureaucracy. Scholars who study the bureaucracy in relation to Congress (e.g., McCubbins, Noll, and Weingast 1987, 1989; Weingast and Moran 1983) and the presidency (e.g., Moe 1985, 1989) typically focus on how one branch or the other controls the bureaucracy and its policy outputs. Implicit in this scholarship is the notion that whichever branch controls the bureaucracy gains an advantage by imposing its policy interests on the other. Bureaucratic policymaking, in other words, is seen as an extension of a zero-sum contest, in that what one branch gains the other loses. In contrast to this approach, I argue that bureaucratic agencies can be understood and explained better by viewing them as rationally designed institutions that allow both branches of government to efficiently represent different and competing constituency interests. Bureaucracy, in other words, is better conceptualized as the result of a positive-sum game between the3legislative and executive branches. This a perspective has very different implications for our understanding of the creation, evolution, and survival of bureaucratic agencies. Under the zero-sum approach, evidence of control by one branch implies defeat and failure by the other, which in turn implies that the losing branch will attempt to reorganize the bureaucracy. The positive-sum approach, in contrast, implies that bureaucratic organizations, because they can efficiently serve the competing interests of both branches, will be far more stable and enduring. This paper advances this argument by developing a formal model of agency policymaking given competing interests between a legislative and an executive branch. In advancing the implications of this theory, I focus on a substantively important agency in the federal government: the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB). Since 1981, all executive (non-independent) agencies have been required to receive OIRA approval for their rules before they are published in the Federal Register. In performing regulatory review, OIRA has ostensibly provided the President with substantial ex post control over agency policymaking. Scholars who study OIRA agree that it is very important to the policy process, and that, by design, the agency favors the President over Congress. Some scholars have gone so far as to argue that Congress would prefer to abolish OIRA, and does not solely because it cannot overcome the collective action problems that are symptomatic of congressional policymaking. The theory developed below, however, offers a rationale for why an apparently coercive institution such as OIRA maintains political insulation and its integrity in the American separation of powers system, by efficiently representing the competing interests of the Legislature and the Executive simultaneously. In the model, policymaking occurs in an environment where actors are uncertain, ex ante, about whether particular policy choices will prove salient to their interests, ex post. The4potential for OIRA intervention strategically influences the policy choices of administrative agencies, so that they propose policies that deviate from their favored policies and reflect the interests of the legislature, rather than the executive--even if OIRA chooses not to intervene after a proposal is made. Hence, cases can arise wherein