Saturday, October 17, 2015

What does Ex-Im's zombie status say about bureaucracy?

In the scheme of things the row over the U.S. Export-Import Bank is small-ball. But its relative visibility provides an interesting glimpse into the machinery of federal bureaucracy, and the near-impossibility of totally winding down governmental institutions once they become entrenched.

The Ex-Im Bank lost congressional authorization in August, theoretically requiring it to cease operations and disappear. In reality, the issue continues to be a focus of partisan haggling, with a high likelihood that its funding and authority will return as part of wider budget negotiations. What's interesting is what happens in the meantime.

The bank's website has a pointed letter from the administrator articulating a position aligned with the interests of its employees and beneficiaries--namely that it does good work and its de-authorization is a temporary 'lapse'.

Two things stand out here. One is the uncomfortable fact of legacy commitments. Although the bank can't conduct new business, it has existing deals that require oversight and staff. This is a great example of government's institutional ratchet effect: even without funding, how long would it take to completely wrap-up and shutter for good? 10 years? 20? This bureaucratic overhang means federal employees and stakeholders persist, enabling continued lobbying and agency drift.

Continued staffing leads to the second point: what happens to the employees whose positions are no longer required given the bank's zombie status? Do they find new jobs? If the bank is reauthorized in a few months, do they return, or must a new round of hiring occur? These circumstances clearly show how the interaction of politics and bureaucracy degrade institutional dynamism, capacity and probably worker morale.

In general these efficiency issues are a necessary and acceptable byproduct of government operation, but there do exist some good ideas for improvement. Sunset requirements for new regulations, periodic regulatory jubilees, and a regulatory lookback approach to cost benefit analysis (initiated by OIRA under Cass Sunstein's tenure as administrator) would all be positive steps.

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