Parsing Trump’s Latest Power Grab

Today I want to return to President Trump’s efforts to consolidate executive power, and what that might mean for regulatory compliance and corporate governance if he succeeds. Our latest example worth dissecting: his executive order issued last week to take control of independent government agencies. 

Those agencies include regulators near and dear to compliance professionals’ hearts for decades, such as the Securities and Exchange Commission, the National Labor Relations Board, and the Federal Trade Commission. Under the order Trump signed last week, all those agencies (and many others established by Congress over the years) will now need to work under much tighter oversight from the White House.

For example, within 60 days of the order (which means April 18), all agencies must identify any regulations under their purview that are “unconstitutional regulations and regulations that raise serious constitutional difficulties” or that “impose significant costs upon private parties that are not outweighed by public benefits,” and so on and so forth, presumably as a precursor for Trump and his White House disciples to declare that said regulations will no longer be enforced. 

There’s more. Agencies must now also submit all proposed regulations to the White House for review before those proposed rules can be adopted. The Office of Management and Budget, which serves as the CFO of the executive branch, will now exert authority over agencies’ budget and spending priorities, regardless of the budgets approved by Congress. Agencies must also accept interpretations of the Justice Department and White House on what federal law means. Agency personnel are barred from voicing any other views on the law and regulations, including any guidance those agency officials offer.

Is this power grab illegal? Plenty of people say yes, that Trump’s actions violate congressional statutes meant to keep independent agencies, ya know, independent — a practice that dates back to the late 1800s and that has been upheld by the Supreme Court. 

Then again, it’s no secret that Trump couldn’t care less about statutory authority. He believes that as the elected president, he should have full control of all parts of the executive branch. He’s also betting that this incarnation of the Supreme Court — crammed with partisan hacks and devotees of unchecked executive authority — will side with him and uphold his power grab. 

So What Does This Mean for Compliance?

I’ll admit that when I first heard about this executive order, my immediate response was a simple, “So what?” Like, don’t all agencies try to coordinate their policy agenda and enforcement actions with the president who appointed their leadership? How are Trump’s actions now any different from what prior presidents have done before? 

The more you think about it, however, the more you see how this can all go sideways. 

Trump already knows that the regulatory agencies will march in lockstep with him to do his bidding. The executive order was just Trump demonstrating dominance, pure and simple. He wants everyone to know that he will be dictating policy pronouncements to the agencies. The agencies will not be developing regulatory policy on their own schedule, or have the freedom to carry out enforcement of those policies on their own. All regulatory agency activity will be subordinate to the dictates of the White House. 

Except, Trump doesn’t do thoughtful policy development and even-handed enforcement of the law. He has no inter-agency planning process. He doesn’t bother to invest the time and energy necessary to coordinate his policy objectives. He tweets, and that’s it. He’s all impulse, no strategy and foresight.

So his policy pronouncements will be a reflection of that: tweets at odd hours or improv statements delivered during a random talk with reporters, without any context or understanding. Then he wanders off for another round of golf somewhere, and then does it all over again. 

OK, for better or worse, that’s the leader we chose — but what does that leadership style mean for the regulatory and enforcement regime your company needs to navigate? 

Chaos and Paralysis, Not Order

First, it doesn’t mean we end up with a streamlined regulatory regime, guided by a conservative philosophy of government. It doesn’t even mean we end up with a complicated regulatory environment, like you already read about in those surveys of enterprise risks. Instead we end up with an incoherent regulatory regime, guided by arbitrary governmental decisions. 

That will be the challenge for corporate legal departments and executive management teams trying to understand how to engage with the government. You might have a contract with the government; Trump might wake up one day (or more likely, stay up late some night) and then tweet that he’s not going to honor it. Or you might have a product or service you offer to consumers; Trump decides he doesn’t like it, and orders regulatory agencies to strangle the industry. 

Then he’ll tweet something else the next day, quite possibly contradicting something his Administration said the day before. Just look at this nonsense with Elon Musk and the five bullet points government employees are supposed to provide to their bosses; three days into that zaniness, and the Administration still can’t figure out what it wants to do.

Second, be prepared for regulatory agencies to achieve less progress on, well, anything; because they’ll be afraid of running afoul of the Dear Leader. Indeed, the whole point of the executive order was to centralize oversight and control of the independent agencies through one point (the White House), which is led by a fickle and arbitrary leader (Trump). That’s not a model designed for clarity and efficiency; it’s a model designed for control and fear. 

This is something we see in authoritarian regimes all the time, and I suspect compliance officers who’ve visited such places have seen this directly. Mid-level bureaucrats don’t do anything, because they’re afraid they might do the wrong thing that draws the ire of the Dear Leader. Better to do nothing at all and keep your job, than to do something and perhaps get fired. 

That’s the world Trump wants to bring about. You can see why he wants it — the king always likes the powers of royalty, after all — but it does no favors for the rest of us. Plan accordingly.