Wharton's Brian Feinstein discusses his research on the strength of Congress's oversight powers.

Over the past several decades, policymaking power has flowed from Congress to the executive branch, as presidents and agency heads have demonstrated an increased willingness to exercise unilateral powers to bypass a Congress that seems to be perpetually gridlocked. This development arguably has weakened the role of Congress in governance. New research from Brian D. Feinstein, Wharton professor of legal studies and business ethics, challenges that narrative by exploring the strength of Congress’s oversight powers. He spoke to Knowledge at Wharton about his paper, “Congress in the Administrative State,” which also offers a course of corrective action for policymakers.

 An edited transcript of the conversation follows.

Knowledge at Wharton: One thing people on both sides of the aisle probably would agree on is that the role of Congress is in a decline, that they’re not accomplishing much these days. But you present an alternative view in this paper. Can you explain that?

Brian D. Feinstein: I wouldn’t take issue too much with the notion that Congress is in a decline overall. I think the most recent poll that I saw had public approval of Congress at around 13%. In a lot of important ways, Congress isn’t using its powers to the fullest extent that it could. There’s gridlock, a feeling of partisan bickering and struggles with some routine tasks like passing on-time budgets and debt ceiling increases.

But my research shows that that’s only part of the story. Congress actually remains quite vigorous in several other often-overlooked ways, including its oversight activities. Congress, the House and Senate combined, hold around 300 oversight hearings each year. These are hearings where a congressional committee will haul in an agency official, say the EPA administrator, … and subject that person to aggressive questioning regarding a decision that the committee disapproves of. Some of these hearings are high profile — we have the Watergate hearings or Iran/Contra or Benghazi in the public mind. But most of these don’t make headlines. They’re not really opportunities for publicity-seeking by legislators; these are efforts to change regulatory agencies’ priorities and practices, usually in small-ball types of ways.

The motivation for the paper is that when we assess Congress’s powers and effectiveness, we shouldn’t only look at Congress’s direct formal powers, like passing laws. We also ought to look at Congress’s soft powers, like oversight. What I find when I empirically assess the effectiveness of oversight is that, under certain circumstances, it can be remarkably effective.

“In a lot of important ways, Congress isn’t using its powers to the fullest extent that it could.”

Knowledge at Wharton: What are these circumstances?

Feinstein: When you have a situation where the committee’s preferences are aligned with those of Congress overall, then you see a lot more oversight activity. For instance, if you have a committee that’s a real outlier, that has preferences that are very different than Congress’s preferences, that committee doesn’t necessarily want to hold a hearing because it could awaken a slumbering Congress to make legislative changes in a way that the committee disfavors. But where you have the committee and Congress having preferences that are consonant, you have a lot more oversight happening.

Knowledge at Wharton: When you say “preferences,” is that defined by which political party is in power?

Feinstein: To measure preferences, I look at a measure based on roll call votes. It’s this complicated algorithm that assigns each member of Congress a score based on how liberal or conservative they are on a two-point scale. You do see pretty big jumps in the median member of Congress’s score on that ideology measure based on which party is in power. But even under circumstances where you have unified government, say as now when the Republicans control Congress and the White House, you do still see a lot of oversight occurring.

Knowledge at Wharton: How can Congress use this oversight power more effectively than it is right now?

Feinstein: Congress should consider two changes. The first is a change to Congress’s internal institutional design. Where you have this disjuncture between the committee’s preferences and Congress’s overall preferences, you see less oversight. So, Congress could create committees that are representative of floor preferences. Instead of having a bunch of senators from farm states on the Agriculture Committee, have that committee have diverse representation. That makes it more likely that the committee is going to oversee the Department of Agriculture effectively.

Congress could also consider some measures in the design of administrative agencies that would promote oversight. Give their inspector generals greater powers. These inspector generals are independent offices that are nested within administrative agencies and are charged with ferreting out corruption in those agencies. If they had greater power, if they had higher budgets, they could do more. Congress could also consider increased whistle-blower protections so civil servants can report wrongdoing, get that out to Congress and Congress would take action. Enhancing protections, enhancing inspector generals, maybe transitioning some single-member agencies to a multimember structure so that at least one of the commissioners would have an incentive to pull a fire alarm if he or she sees wrongdoing — those sorts of design changes within agencies can really do a lot to motivate congressional oversight.

Knowledge at Wharton: Where do outside influences come into play? For example, you talked about committee composition. There are people from farm states who really want to be on a committee that oversees the USDA, whereas someone representing an urban area may not be interested in that. Or there may be industries that really want to fight against oversight. How does that have an effect?

“Where you have this disjuncture between the committee’s preferences and Congress’s overall preferences, you see less oversight.”

Feinstein: I think there is a trade-off here, and you’re right to acknowledge it. If you have committees that are more representative, the average committee member might be less interested in conducting that oversight work. If you have committees that are more expert and more interested in pursuing oversight, they’re less likely to be representative of the floor’s preferences. This is an issue that’s common in principal agent situations. It’s an expertise/representative trade-off.

I think if you had representative committees, you might see some shirking by some legislators who are uninterested in conducting oversight. But I think overall you would still see a lot of effort. If you’re a member of Congress from an urban area who got placed on the agriculture committee, you might be pretty dejected by that. But I think your second thought would be, “Hey, if I’m going to have any influence at all in this chamber during my time in Congress, I’d better do my homework and learn about agriculture-related issues.”

That’s the experience of Shirley Chisholm, who was a member of Congress in the 1960s and 1970s. She was from Brooklyn. When she got into Congress, the Democratic leadership — mostly Southern, racially conservative Democrats — didn’t like her. They placed her on the agriculture committee, and her first reaction is exactly what I described. She was upset. She thought this had no relation to her district. But over the course of her time in Congress, she became an expert on some of the issues that the agriculture committee has jurisdiction over and really became a leader in those areas. Some of her obituaries mention her leadership on agriculture committee issues. I think that’s the sort of experience where, yes, if you have a more representative committee, maybe the average committee member would have less intrinsic interest in the subject. But I think that can be overcome by this desire to have some influence, and I think that can be a real motivator for members of Congress.

Knowledge at Wharton: I also think that it might give them a fresher perspective because they’re coming at it from that outsider view. They may not feel as influenced about making certain decisions that might anger their constituents.

Feinstein: That’s exactly right. There’s always a potential of capture with these committees. There’s a term that political scientists have, iron triangles, where you have the subcommittee with jurisdiction over an agency, agency officials and interest groups. Those are three groups that, as sides of the triangle, have their own cohesive policy network that doesn’t really allow for outside influence to come in, and that’s something that’s very undemocratic. If you can break up those iron triangles, if you can have people with a fresh perspective or people who aren’t wedded to certain interest groups have an influence in policy, I think the effects of that would be largely positive.

“It could be through oversight hearings that Congress influences agencies to make policy changes in ways that really affect businesses in these regulated industries.”

Knowledge at Wharton: Why is it important for business to understand this role of Congress?

Feinstein: Most businesses have an understanding that they ought to have some knowledge of the law-making process, of what legislators are doing in terms of introducing bills that could affect their industry and trying to influence those bills. Many businesses have knowledge and deep understanding of the regulatory process. Many businesses, though, don’t see oversight as part of the mix.

… It could be through oversight hearings that Congress influences agencies to make policy changes in ways that really affect businesses in these regulated industries. I think it would behoove a lot of firms to take that into account.

Knowledge at Wharton: What would you say to business leaders for whom the terms “oversight” or “regulation” might strike fear into their hearts?

Feinstein: First, it should strike fear no more than the extent to which the prospect of legislation or the prospect of new regulation strikes fear into their hearts. Firms are comfortable, or at least aware, that there can be legislative changes that affect their industry. For better or worse, they lobby around legislation. In some cases, regulation even can help them — for instance, larger firms can benefit from a lot of red tape that can shut out smaller competitors. So my first response is that they should worry about oversight to the same extent that they worry about other forms of policymaking.

Second, sometimes these oversight hearings do involve … executives from the private sector, and I would urge members of the business community to take those hearings seriously. There have been times where executives have come before Congress and seemed arrogant or unprepared, and sometimes that can lead to changes that are adverse to those businesses.

In the aftermath of the financial crisis, the Senate Permanent Subcommittee on Investigations held a series of hearings on mortgage-backed securities. Some of the bank executives who testified seemed to many people to be a little arrogant or a little unprepared or dismissive of the committee. Those hearings ended up being an impetus towards introducing a version of the Volcker Rule that ended up in the Dodd-Frank Act.

I’m not saying that things would have been different if the committee hearing had gone more smoothly for those executives. But it certainly didn’t help that, at a committee hearing charged with ferreting out alleged wrongdoing in banking, a lot of the bank witnesses seemed uninterested. That certainly didn’t help those banks when it was time to introduce the Merkley-Levin Amendment [to the Dodd-Frank Act], which strengthened demarcations between banks’ proprietary trading and their traditional banking activities. So, I would say to really come prepared and be respectful and humble and seek to educate and engage with the committee.

“There have been times where executives have come before Congress and seemed arrogant or unprepared, and sometimes that can lead to changes that are adverse to those businesses.”

Knowledge at Wharton: We’re even seeing this today, where we’ve had a lot of heads of social media companies recently called to hearings to talk about privacy concerns. Those have even been reported widely in the media, so the public has also had a chance to weigh in.

Feinstein: Yeah, I think it’s a great way for democratic accountability to happen where you have public engagement on those issues. If I were the chief executive of a social media company, I would worry not only about the prospect that this would lead to some sort of legislative fix, I would also wonder whether the Federal Trade Commission and the Department of Justice Antitrust Division are watching these hearings and getting a signal about what Congress’s priorities are. And they can act independently based on what they hear in those hearings.

Knowledge at Wharton: What are some future lines for your research?

Feinstein: I’m exploring different ways in which political actors can influence regulatory outcomes. Right now, I’m looking at the composition of multimember commissions, like the Securities and Exchange Commission or the Federal Communications Commission. What I found is that, for most of these commissions’ histories, they’re mostly staffed by former lawyers, D.C. types who became commissioners or board members. But over the past 20 years, there’s been a huge increase in the number of congressional staffers who are now commissioners. On the major commissions, about 40% of their commissioners or board members came from the Hill, were formerly chief counsel to a prominent senator or a policy director on a committee. I’m looking at how that’s changed the functioning of these regulators and how that can influence the eventual regulatory outcomes that they enact and that affect firms.