Jimmy Carter's surprising deregulation legacy—and why it still matters

In the Wall Street JournalFormer Texas Senator Phil Gramm gave a compelling account of how President Jimmy Carter – who turns 100 on October 1 – has not received the credit he deserves for the economic deregulation of the 1970s and early 1980s. Outlining the transformative legislative efforts of this period, Gramm wrote:

Without Mr. Carter's deregulation of airlines, trucking, railroads, energy and communications, America may not have been able to diversify its economy and lead the world in high-tech development than our postwar dominance of manufacturing Ended at the end of the 1970s. Carter deregulation helped fuel the Reagan economic renaissance and continues to enable the powerful innovations that are reshaping our world.

Carter also deserves credit for promoting the concept of a regulatory budget — an idea often associated with Republicans today but which Carter pioneered during his presidency.

A new era of expanding regulation

While Carter's era saw a significant decline in economic regulation, today's policymakers appear unable to put together a similarly sustained program to reduce government spending, subsidies, and the sprawling regulatory state. In fact, we have seen a return and even an expansion of the regulatory framework that Carter dismantled with the increase in economic, technological, and social policy regulation.

The budget disputes were temporarily put on hold with winks and secret handshakes before the 2024 election, but trillion-dollar interest payments and a looming debt crisis await in early 2025. The successor to Congress, which just left town after approving another extension of stopgap spending, must recognize the urgent need for a wholesale abolition of federal departments and agencies as a prerequisite for meaningful spending and regulatory cuts.

As Gramm noted, Carter's elimination of the Civil Aeronautics Board was a significant triumph; However, new proposals to regulate airlines have gained traction in the Biden administration. This underscores the fact that departments, agencies, commissions, and offices responsible for allocating spending and administering regulations are created far more often than abolished.

What happens to regulations if agencies are abolished?

As Congress confronts the reality that the federal government cannot and should not do everything, the question arises: What happens to the rules and regulations administered by a closed agency?

This is a key question for the 119th and future Congresses. The answer will depend on the details of the “Terminator” legislation aimed at abolishing agencies. Such legislation should also explicitly repeal or override the rules and regulations enforced by these authorities to ensure that their regulatory influence and legal effect also disappears. The goal would be for administrators to pursue other interests in the private sector or to spend more time with their families. But it didn't quite work out that way.

Example of the Carters Civil Aeronautics Board

When the Civil Aeronautics Board (CAB) was closed with the Airline Deregulation Act of 1978, deliberate repeal was the priority. The then chairman of the CAB, Alfred Kahn, an “avowed liberal,” according to Gramm, was unimpressed by the fact that “no one could fly an aircraft commercially on any route without the express permission of the Civil Aeronautics Board, and that there was price competition, that is to price cuts, came “illegal.” To Kahn, these restrictions were ridiculous, which he noted, remarkably Time Magazine on his tenure as CAB chairman: “I will consider myself a success in this job if there is no job left when I leave it.”

You don't find this feeling often anymore. Under the deregulation law, government control over fares, routes, and market entry and exit was removed. Without having to ask Mother-May-I about the CAB, competition intensified, prices fell and air travel – once a luxury – became democratized.

However, exploitable regulation remained. While many aviation regulations were abolished or changed during the Carter era, others were reinstated, such as certain consumer protection and safety regulations. The Federal Aviation Administration (FAA) – within the Department of Transportation – continued to oversee aviation safety (inspections and audits), aircraft maintenance, pilot training and certification, air traffic control, and airport operations. Some of the FAA's safety oversight practices came under scrutiny today. The FAA requirements also apply to advertising practices and to compensation and remedies related to flight cancellations and delays, denied boarding, baggage handling, and related procedures.

In addition, the rise of the Transportation Safety Administration after 9/11 tightened security regulations for passenger and baggage screening. Some sought to eliminate the TSA's unwelcome “security theater” and privatize its functions. But the TSA remains firmly entrenched, just as the FAA's regulatory authority has been expanded to cover new technologies like drones. Most recently, the Biden administration's Competition Council is trying to restore price regulation and other controls to airlines — and beyond.

Carter's CAB example implies that while legislation or administrative reorganization may bring about the end of an agency, its regulatory footprint may remain or be transferred to other government agencies, even if consumer protection and safety are best served through competitive disciplinary procedures rather than competitive disciplinary procedures can be guaranteed by administrative violations. As CEI founder Fred L. Smith Jr. warns, “A pruned weed is a healthy weed”—once regulations are put in place, they are notoriously difficult to completely eliminate.

What other departments and agencies were abolished?

Carter's abolition of the CAB is a rare example of agency abolition, but even that did not last. In the decades before and after, there were few cases where agencies were truly abolished and most functions were instead simply moved elsewhere. Consider the following:

1940s: Franklin D. Roosevelt's Civilian Conservation Corps and Works Progress Administration were abolished—only to be revived in spirit by Biden's American Climate Corps.

1970s: The Atomic Energy Commission, the Energy Research and Development Administration, and the Federal Energy Administration were dissolved and their functions transferred to the newly created Nuclear Regulatory Commission and the Department of Energy.

1990s: The US Information Agency was abolished, but its functions were taken over by the State Department. The Interstate Commerce Commission was abolished, but its duties were transferred to the Department of Transportation and the Surface Transportation Board.

2000s: TThe Homeland Security Act abolished the Immigration and Naturalization Service (INS), but transferred its functions to three then-new creations: US Citizenship and Immigration Services (USCIS), US Immigration and Customs Enforcement (ICE), and US Customs and Border Protection (CBP ). ).

2020s: Decades after the Federal Tea Tasters Repeal Act of 1996, we saw the abolition of the obscure Board of Tea Experts.

These examples show that while agency names are disappearing, the underlying functions—and often the regulatory burden—continue to be assumed by other federal agencies.

Insights into department and agency terminations

The key lesson here is that true agency abolition is rare, and corresponding deregulation even rarer. When Congress puts departments or agencies in its crosshairs, such as the termination of the Department of Education led by Republican Thomas Massie of Kentucky, it must proceed extremely carefully to ensure that the government's influence in both spending and regulation is real is restricted.

The ideal outcome of abolishing an agency is the complete disappearance of its regulations. However, to achieve this, clear legislative intent and mechanisms are required to prevent the transfer of regulatory powers to other entities and to implement privatizations or the restoration of powers to states and localities to prevent the regrowth of “weeds”. Carter's deregulation of the CAB and the sparse list of examples otherwise demonstrate that while deregulation is possible, its legacy must be carefully guarded.

As part of the broader spending de-escalation and agency abolition, the withdrawal of federal grants, subsidies, and the gigantic contracting states would go a long way toward addressing both the budget crisis and regulatory overreach. These reduction categories are the true weed killers and are necessary for any successful “Terminator” legislation.

Vigilance: Sustaining Carter's Deregulation Legacy

New advocates of deregulation must remain ever vigilant to ensure that reforms are permanent and that privatization, competitive discipline and federalism are strengthened and completely replace federal control. As part of these reforms, new institutions such as the Congressional Office of Regulatory Analysis (CORA) are less inclined to administrative control than the current Office of Management and Budget (which is now neutering itself through its new “Circular A-4” guidance on regulatory review). . ) could help maintain focus. Of course, oversight hearings, reports, and consistent legislative action are needed to ensure that agency terminations are not reversed by future administrations.

As Alfred Kahn wisely noted, the success of downsizing means creating an environment in which the agencies themselves are no longer necessary. However, agencies are adept at protecting their turf, so we should expect resistance to any serious termination efforts. But the federal debt, expected to exceed $36 trillion, will ultimately force Congress to make difficult decisions. When the time comes, lawmakers can take inspiration from Jimmy Carter's legacy. We say thank you and happy birthday to him.