The Case for Letting Crises Go to Waste: How an 'Abuse-of-Crisis Prevention Act' Can Help Rein in Runaway Government Growth

Abstract

An Abuse-of-Crisis Prevention Act to reaffirm boundaries of politicians and the legislation they can pass has become necessary to the survival of limited government, given the routine “flash policy” responses to crises - including the 2008 financial crash and the COVID-19 pandemic. Excessive government spending, magnified during crises, creates not just economic distortions, but also burdensome regulatory controls rooted in a presumed delegation by Congress to unelected agency officials. Conventional challenges to the constitutionally dubious administrative state are necessary, but not sufficient, to preserve a system of limited government. An alternative agenda of bolstered economic resilience and restoration of the rule of law is required. Encompassed in that program must be a rebalancing of shock readiness and responsibility vested in society at large as distinct from government emergency powers.

What is needed most urgently is for policy makers to adopt resilience-expanding policies that do not expand the size of government and help increase intergenerational wealth and self-reliance of house-holds, businesses, and lower-level governments. In the case of the pandemic, regulatory interventions undermined some of the very businesses needed to fuel the economic recovery.

Federal resources already come from private parties in the first place, so such policies must also reinforce the ability of businesses and lower-level governments to respond to crises without the creation of new government programs.

Expanding spending and regulation over the past few decades confirm that politicians’ time preferences give them no incentive to preserve limited government unless obliged to do so. While tightly constrained crisis response can be necessary and appropriate, overly aggressive crisis response policies taken in haste weaken the nation’s - and our descendants’ - resilience for weathering subsequent crises without expanding government still further. America’s tradition of limited government cannot survive repeated episodes of such policy making. A new approach to empower the various segments of society and the public instead of Washington is paramount.

This paper seeks to start the conversation necessary to course correct and build readiness for the next major economic shock and preserve constitutional republican government. It begins with a description of the flash-policy response to the coronavirus crisis and its motivations and enabling factors. It then outlines some of the conditions that have contributed to the expansion of federal power and undermined individual and business resilience. Finally, it goes on to identify core principles to enable a shift in crisis management toward an approach consistent with limited government.

Keywords: Inflation, crisis, Covid, Administrative law, regulation, agency, public administration, transparency, guidance documents,

JEL Classification: A1, K2, k21, k23, k32, H10, H12, H13, H4, H50, H60, L1, L12, L4, L5, L50, L51, L52, O3, O4, O43