Guest Essayist: Charles K. Rowley, Ph.D., Duncan Black Professor of Economics at George Mason University and General Director of The Locke Institute in Fairfax, Virginia

Federalist # 73 continues with a discussion of the President, dealing particularly with the independence of the executive branch of government and the relevance of the veto power.  As readers will know, Hamilton, more than any other Founding Father, believes in the importance of centralized authority within the federal system, even to the extent of flirting with monarchy.  Although he is writing as PUBLIUS, and reflects to a certain degree, the views of his colleagues, John Jay and James Madison, let me forewarn readers of concerns that most particularly should exercise our minds when reviewing the powers of any centralized presidential authority.

“In constraining any system of government, and fixing the several checks and controls of the constitution, every man ought to be supposed a knave, and to have no better end in all his actions, than private interest” (David Hume, 1752).  “It is better to keep the wolf out the fold, than to trust to drawing his teeth and claws after he shall have entered” (Thomas Jefferson 1782).  “The very principle of constitutional government requires it to be assumed that political power will be abused to promote the particular purposes of the holder; not because it always is so, but because such is the natural tendency of things, to guard against which is the especial use of free institutions” (John Stuart Mill 1861). So we have been warned!

Now let us review Hamilton’s reasoning in Federalist # 73 in the light of subsequent experience.  As to the issue of support, I have no problem.  Hamilton correctly defends Article II, Section 1, clause 7 of the proposed constitution confirming that the President’s compensation for his services shall neither be increased nor diminished during the period for which he has been elected, and shall constitute his sole emolument from the United States or any individual state.  This protection and constraint is essential to avoid excessive pressure being placed on the President by Congress to pursue goals that others are determined to achieve.  What could not be foreseen, in the late eighteenth-century, is the degree to which the promise of high post-presidential monetary returns may influence the behavior in office of any sitting president.  Presidential libraries, for example, play a significant role in determining the evaluated legacy of any president.  Such libraries are exorbitantly expensive to establish and to maintain.  And no United States president, in recent times, has died in relative poverty – this in sharp contrast to many prime ministers in parliamentary systems of government.

Hamilton’s discussion of Article 1, Section 7 of the proposed constitution is much more interesting.  For here Hamilton balances the strengths and weaknesses of the proposed qualified negative (or veto) power of the President with respect to acts or resolutions of the two houses of the legislature.  In defending this power, Hamilton walks a tight-rope between his belief in strong central authority and his recognition that all political power must be checked and balanced if a republic is long to survive.

In rejecting outright any notion that the president should serve devoid of veto power, Hamilton displays – not without considerable justice in the light of subsequent events – his grave misgivings about the potential for bad behavior of any legislative branch of government.  Instinctively, he recognizes that a largely self-serving legislature would succumb to the temptation to impose its will upon a defenseless president in the absence of presidential armor.  The question, for Hamilton, is only whether that armor should be absolute or qualified.

At this point, in my judgment, Hamilton blinks when confronting the likely true nature of a president’s political role.  Surely he acknowledges some force in the argument that it is ‘not to be presumed a single man would possess more virtue and wisdom than a number of men; and that unless this perception should be entertained, it would be improper to give the executive magistrate any species of control over the legislative body.’  However, he dismisses this concern on the ground that the more significant danger emanates from the predatory ambitions of the legislature.  At the time, the Founders had in mind the name of George Washington, as their most preferred first president.  And few would deny that George Washington was a man of wisdom, impeccable personal integrity, and high honor.  But would one feel as comfortable in making those suppositions about a Ulysses S. Grant, an Andrew Jackson, a Franklin Roosevelt, or a Richard Nixon?  I do not think so.

In any event, thankfully, Hamilton comes down in favor of a qualified-over an absolute-veto, albeit by faulty analysis, and almost certainly because he is writing as PUBLIUS and not as Hamilton.  Hamilton’s concern is not at all over the prospect that an absolute-veto power would be sorely abused – which surely would have proved to be the case – but rather that such a power might be under-utilized by presidents whose scruples might hold them back from exercising powers of such a magnitude.  History advises us that homo politicus pervades the executive branch of government just as much as he pervades the legislative branch.  Presidents would have deployed absolute-veto power quite unscrupulously, as if to the manner born.

The central issue in Federalist # 73 thus centers on the degree to which the veto power is to be qualified.  Hamilton defends the requirement of a two-third majority in each house of the legislature to override a presidential veto and to pass a vetoed-bill into law.  This super-majority, of course, is arbitrary, but, in principle can be justified.

In viewing the legislative process from an economic perspective, it is useful to reflect upon two expected costs of any kind of collective choice.  On the one side, are aggregated expected external costs that collective actions may impose on individual electors.  Expected external costs decline as the requisite vote super-majority increases.  On the other side, are the expected costs of reaching legislative decisions.  These costs increase as the requisite vote-majority increases.  A rational vote-mechanism will try to minimize the joint expected external and decision-making costs.  Evidently, as the salience of an issue rises, so the super-majority vote-requirement should increase.  If, in general, presidents contemplate the veto more with respect to major than to minor bills, then the qualified majority rule is economically justified, because expected external costs are higher in such a situation.

The debate over Hamilton’s defense of the qualified-negative naturally focused on analogies with the British monarchy, with many commentators noting that the unjustifiable rights and privileges of the British monarch should vehemently be denied to any United States president.  For the most part, Hamilton claimed that the veto power was defensive in nature, allowing the president to defend the People against excessive legislative zeal, not to allow the president to impose his own will on the People.  Such arguments prevailed in the ratification process.

With hindsight, however, Hamilton was wrong in this assessment.  The qualified-veto power has provided presidents with considerable opportunities to exercise a third-chamber role in the legislature.  The knowledge, ex ante, that a president will veto an unacceptable bill, forces the legislature to logroll with the president when formulating major bills, in order to anticipate and to frustrate the application of a veto.  Increasingly, unscrupulous presidents have taken advantage of this recognition to shift from defense into aggression in the legislative process not always, by any means, to the advantage of the People.

As the regulatory authority of the executive branch increased – most notably since the Civil War – so the legislative powers of the presidency have advanced, to the extent that, arguably, they now exceed those enjoyed by any British monarch even at the peak of the Divine Right principle.  Health care reform, fiscal stimulus, cap and trade, card-check, and immigration policies have been driven and fashioned, since January 2009, much less by the Democrat-controlled Congress, than by the administration of President Obama.  These policy initiatives, in many respects, may turn out to be inimical to the underlying interests of the People.

Predictably, public officials imbued with power constantly ask for more.  That is the true nature of homo politicus.  Instinctively, therefore, the People – who by nature cherish their lives, liberties and properties – should recoil instinctively from any attempt to extend such power.  The line-item veto is just such an example.

The line-item veto, or partial veto, is the power of an executive authority to nullify or cancel specific provisions of a bill – usually a budget appropriations bill – without vetoing the entire legislative package.  Such line-item vetoes are usually qualified by legislative override provisions.  In 1986, President Ronald Reagan, in his State of the Union Address, asked the Congress for such an authority: “Give me the authority to veto waste, and I’ll take the responsibility, I’ll make the cuts, I’ll take the heat.”  The Congress refused this overture, not least because the Democrat-majority in the House of Representatives sensibly anticipated that much more than waste would be vetoed by this president on the social side of the budget.

In 1995, President Bill Clinton repeated this request in his State of the Union address.  An unwise Congress granted his request in the Line Item Veto Act of 1996.  President Clinton deployed this power 82 times in 11 budget bills, until the United States Supreme Court correctly determined, in 1998, that unilateral amendment or repeal of only parts of a statute violate the Presentment Clause of the Constitution.  Ambitious presidents ceaselessly search for such additional authority.  President George W. Bush once again requested a line-item veto power in 2006, this time setting out a complex process designed to avoid the Supreme Court ruling.  Fortunately, the loss of any Republican-majority in Congress intervened to deny him this dangerous privilege.

The executive branch currently enjoys excessive power in the United States political process, threatening the replacement of the separation of powers by the imposition of an Imperial Presidency.  The People will be wise indeed to constrain, rather than to extend, the powers of the executive branch – not least by revisiting the expansive interpretations of the General Welfare and the Commerce clauses by the Supreme Court – if our precious constitutional republic is long to survive repeated attempts to subvert its original design.

Friday, August 6th, 2010

Charles K. Rowley, Ph.D. is Duncan Black Professor of Economics at George Mason University and General Director of The Locke Institute in Fairfax, Virginia.  He is co-author (with Nathanael Smith) of Economic Contractions in the United States: A Failure of Government. The Locke Institute (#).  He blog s- at #.


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