Keeping Agencies In Line

Last summer, Representative Cardoza (D-CA) was upset that the secretary of the Department of Housing and Urban Development was flying off to various conferences rather than dealing with the housing foreclosure crisis, so he eliminated the secretary’s travel budget. He said “Frankly I want to cause officials a little personal pain. I want them to understand they’re hurting folks in my district by their lack of actions and so they need to plant their butts at their desk and do the jobs they were appointed to do”. Rep. Cardoza added this cut as an amendment to the Transportation, Housing, and Urban Development spending bill.

If we had read this news story before taking public choice we might think that representative Cardoza lost his temper or overreacted a bit. However, Weingast and Moran enlighten us by explaining this kind of behavior. The Weingast and Moran article argues that Congress has several tools at its disposal to control agency behavior. Congress has created a system of incentives for agencies by rewarding agencies that pursue congressional goals and sanctioning those that don’t. Congress probably exercises its most potent oversight of agencies through the appropriations process. Since Congress controls the purse strings, it can cut off or reduce funds to agencies. Rewards go to those agencies that pursue the policy preferences of current committee members which reflect the preferences of the voters in their district. Specific committees have more influence than the rest of Congress over a specific agency. Cardoza was offended that the secretary of the Dept. of Housing and Urban Development didn’t notice the severity of the housing crisis and how it was affecting his constituents back home who were facing foreclosures. Clearly, the members of Congressional committees play an important role in influencing regulatory policy. Congress can use sticks or carrots to influence agency action and Rep. Cardoza thought sticks might be more effective in this case.