Spring Cleaning in Washington

Just a few months ago, members of Congress took turns wagging their fingers at CEOs of the automakers for not making tough choices--not shedding "legacy costs," not making products consumers wanted, not cutting bloated bureaucracies.  Detroit had become self-referential, unable to compete because it was unwilling to deal with its internal constituents.

Now Washington faces a series of domestic crises that will shape the health of our society for decades--unaffordable healthcare, balkanized financial regulation, and a mind-boggling deficit, to name three.  But Washington will likely fail--indeed, may even make the problems worse--unless it deals with its own "legacy costs" and bloated bureaucracies, which currently make it impossible to achieve new focus and efficiencies.

Detroit is Google compared to Washington.  Year after year, Congress makes laws but almost never repeals them.  Washington is like a huge monument to legacy costs.  Laws from the Depression will send tens of billions in unnecessary subsidies this year to farmers, organized labor and other groups thought to be in need--80 years ago.  Bloat is also notorious--it's nearly impossible to fire anyone under civil service laws, so layers of middle management have grown exponentially.  Professor Paul Light found 32 levels in some agencies (compared to 5 levels in most well-run enterprises).

All this accumulated law--about 300,000 pages of federal statutes and regulations--operates as a form of central planning.  It bogs people down in bureaucracy.  In healthcare, the labyrinthian requirements of Medicare, Medicaid, HIPAA, plus the equally dense, and often conflicting requirements of 50 states, plus the insurance company red tape, make it impossible for people to deliver care efficiently.  Add to that bureaucratic nightmare the ever-present fear of being hauled into court whenever a sick person gets sicker, and you have a system that looks like it was designed for frustration and waste.  (See here for principles needed to climb out of this rut.)

The inertial forces that make it hard to achieve change in Washington, in the best of circumstances, become a kind of invincible fortress when reinforced by thousands upon thousands of pages of binding law.  Each of those provisions is zealously guarded by special interest groups, and changing any word of a statute requires the votes of 218 members of the House and (generally) 60 senators.

Faced with legions of special interests, Congress is trying to fix healthcare by piling new requirements on top of the old ones.  But this won't address the underlying problems of efficiency, any more than it could in Detroit.  To restore focus and efficiency, Congress must first clean out what's there--not to eliminate the goals of existing regulation but to put them in a coherent framework that real people can understand and internalize.

Dealing with the sclerosis of accumulated regulation, however, is not something our leaders have any experience with.  Most of the historic legal reforms of the past century were written on a new slate.  The Progressives at the turn of the 19th century imposed worker safety and food safety laws to fill the regulatory void of laissez-faire.  Roosevelt's New Deal provided social safety nets where there were none, and job programs in agencies that didn't exist before.  The civil rights movement led to laws against discrimination where there were none.

We don't have the luxury of a clean slate--healthcare, schools, and the financial sector are all mired in a bureaucratic jungle.  Al Gore had the right idea with his Reinventing Government initiative, but he was trying to simplify what was there.  The imperative now is much more radical, and urgent--to solve society-wide crises of affordability in healthcare, accountability in the financial markets, and disarray in schools.

Making sense of the current problems requires not just new laws--but a willingness to undo old laws in order to build coherent new structures.  The litmus test is not whether some expert can draw a complicated chart showing how law requires this or that, but whether real people (including doctors, teachers, and financial regulators officials) feel liberated to focus on doing their jobs properly.  The closest analog in history are recodifications that occur periodically--almost always releasing enormous improvements in productivity.  In ancient Rome, the emperor Justinian is best known for taking "the vast mass of juristic writings which served only to obscure the law," and rewriting them into a coherent code.   Napoleon considered his "Napoleonic Code" to be his finest achievement, and the simplified set of principles that his experts created is still the legal foundation for most European countries.  America's Uniform Commercial Code, developed in the 1950s and adopted by all states, brought consistency and efficiency to a tangled web of state laws that impeded free flow of commerce.

The current debate is missing its most important element of effective reform--the need to phase out many existing laws and regulations so that our leaders can build structures from the ground up that focus on human responsibility and accountability.  This is what observers such as Ezekiel Emanuel have called for in healthcare (see here), and what Richard Posner seems to be suggesting for financial reform (see here).  Two areas I have worked on--healthcare justice and authority of teachers--both require abandoning existing legal conventions in order to meet our public goals.  To restore trust needed in healthcare interactions, patients and doctors need health courts that are reliable to sort out good care from bad care.  To restore a school culture of order and respect, teachers need to be released from bureaucracy and the threat of a legal proceeding for ordinary daily disciplinary decisions.

Getting anything done in Washington is notoriously difficult, and the instinct is always to do whatever can be agreed upon in the sausage factory, and then to collapse from exhaustion.  But that's not good enough this time around.  We can't get there from here.  The failures of our public institutions are built into the current structures and can't be fixed without rebuilding those structures.

Future historians will look on this time as one that was critical to the growth of America in this century.  Meeting the challenge requires building a new foundation of law and regulation that aspires to address our current goals, not to mollify interest groups clinging to past entitlements.  Like Detroit, Washington has to face up to the need to clean out its clogged bureaucracies and start anew.