The Constitution and Agency Costs with the Presidency
Power is Sourced from Citizens and They Retain Rights Over its Legitimate Use
Nov 2021- when I wrote this article I was trying to capture ALL my concerns about our evolving relationship with our Federal Government. Too much for one article- This is my edited and parsed version!
Through their experiences with European tyrants like King George the founders of our country knew that granting any leader the power to govern over them was a dangerous proposition. Even with a government formed by the people, leadership positions attract the power-obsessed, and the power-obsessed continuously push boundaries.
The Constitutional Delegation created a living document which has protected us for 235 years. It contains the ultimate ‘trump card’ over a leader who exceeds his or her boundaries- the impeachment clause. I was furious that after the January 6th attack on the Capitol that the Senate failed to uphold the impeachment of the former President. From my perspective, President Trump drove up agency costs and set dangerous precedents for four years, and his net effect was to destabilize our republic. In the spirit of full disclosure, I have never been affiliated with a political party, I am simply an interested student of the process of management and government.
After leading the Continental Army to victory over Cornwallis and the British Empire, many wanted to see George Washington become a de facto King. Washington detested the idea, and was even hostile to those who suggested it. Those involved in the founding of our country feared the creation of a national government because it would require granting power to an ultimate leader. How could they create such a role without inviting tyranny?
The Constitution they created reflected their priorities and levels of trust. First create a Legislature, and only then define a Presidency and make it clear that in many ways the Presidency would be subordinate to Congress. The President is to execute and enforce laws created by Congress. The President could also be removed (impeached) by Congress if in violation of the oath of office.
On January 6th the then-current President of the U.S. stoked up a dangerous mob and encouraged an attack on our Capitol, a global symbol of our Democracy. I don’t know how many American citizens realize that in 1793 President George Washington laid the cornerstone to commence construction of the U.S. Capitol. Knowing our first President’s legacy with helping to build the Capitol, I was furious when our latest President incited a mob of citizens to vandalize the same building and attack the police sworn to protect it. To add insult to injury, I watched 43 Senators refuse to uphold the Impeachment of the former President for his role in the attack.
The Capitol’s architecture and prominence has long made it the symbolic center of our Constitutional Republic, and a global symbol of democracy. Think about similar attacks on symbolic structures: The Twin Towers were a symbol of our free-market, capitalist economy which was the ultimate weapon that defeated Communism in the late 20th century. the Pentagon is a symbol of the global reach and strength of the U.S. Armed Forces. It has become standard for extremists or terrorists to attack symbols of America, so what did the rest of the world see when our own citizens attacked our Capitol and its rightful occupants? If you didn’t think it was a big deal that the President encouraged this attack, think again.
I write this as a lifelong Independent voter. I don’t seek to promote the position of any political group. I have voted for candidates from both parties in various elections over 30 years. I also defend the right to take politically incorrect positions. We now have access to so much information almost instantaneously. We should use that to have deeper, fact-based debates about issues rather than seek to shout or threaten opposing views into silence.
Election Results Were Verified, Republicans Need to Admit That
The President and participants in the ‘mob’ justified the Capitol attack as a retaliation against a ‘stolen’ election. Saying that election fraud was significant and that it impacted outcomes is no longer an ‘opinion’ that a reasonable person can state- it has been disproven in recounts, reviewed and rejected by Judges. Multiple Republican Governors or Secretaries of State have even spoken up and admitted that the election results in favor of Biden are legitimate. However, there are still a number of Republican Senators and Congressman who fail to do this, which gives credence to the mob and promotes phony conspiracy theories.
Lawsuits filed by the President’s lawyers in November and December in Georgia, Michigan, Wisconsin, Arizona and Nevada were investigated, and no state results were overturned. In Georgia, after three recounts the Republican Secretary of State again verified the result for Biden. Some blamed the outcome of the state cases on the bumbling of the former President’s lawyers, but this is backwards thinking. Had the evidence been strong, Mr. Trump would have had no shortage of formidable legal firms jockeying to take the case. Top lawyers are who they are because they have an instinct to smell loser cases and steer clear.
What does it mean to have integrity and ethics? It means one is able to not just win gracefully, but more importantly to lose gracefully. It doesn’t mean the person likes to lose or is a loser, it means the person respects the process and rules over trying to satisfy their ego at any cost. Over the last four years we’ve heard the President speak about winning in ruthless terms, and that winners take control of even the uncontrollable. I push myself hard and I can relate to giving that extra effort to win, but some of his comments were ridiculous. Mr. Trump faulted war veterans for being casualties or for having been captured by the enemy. We owe a great deal to those who made personal sacrifices to serve our country, and that respect for veterans must be modeled from our President on down.
In an ethical person, the drive to compete and win does not bleed over into a readiness to rig the game to ensure the win. Deceit begets distrust, and hearing casts a shadow on a player or organization long after the transgression. Do people who cheat their way to a win just have that ‘Je-ne-sais-quoi’ of a winner? Please! Admitting a loss is a critical step in the ‘post-mortem’ process, and a prerequisite to making the adjustments necessary to improve outcomes the next time. This is basic quality management, or ‘six-sigma’ process control. Shouldn’t we extend this to management of government?
The Constitution, The President, and Agency Costs
In the rest of this article, I look at boundaries set on the President in the Constitution and the danger of some of the precedents that have been set over the last four years. One way to assess the impact of conflicts of interest in a business or other organization is with the concept of agency costs. Agency costs identify lost value or excessive costs due to the misalignment of the interests of a manager versus the owner or owners of an asset. In this case the asset is the U.S. government, the owners are us, the citizens of this country, and the manager is the President.
No matter a citizen’s political affiliation, we all have an interest in seeing the government operate without wasteful agency costs. These costs can include emoluments, bribery, nepotism, quid-pro-quo transactions and other forms of corruption, or the cost of preventing and prosecuting such transgressions. There is no free lunch, but there are ‘optimums’ in this complex, dynamic system. Let’s look at the Trump Presidency in the context of each of the four clauses in the Constitution which cover the Presidency, with an eye toward minimizing agency costs in our Federal system.
Article One:
Election of a President, qualifications for office and compensation. Regarding the income of the President, “he shall not receive…any other Emolument from the United States…”.
The roots of the word Emolument regard fees paid to a miller for grinding corn, so it is a bit dated, but refers to pecuniary perks outside of official compensation, and can also refer to in-kind services or other ways of adding to personal wealth through the power of the office. A President, like members of Congress, is in a position to oversee public assets and services and must avoid even the appearance of conflicts of interest. That is why government officials even at state and local levels are usually not allowed to receive gifts from businesses or foreign officials. It creates at a minimum an implied pressure to reciprocate- a conflict of interest. This type of corruption is common in many less developed countries and it harms the credibility of those governments particularly in the eyes of its citizens. Our President receives a generous salary plus room and board and staff at a pretty sweet crib, lifetime pension, lifetime secret service protection, airforce one for travel, etc. — we can’t have them scheming deals at taxpayer expense on top of all of that.
Recent Presidents, starting with Bill Clinton, have multiplied their net worth while in office too much for my liking. The framers of the Constitution clearly saw the pursuit of enriching oneself while holding office as a path to corruption and loss of trust from the public. Any President is likely to have numerous opportunities once they leave office to profit from the experience, particularly through consulting, speaking, and writing. Respect for ordinary citizens and discretion should lead a President to defer pursuit of individual wealth until their term is complete, given that the compensation package and perks of the job are certainly sufficient while in office!
Mr. Trump took the emoluments issue to a new level. He made no attempt to distance himself from the active pursuit of personal wealth while actively in office. This was most obvious with encouraging executives, lobbyists, and foreign officials to stay at and use his properties in D.C., Virginia, New York, and Florida when seeking to meet with the President or other members of his administration. These are implied quid-pro-quo transactions, also spelled ‘Corruption’. It is something you’d expect to see from the autocratic strongman of a third-world country.
During his run-up to the 2016 Election, Mr. Trump’s Mar-a-Lago club in Florida had a surge in new memberships starting in 2015 and worth an additional $5 Million in revenue per year. The Billy Graham organization paid close to $400,000 for a single event in 2017 held at Trump’s Washington hotel. This just scratches the surface, and more is coming out now that the Supreme Court upheld the release of years of Mr. Trump’s tax returns and related financial information. It is easier to detect monies paid to Mr. Trump and his businesses, but there is no free lunch, particularly in Washington. I am even more concerned with the side of the transaction we can’t see: how he redirected taxpayer assets or policy to reciprocate to his domestic or foreign contributors.
Given the former President’s slogan of coming to Washington to ‘drain the swamp’, these conflicts of interest involving running up revenues for his businesses while supposedly employed full-time (and compensated well) by us U.S. citizens should concern everyone. If you hired an employee for your business and they engaged in conflicts of interest to enrich themselves, you would fire them, I certainly would. Given his ‘drain the swamp’ comments, his concurrent business activities were like flagrantly rubbing the public’s nose in the agency costs of his Presidency.
As one final conflict of interest prior to leaving office, Mr. Trump pardoned a long list of convicted criminals, some who had priors. That does not fit the spirit of the Presidential pardon, which is more to correct over-zealous prosecution or show empathy for time served or circumstances where a prisoner has faced particular hardship. If some of these pardoned offenders go on to commit more crime and inflict costs on law-abiding society, that is yet another agency cost to this Presidency. Was the ‘swamp’ Mr. Trump brought to town better than the ‘swamp’ he campaigned about draining? We the American public were left hip-deep in the musty, brackish, alligator-infested bog Mr. Trump created.
Our country has a huge national debt, and the cost of servicing that debt reduces the efficiency of providing services for the tax dollars received. Agency costs further reduce the ‘buying power’ of each tax dollar you pay, so our country cannot afford a swamp. The swamp analogy was brilliant political marketing, I readily admit it! But I am a systems design guy and as soon as I heard the swamp analogy I thought about a system of improved controls, incentives, transparent process, and consequences which would produce measurable and sustainable swamp draining. I realized though, the former President is a brilliant CMO type, but hath not the mind or patience to be a COO. Once he won the election, he had no drive to follow up on the swamp thang, there would have been too much personal risk of exposure of his own conflicts with minimal benefit from increased voter support.
This leads me to his rise in popularity from “The Apprentice”, which although labeled reality TV was not a real business, something his supporters seem to happily ignore. I’ve heard many supporters talk about what a successful businessman he’s been, and I would instead identify him as ‘a successful celebrity who is also a businessman’. His expertise in business is focused on personal brand marketing. He realized most people don’t unpack ‘business tycoon’ into distinct disciplines and qualifications. In marketing we say he benefitted from ‘the halo effect’.
There is a classic Harvard Business Review article which outlines the three sustainable competitive strategies in business: operational efficiency, customer intimacy, and product innovation. Operational Efficiency is a business skillset we truly need in the public sector, it would be a great competency for a President and is needed to ‘drain the swamp’. However, there is nothing to indicate the former President’s interest or expertise in that area. Mr. Trump also has clear delegation issues, and often reverses decisions made by subordinates as well as frequently fires them. Operational efficiency requires hiring talented subordinates and empowering them to make good decisions, as well as being introspective and learning from mistakes to continuously improve processes. When we unpack it like this, I think the disconnect is clear.
Many in the public take politician’s statements at face value, and don’t drill down to understand if they are blowing smoke or have a real plan. I don’t need to judge whether or not Mr. Trump was as successful as he claims, just focusing on his brand tells me enough. Mr. Trump’s businesses are always high-end, ‘look at me now’ luxury brands –it’s the antithesis of the concept of ‘draining the swamp’. I get that people wanted an outsider and a businessman- I have no problem with that. The problem is nobody went the next step and unpacked the brand and tried to map it to core American values. When that is done, it falls apart.
Article Two:
Responsibilities of the Office, Commander in Chief of the Armed Forces, appointing Ambassadors, Officials, and Justices, subject to approval of the Senate
Head of the Executive Branch of the Federal Government
As Head of the Executive Branch, the President oversees 15 cabinet-level departments and various agencies, bureaus and commissions. The President’s role is best viewed as a 4-year trustee with duties to oversee the execution of legislation and budgets coming from Congress and carried out by the massive federal bureaucracy. The thousands of employees in these organizations are mostly civilian and designated with a ‘GS’ level (GS-1 to GS-15).
I grew up in the D.C. area and my Dad retired from years of service in the government, at the Pentagon and later the GAO. I saw how federal civil service employees had a sense of professional duty to their agency or department, and that usually came before any political affiliation. The President has about 4,000 potential appointed positions, about 1250 of those require Senate approval, and the total workforce as about 2 million Federal civil service employees. The numbers are overwhelmingly in non-partisan permanent hires. Even political appointees have a professional code of conduct and a Constitutional oath. When the former president came up against the sense of professional duty or oath of civil service workers, he’d rally the base to claims of ‘deep state’ conspiracies or disloyalty.
The sense of professionalism and duty that I have seen firsthand with many civil service professionals actually distinguishes our federal government from many others in the world. It is a positive which helps our government operate effectively and continuously through transitions and not be subjected to wild swings of the partisan pendulum. Limiting the number of appointed positions in executive branch departments dampens the partisan swing from a change in President and helps these organizations develop a culture of service and core competencies. I think most of the public regardless of political affiliation would see this as a positive if they had the whole picture.
Mr. Trump often stated his expectation for personal loyalty from subordinates. That may have been O.K. in the private sector, but in the public sector he had Constitutional limits on his power as well as longstanding traditions and culture in the federal civil service. Mr. Trump often insulted government employees and even attempted to fire permanent employees who were not his appointees. He sought to raise the number of political appointees within departments and to convert appointed positions to permanent hires. This aspect of his Presidency hasn’t gotten a lot of press, probably because the mechanics of the bureaucracy isn’t very exciting to the general public, but they were harmful precedents.
Many Trump supporters admired his ‘Winner take all’ approach and that he had often been that winner, or at least publicized himself effectively as a winner. The trouble is our President is not a king but a trustee on a 4-year term. Each department or agency, like Justice, State, the CDC, EPA, or Interior/BLM, has many ongoing activities not wholly under the control of any one President. Many positions in each organization are permanent hires through a competitive selection process.
Civil Service employees do not need to be partisan appointees in order to carry out the mission defined by partisan policies. I would rather have an expert for, say, a survey position at the bureau of land management than scramble to find a loyal partisan who also had the necessary competence and understanding of government processes. Selecting for personal loyalty over competence is not in the best interest of the American public. Seeking to make the bureaucracy more partisan creates conflicts of interest which disrupt the daily routine of an organization- more office politics means C-Y-A behavior, risk aversion, and loss of trust within and between teams. Do the benefits outweigh those costs? Did the Republicans get a bureaucracy tuned to deliver on their agenda more effectively? I doubt it.
Heavily partisan bureaucracies that lack a spirit of service to the public is a hallmark of authoritarian autocracies around the world, neither Democratic nor Republican voters have an interest in seeing Trump do that kind of makeover with our government! These actions represent additional agency costs from the Trump presidency.
Commander in Chief
The separation of Military and State in our country is another source of our stability and strength. In the post-WWII period, the few other countries which have shown this separation are among the most stable and free countries with the healthiest economies. Here is the typical descent into tyranny: a leader usurps power, they drive authoritarian policies where citizens’ rights become subordinate, they use the power of the state to persecute and silence political rivals, and they leverage their military to achieve both of those things. Except in extreme emergencies such as natural disasters, America doesn’t use its military for domestic operations. If you understand how often a leader’s domestic use of their military descends into tyranny, you will understand exactly why it is critical that we maintain this separation. Mr. Trump dangerously attempted to set new precedents this past year, and it was disrespectful to the oath taken by military personnel to uphold the constitution. Some officers even resigned rather than break their oath. It is not in any law-abiding citizen’s interest, no matter their political affiliation, to see Mr. Trump violate this longstanding tradition in our country.
As I mentioned I understand how supporters liked that he was a Washington outsider, but that is not an excuse to remain ignorant about traditions where those traditions are a source of our national strength. We have a tradition of civilian leadership in the President’s cabinet. As the saying goes, “to the man with only a hammer, every problem looks like a nail.” It actually shows our military great respect to have boundaries around how and when they are used, and not to drag them into missions that force them to be something they are not.
Article Three:
report to Congress via ‘State of the Union’, ‘take Care that the Laws be faithfully executed’
The history of tyranny in the world often involves the same person who establishes laws and policy being the ruler who oversees how the laws are enforced. This is why the Constitution starts by clearly defining the Legislative Branch, or Congress, and after that defines the Presidency and assigns the President the role of faithfully executing the laws passed by Congress. Tyranny often involves a leader having both the authority to enact laws to persecute a person or group, and also having the power to uphold and enforce those laws. The separation of powers in our Constitution is fundamental to preventing tyranny!
Franklin Delano Roosevelt served four terms as President through the Great Depression of the 1930’s and World War II in the 1940’s. He pressured Congress on legislation that granted the Executive branch far-reaching powers. Ironically, it was the ‘liberal’ press that publicly opposed the slide towards unlimited Presidential power. With a Congress that merely ‘rubber stamped’ the President’s initiatives, the Supreme Court stepped up to rule certain programs unconstitutional. FDR’s answer was to push legislation through Congress in 1937 to stack the court (sound familiar!). Just-in-time, there were some shifts in the court in FDR’s favor. The Senate then stepped up and voted down the court stacking legislation.
I’d like people who supported granting more power to President Trump to think about this history with FDR and how even the liberal press raised the alarm. Why is it so vital to our survival to keep the balance between the three branches and to keep a civil service which is more focused on its professional duties than partisan politics? Here’s why: we have to anticipate that there will always, at some point, be shifts in the party holding the White House. If the executive branch gets too top-heavy and partisan, it will be a volatile, disruptive shift every time. Washington gridlock can seem frustrating, but as the imperfect system to govern 350 million diverse people, ‘operational’ is perhaps something to celebrate! The short-term result of altering this proven system may allow a President to quickly push through a populist agenda, the longer-term result is likely a country with less liberty, security, justice and opportunity for everyone.
The Constitution does not tweet or tik-tok and it doesn’t give speeches at rallies. It is a subtle force that holds us together and it is easy for many voters to forget. For example, whenever we’ve had a close Presidential election, particularly if the winner of the most total votes did not win the election, we hear calls to abolish the electoral college. I won’t go into lots of detail here, but it is not in the public’s interest to do that, even if it would switch the most current election in favor of the candidate you supported. The electoral college ensures that no state is meaningless and that no group within a state is meaningless- it protects each of us from ‘a tyranny of the majority’.
Every one of us on some subject is in the minority, perhaps by way of some demographic or location. With a simple national vote count, we could be at risk of having an issue or right completely ignored or taken from us. The Constitution, and the electoral college, were both architected to provide a balance between democracy and the preservation of our liberty and rights. Diversity on our scale in other countries or regions of the world has led to civil wars and even genocide. We are dealing with a period of escalating political tension, but the Constitution and the Electoral College are both our secret weapons to resolve our differences peacefully. We’re still standing, but we can’t afford to allow a President to incite a mob with the intention of destroying our Constitutional rule of law.
What is the cost of emboldened foreign espionage and terrorism given these elements witnessed us allowing our own citizens and supporters of the President to attack our Capitol? We look weak and divided, and the source of it traces back to the conflict of interest between the President and the oath he swore. Of course, the founders of the country had a solution to such a situation, Impeachment. A perfect segue to my final section…
Article Four: Impeachment.
The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.
George Mason was a constitutional delegate from Virginia, a contemporary of Washington, Madison and Jefferson. I earned a master’s degree from George Mason University, so pardon me if I talk him up a bit here! Mason wrote the Virginia Declaration of Rights and the 1776 Constitution of the Commonwealth of Virginia. Not well known is that the first document provided Jefferson with ideas he expressed in our Declaration of Independence, and the latter document ratified in the Commonwealth of Virginia provided the Constitutional Convention with inspiration to add a Bill of Rights to the U.S. Constitution. Mason did not like politics but had a great mind for the design of a fair and just government.
Mason was passionate about communicating to elected leaders that the power of their position was on loan to them by the people. In 1775 he said, “in all our agreements let us never lose sight of this fundamental maxim — that all power was originally lodged in, and is derived from, the people.” The danger in every government throughout world history is the Regulation of Power. Mason knew that those who are drawn to positions of power often test its limits and seek more. Constitutional convention participants like Washington, Madison or Mason were concerned that the Republic could survive and protect itself if Americans elected a tyrant like King George. The failsafe was the Impeachment clause.
In these days long before complex, distributed computer systems, they had this futuristic belief that we could place our trust in a system of gates and controls and distribution of decision-making. Well, they didn’t think in those terms, they wrote a Document, but I see it as a man-made, adaptive system that has served us for 235 years. I could almost argue it was the first A.I!
We are social creatures, and it doesn’t come naturally for people to put more trust in a document than a person, but the framers of the Constitution were pushing us to see that no Individual is so valuable that they are worth violating the system. I find that modeling Agency costs in any organization is a handy way to identify systemic corruption, and when I used the articles in the Consitution as a guide I realized how extensive the threats were to our Republic. This is a Value and a Priority that transcends any citizen’s party affiliation.
