The defeat of the US watchdogs

A note to readers: Edward Luce’s Swamp Note will be out on Monday. Rana Foroohar is out.

Most political junkies focused on Chicago this week, watching Democrats Kamala Harris and Tim Walz set up shop for the November presidential campaign. The convention was big on flag-waving and bold names (both Obama and Clinton, Oprah Winfrey, Stevie Wonder and Spike Lee, among others), but little on detailed politics. Anti-Donald Trump teams competed for airtime along with the usual promises to make America fairer, stronger and more prosperous.

But another piece of news underscores the limits of what a Harris-Walz administration could hope to accomplish. On Tuesday, a federal judge in Texas blocked the Federal Trade Commission’s bold effort to reshape the U.S. labor market by making it easier for workers to switch jobs. U.S. District Judge Ada Brown ruled that the regulator “lacks the statutory authority” to ban non-compete agreements nationwide.

The FTC said it was “seriously considering an appeal” and noted that a judge in Pennsylvania had ruled otherwise on a similar challenge there.

The cases are part of a sustained legal attack, largely by big business, that ties the hands of progressives who want to use regulation to control big business and address social, economic and environmental problems. Over the past few years, the conservative majority on the Supreme Court has restricted the ability of regulators to impose rules unless they are explicitly authorized by Congress and made it easier for critics to challenge existing regulations.

That has encouraged industry groups to pursue some of the Biden administration’s signature regulatory policies at the FTC, the Securities and Exchange Commission and other watchdogs. These groups are also strengthening their chances of success by filing cases in Texas and the Fifth Circuit Court of Appeals, which is dominated by conservative judges.

“There’s been a complete reset,” says Brian Daly, regulatory attorney at Akin Gump. “Industries have discovered that the world doesn’t end when you sue the primary regulator.”

Challenges work. A federal appeals court threw out the SEC’s new rules for private equity funds in June, while both its climate disclosure requirements and the FTC’s crackdown on deceptive sales tactics by car dealers are on hold while legal challenges go through the courts.

“We are updating our rules to benefit investors and issuers alike within the laws and how the courts interpret those laws. If a court rules one way, I adapt,” SEC Chairman Gary Gensler said.

Regardless of who wins in November, the US watchdogs will almost certainly have to pull their horns. Republican candidate Trump, who championed lighter regulation in his first term, has explicitly promised to do the same again.

It is unclear whether Harris wants to continue Biden’s tough policies on financial regulation and competition. Her first economic speech drew attention as she promised to tackle rising food and grocery prices. Some saw it as a nod to price controls that will almost certainly be challenged in court. But Ken Chenault, the former chief executive of American Express, told the Democratic convention that Harris is “pro-business,” and her supporters on Wall Street and Silicon Valley say she would be more open to working with industry than Biden’s team was. .

Either way, her options will be narrowed by aggressive industry litigation and hostile judges. Agencies seeking to address new issues will face pressure to demonstrate that their actions are explicitly authorized by Congress and justified by a detailed cost-benefit analysis. Most analysts believe this will lead watchdogs to focus on their core functions, such as overseeing markets and approving drugs — and become cautious about writing new rules.

A Harris administration would have more room to maneuver if Democrats are able to retain control of the Senate. This would allow them to promote her appointed agents and new federal judges without Republican votes.

Under Biden, Democrats have had some success rebalancing the lower federal courts. The Senate has confirmed 205 of Biden’s picks to top federal courts. If all of Biden’s pending nominees are promoted, the appointees would easily surpass Trump’s total of 234.

The downside for Democrats, of course, is that Biden appointed only one Supreme Court justice to Trump’s three, and the 6-3 conservative majority won’t change until someone retires, dies, or (unlikely) Congress will pool the votes to change the rules. . The Democratic Platform talks vaguely about “structural reforms of the courts to increase transparency and accountability,” but don’t hold your breath.

Ed, you were at the Democratic National Convention this week and have a better understanding than I do of how the party talks about business and the economy. Is it good or bad for Harris’ electoral chances that she can’t replicate Biden’s gigantic regulatory push?

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• Much has been written about the contrast between the vice presidential candidates, from their clothing and finances to their rhetorical styles. But Washington Post columnist Matt Bai argues that Republican JD Vance and Democrat Tim Walz hold different views of America, asking voters to decide whether it’s primarily a place or an idea?

Edward Luce answers

Brooke, this is a good question and many people ask variations of it. To be honest, Harris is a bit of a blank slate when it comes to economics. Until last week, when she launched her controversial measures to combat rising prices, all we had to go on was her ill-fated 2020 presidential bid. But she has since disavowed many of the positions she took then, including Medicare -for-all and ban fracking.

My sense from the way she talks is that she is far less focused than Joe Biden on reviving US manufacturing employment. In part, this could be generational. Biden is nostalgic for the era when a single-income household could put kids through college. My impression – and I am deliberately using vague terms here – is that Harris is more focused on the realities of today’s economy. The only subject on which she has spoken with any regularity and conviction is her plans to strengthen the care economy. This includes parental leave, revamped child tax credits and a focus on the plight of marginalised, part-time workers in the service sector.

Her plans to address the price hike felt rushed, and the Harris-Walz campaign was surprised by the backlash. It would not be difficult to imagine this Supreme Court striking down some or all of such legislation. It would make more sense for Harris to double down on Lina Khan’s efforts at the FTC to address market concentration, including in the meatpacking industry. But that would alienate the business, which already sees Khan as an adversary. And it would be a leap of faith to imagine that Khan would have any better luck winning big court cases over the next four years than he has since 2021.

The answer to your question is that the growing reality of a regulatory rollback won’t have much of an impact on Harris’ electoral prospects. People don’t vote on the details of a candidate’s plans. They go with their feelings. If Harris can convince middle-class Americans that she has their backs, she will win.

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And now a word from our Swampians. . .

In response to “Chicago means a lot to Kamala Harris:”
“The Democratic Party’s donor class is the most neoliberal and neoconservative in its history. At this point, it looks like Ms Harris will present an aspirational change to the party base and “the more things change, the more they stay the same” to the party’s super-rich donor class, who really hold the reins here. ” — Paul A. Meyers