The damage caused by the Biden administration’s regulatory overreach

Lost in the current political discussion about such crucial national issues as whether people eat pets is a debate about one of the most fundamental differences between Kamala Harris and Donald Trump — and between Democrats and Republicans more broadly.

That difference concerns regulations. Nowhere could the contrasts between the two parties be greater, at least not on abortion and taxes.

That Democrats are not only willing to 1) regulate as much as possible as quickly as possible, but 2) do so without regard to the law, has never been more evident than in the run-up to the 2024 elections.

Faced with an essentially 50-50 proposition to stay in power, or live with Trump 2.0’s deregulation, Biden’s executive branch is pulling out all the stops, often going to the limits of what is legal, in some fallen past the breaking point.

For example, a few months ago a federal appeals court threw out a rule issued by the Securities and Exchange Commission on fees and certain other practices of private funds. The reason: The unanimous court said the SEC does not have the legal authority to make these rules.

The SEC did not appeal the decision. Instead, it began to act as if the rules still exist and to take enforcement action against certain private funds.

That’s right: the courts said the SEC didn’t have the legal authority to do anything, but acted as if it did anyway.

This is not a rare occurrence. In Washington parlance, this is called “regulation by enforcement.” And it happens when a regulator tries to create a rule, fails (or doesn’t even try), but starts enforcing the rule anyway.

It is not the only extra-legal instrument that democratic governments like to use. A sinister example is ‘regulation by letter’. It works like this: a regulator sends a letter (or posts a notice on its official website) that essentially says, “We want you to do better… We’re not going to tell you exactly what that means, but it’s best to assume . If you don’t, we’ll investigate you much more closely. You wouldn’t want that, would you?”

In other words, it’s the government equivalent of a mafia protection racket. “You have a nice spot here… it would be a shame if it burned down.”

The Federal Deposit Insurance Corporation did this a few months ago because of rules regarding passive ownership of some banks by large asset managers. It started with the FDIC approving a notice of proposed rulemaking, which at first glance seems unnewsworthy. However, the FDIC subsequently sent letters to asset managers requiring them to comply almost immediately with many of the terms of the proposed rule, even though it is only a proposal.

In other words: it doesn’t matter that the rule doesn’t formally exist yet, we’re going to pretend that it does. And woe to those who do not obey our rule.

Of course, all of this violates both the letter and the spirit of the Administrative Procedures Act, which governs how executive agencies must conduct themselves in issuing regulations. The rules include minor inconveniences for regulators, such as the right for members of the public to comment on the proposals.

But following the law can be difficult and slow. And finally, when it comes to so many things these days, it seems that for too many people on the left, the end justifies the means.

This is not to say that the victims of this government overreach have no remedy. They can (and occasionally do) sue the government. But many don’t have the money for that. Others do, but even if they are successful in court, they run the risk of incurring even more wrath from regulators next time.

Just ask PayPal, which challenged the Consumer Financial Protection Bureau’s proposed prepaid card rules in 2019. Although PayPal ultimately prevailed, the government responded to the lawsuit with two new investigations into other practices.

As the recent SEC action on private funds shows, even defeating the government in court may not be enough, especially if a progressive Uncle Sam is eager to ignore court rulings.

Regulation affects us all in ways we will never see. And while you may not have a dog in the fight when it comes to things like private funds or large passive investments in banks, those regulations still influence the market, and the market influences you.

Your bank charges may increase; your “free checking account” could become a lot more expensive (or disappear altogether); your mortgage costs may increase; your small business may not be able to get a loan.

The Administrative Procedures Act is there to protect the people who are regulated. But the law also protects you and me. And it would be great if the Biden administration started following the law.

Mick Mulvaney, a former South Carolina congressman, is a contributor to NewsNation. He served as director of the Office of Management and Budget, acting director of the Consumer Financial Protection Bureau and White House chief of staff under President Donald Trump.