Big government failed in the early days of the COVID-19 crisis. The biggest failure in the US was perhaps the saga of the botched SARS-CoV-2 testing kits sent out by the Centers for Disease Control and Prevention (CDC) in early February. The kits didn’t work correctly, and because the Food and Drug Administration (FDA) didn’t allow outside labs to create their own tests until the end of February, that meant that for precious weeks there was little COVID-19 testing in the United States and so little sense of the scope of the looming crisis. Big government failed—and both our public health bureaucracy and our medical device bureaucracy share the blame.
So, what’s the right fix? On another day, I’d be glad to extoll the virtues of deregulation. But this essay isn’t the typical fantasy league policy reform: I’m not going to play the usual pundit’s game where I imagine that Congress and the president inexplicably become wiser and choose to follow my personal suggestions on how to regulate American healthcare. Instead, I’m going to argue that the CDC and the FDA would be far better at their jobs if they were far more independent of the rest of the federal government—more like the Federal Reserve or even the federal courts.
And turning the CDC and the FDA into truly Fed-quality independent agencies will be a real possibility when Congress begins to consider the lessons of the COVID-19 crisis in the coming months and years. Just as Wall Street’s Panic of 1907 led to the creation of the Federal Reserve in 1913, the COVID-19 crisis is likely to lead to some set of institutional reforms so that the nation will be able to better respond in the future—both to the continuing COVID-19 risk and to future public health risks. The federal government responds to crises by reforming the federal bureaucracy, so it’s time to start thinking about just how that bureaucracy ought to change.
And today the current CDC and FDA are typical federal bureaucracies with no real independence from either the president or Congress. The director of the CDC is appointed by the president and can be fired by the president at any moment. The FDA commissioner is nominated by the president, confirmed by the Senate, and can, likewise, be fired at will by the president. These jobs don’t come with a professor’s tenure; they don’t come with the 14-year terms of the Federal Reserve Board; and unlike the federal judiciary, they certainly don’t come with a constitutionally guaranteed lifetime appointment and a ban on salary cuts.
The American Founders included that constitutional ban on salary cuts because they understood that a guaranteed cash flow was important if they wanted to create a judicial system that was independent of both the president and the legislature. Virginia Woolf once wisely said that “a woman must have money and a room of her own if she is to write fiction.” It’s equally true that a federal judge needs the same—especially the money—in order to write independent judicial opinions. If a judge knows that Congress is cutting pay for judges who pen the “wrong” kinds of opinions, well, then a lot of judges are going to pen the “right” kinds.
Likewise, the CDC and the FDA both have a strong incentive to pay attention to Congress and give it what it wants, since Congress decides every year how much money to put in their budgets and what strings to attach to that money.
One thing Congress wants federal agencies to avoid are scandals, visible and especially televised tragedies. As a result, the CDC and the FDA both know that you get in more trouble for what you do than for what you don’t do. It’s the drugs you do approve that set off the congressional investigation, rarely the drugs you don’t approve. That makes the FDA, in particular, quite conservative in its approach, taking years to approve even drugs that are widely used in other rich countries—a fact that my George Mason University colleagues Dan Klein and Alex Tabarrok have pointed out in their FDA Review project.
You can see Congress’ key focus on the homepage of the House committee charged with keeping an eye on the FDA. What’s their mission? To legislate on “drug…safety.” Not ensuring an abundance of pharmaceuticals, available to consumers at competitive prices, that balance the benefits of availability and effectiveness against the real and unavoidable risks to patients. Just “safety.”
And the FDA acts accordingly—not just with long and costly drug approval processes, but with bans on N95 mask cleaning and rules banning hospitals from using foreign-made KN95 masks that are essentially the same as N95s (the N95 decontamination rules and KN95 bans were recently suspended, weeks later than they should have been). “Safety first” can cost lives, but it rarely leads to congressional subpoenas, firings, or threats of budget cuts.
Compare the CDC’s and the FDA’s halting COVID-19 responses to the robust reaction of the Federal Reserve: In the last two months, its assets have grown by about 50 percent, around 2 trillion dollars, all without a congressional hearing, and with no possibility that the president will fire a Fed board member if he or she doesn’t do the White House’s bidding. The Fed’s only real boss is the future—a distant future Congress who might ask questions about what the Fed did, questions that the members of Congress themselves are unlikely to understand, since members usually just recite questions handed to them by their staff.
The Fed’s independent power to act boldly—to buy up municipal and corporate bonds, to create swap lines with other central banks, to buy mortgage bonds, to search for ways to create direct lending programs that bypass banks and get to small and medium-size businesses—has so far been one of the most successful government responses to the COVID-19 crisis.
The CDC and the FDA could have that same independence, that same power to act with little regard to what the president and Congress might complain about on Twitter or cable television. The CDC and the FDA could be led by small panels—much like the Federal Trade Commission (FTC) or the Federal Communications Commission (FCC)—but with terms closer to the FTC’s seven years or the Fed’s 14 than the FCC’s five. Longer terms create more distance from politicians and more room for that scarcest of political traits: bravery.
Evidence from around the world—evidence I discuss in my new book with Stanford University Press, 10% Less Democracy, reviewed here in The Economist—shows that countries that keep central banks far away from presidents and legislatures usually get lower inflation and fewer financial crises. Central bank independence is one of the great free lunches in economics—and our nation should buy every tasty free lunch available. The only cost—if you’d even call it that—is that independent banks are, by definition, less democratic central banks, kept further away from voters and elected officials. Good governance at the CDC, the FDA, and the Fed all require a mix of long-range planning and occasional lightning-quick action, but the everyday mess of democracy stymies both. Full democracy is a barrier to good health policy just as it is a barrier to good monetary policy.
Especially in our age of social media frenzies, let’s create a better world where health policy is kept away from day-to-day politics. The president should not be able to fire the heads of the CDC and the FDA. Indeed, if these leaders were insulated from the whims of the White House, the best evidence suggests that they’d be better at their main job: focusing on our nation’s long-term health.