Trade Cases

Leibowitz: Congress and the President—Confrontation

Written by Lewis Leibowitz

We have a few confrontations this week. President Biden and House Speaker McCarthy are scheduled to meet this week on resolving the debt ceiling confrontation. Some sort of compromise seems likely, but a cataclysm involving government default is hardly out of the question. The time for agreement is nigh—US Treasury Secretary Janet Yellen has moved up the date of default to June 1, less than four weeks away.

IN PROGRESS... Leibowitz:

A less cataclysmic confrontation occurred last Thursday, with Senate passage of a resolution to disapprove the president’s moratorium on antidumping and countervailing duties on solar panels and cells from four countries. These countries are currently under investigation for “circumvention” of duties on exports of solar materials from China to the US. Last June, President Biden prohibited assessment of duties for two years, expiring in June 2024.

President Biden weighed the prospect of antidumping and countervailing duties concerning these four countries, which import and process solar goods and then send them on to the US, against the need for imports to hasten the transformation of the US energy sector to renewable power. Solar is a key to realization of a cleaner electric grid, and US production is simply not up to the task at present.

These two confrontations are not unrelated. Both pit congressional power against presidential power. Congress was fairly docile on this issue while the Democrats controlled both Congress and the White House (although some Democrats complained about the President’s moratorium), but that is no longer the case. The debt ceiling contretemps and the trade remedy duties on solar are both manifestations of this tension, which is built into our constitutional system.

There are significant differences between the two confrontations, of course. On the debt ceiling matter, the lines are drawn along starkly political lines. Democrats insist that raising the debt ceiling must not be negotiated by bringing in spending. Republicans insist that spending is entirely out of control and that the debt ceiling must be linked to disciplining spending. In some sense, both are a little bit right and a little bit wrong. The last 40 years or so provide clear evidence that spending discipline cannot be achieved by the annual budgeting process. But the Democrats have a point in arguing that default would be catastrophic. It looks like both sides think that standing their ground is worth the risk of defaulting. 

The solar issue, however, has a different dynamic. The president ordered a moratorium on antidumping and countervailing duties against companies in the four countries accused of circumvention (Cambodia, Malaysia, Thailand and Vietnam) because the domestic industry could not yet meet demand for solar panels and cells and US installers need the supply, at least for the time being. 

The president has a good point. The production of solar panels and cells in the US is now unable to meet projected demand. The president apparently believes that by mid-2024 domestic production will catch up with projected demand. We’ll see. There is evidence both ways. 

But Congress weighs the issues differently from the president. Because the four countries are processing Chinese solar goods and then sending them on, a majority of both Houses see the moratorium as benefiting China. Nine Democratic Senators and 12 Democrats in the House voted to negate the president’s decision, under the Congressional Review Act. They want to hurt China’s ability to sell solar goods in the US, and they think that is more important than speeding up solar construction to address the climate. Whether hitting intermediate countries will hurt China much is not clear. But certainly cutting off these supplies would hurt US companies that are trying to install more solar panels, because import restrictions would push up prices and constrict supply. So, it’s a question of whether trying to hurt Chinese producers is more important than increasing the installation of solar panels in the US.

Congress is acting now, in part, because the Supreme Court is paying attention to issues affecting the balance of power between Congress and the executive branch. The Supreme Court and lower federal courts have paid deference to the executive branch over the last four decades or so with respect to administrative interpretations of the law, generally accepting executive branch interpretations, even if a judge disagrees with the interpretation. In a recent case involving the Department of Commerce, the Supreme Court has agreed to hear a challenge to the standard of deference known as the Chevron doctrine. The case documents make clear that overruling Chevron (1984) is on the table. A decision is expected in 2024.

A decision in this case could limit or dispense with the Chevron doctrine entirely. Under this doctrine, federal agencies are able to make legal decisions that federal courts cannot disagree with, as long as the agency determination was “reasonable.”  This doctrine has been a major contributor to the expansion of executive branch authority, courts will generally not reject agency interpretations of complex statutes. Supporters of Chevron respond that Congress handed complex decision-making to the executive branch because courts are not equipped to deal with all the facts and technical data necessary to reach decisions. We’ll see how the Supreme Court sorts all that out. 

The interesting feature of the solar case is that Congress has been second-guessing the President from a position of weakness. Chevron ties the hands of the federal courts, leaving Congress with no option but to rewrite statutes to strip all ambiguity out of complex statutes. In a closely divided Congress, that is effectively impossible. 

President Biden has vowed to veto the congressional resolution passed last week and sent to his desk. Unless his promised veto is overridden (almost certain, because the votes on the disapproval fall well short of the 2/3 vote of both Houses required to override), solar imports from Cambodia, Malaysia, Thailand, and Vietnam will be hurt if the Commerce Department decides that circumvention is occurring, which it nearly always does. The congressional resolution must therefore be seen as a message to the president, perhaps related to negotiation of the debt ceiling increase.

Congress appears to be flexing its muscles a bit, for the first time in years. The country and the Congress are very closely divided, and the outcome on all these razor-thin issues will depend on the skill and judgment of the actors. The next few months will certainly be interesting. 

I can only hope that the country (and the world) are better for having had these confrontations. 

Lewis Leibowitz 

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Lewis Leibowitz, SMU Contributor

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