As NTU and NTU Foundation continue to analyze portions of President Biden’s just-released budget, two items of particular concern to taxpayers are what have been described as “historic increases” in funding for the Federal Trade Commission (FTC) and the Department of Justice’s Antitrust Division. Who’s doing the describing? Unfortunately, it’s the White House itself, noting its perceived need for “robust enforcement of antitrust law.”
The spending hikes contemplated for these two agencies are massive – a 30 percent jump for FTC and a 41 percent jump for the Antitrust Division in fiscal year (FY) 2023, compared to the current year. Measured against the last full FY 2021, the figures are 39 percent and 48 percent, respectively.
Some, but certainly not all, of this higher amount would be offset by more fees and other revenue collections. And while the actual amount of additional money, at $193.5 million combined between FYs 22-23, is a tiny fraction of budget boosts in other areas of the federal government, there is plenty of mischief that both these entities could engage in, if they’re given such a massive infusion of cash.
History shows, quite logically, that big waves of heavy-handed “competition enforcement” on the private sector economy are preceded by torrents of additional tax dollars. One of the more recent instances was mentioned in an NTU Policy Paper, “FTC: A Three-Letter Way to Spell ‘Nanny?”:
In the 1990s the Clinton administration signaled its intent to micromanage the high-tech sector when it ramped-up the budget of the Antitrust Division of the U.S. Department of Justice and took aim at emerging software companies as well as Internet companies, the highest-profile of which was Microsoft. These cases were brought largely due to competitor rather than consumer complaints, and involved issues such as “tying” browsers to operating software.
A 1999 NTU Foundation analysis, “Lawyers Playing Lawmakers,” tracked this trend in greater detail, noting that between 1996 and mid-1999, Department of Justice antitrust fine collections had zoomed from $26.8 million to more than $1 billion. That result was not surprising, given that the Antitrust Division’s budget had risen from $39 million to $114 million in the ten years preceding 1999.
Aside from the additional expenditure of tax dollars being proposed this time around, taxpayers and consumers have other worries from a bigger government role in regulating the economy. As the NTU Policy Paper above noted, research has shown that increased periods of antitrust enforcement can lead to sector-wide declines in stock returns, often translating to poorer economic performance, lower government revenues, and even more upward pressure on federal budget deficits. Should risk-takers in the private sector pull back on developing new products and services under the yoke of FTC and the Antitrust Division, consumers suffer; meanwhile, incumbent companies, saddled with more regulatory costs, could raise prices at a time when high inflation seems less and less “transitory.”
The Biden administration’s budget is not the last word on FTC and Antitrust Division funding – Congress will have its say. Worryingly, there are voices in both parties willing to empower an increasingly radicalized FTC and Antitrust Division crackdown, through several ill-advised legislative proposals.
Sensible policymakers across the political spectrum need to thoughtfully consider the dangerous path that the administration’s antitrust budget represents to the American economy. It is a road that could lead to more hardship and less prosperity at a time when our economic and fiscal future looks especially fragile. Lawmakers should work on a budget that promotes growth and economic prosperity instead of giving federal enforcers a blank check to harass businesses.
UPDATE: Shortly after the publication of this post, news broke that DoJ Antitrust Division head Jonathan Kanter and FTC Chair Lina Khan addressed a conference along with European Union competition chief Margrethe Vestager and German anitrust chief Andreas Mundt threatening heightened European-style enforcement against U.S. tech firms. According to a March 31 Bloomberg Government report by Brody Ford (paywall), Kanter claimed that recent support in the U.S. from some officials in both parties for a crackdown "reflects a mandate for decisive action." Bigger antitrust budgets will, no doubt, allow more delegations such as these to collaborate with their regulators abroad, at even greater taxpayer expense.