Basic Organization
The federal bureaucracy is divided among four types of structures. In addition to cabinet departments, which were examined in Chapter 11, there are also three types of “noncabinet” agencies — independent executive agencies, independent regulatory commissions, and government corporations.
Independent Executive Agencies
Executive agencies are independent bureaucracies that are located outside the cabinet department structure. These agencies report directly to the president, who appoints and removes their chief officials. Presidents prefer an executive agency to remain independent when it has a narrow mission that requires special consideration.
There are approximately seventy independent executive agencies of varying sizes. Some employ tens of thousands of people; others, several hundred. The Central Intelligence Agency (CIA), Small Business Administration (SBA), National Aeronautics and Space Administration (NASA), Environmental Protection Agency (EPA), and the Peace Corps are independent executive agencies.
When the CIA was created in 1947, the Department of Defense lobbied to have it placed under its jurisdiction. The Congress decided against this because it wanted civilian control over intelligence gathering and spying. The Department of Defense failed to win responsibility for NASA for the same reason when it was created in 1958.
Independent Regulatory Commissions
These commissions are formed with the express purpose of regulating particular sectors of the economy and promulgating rules. They are intended to be totally independent from the president and the executive branch. Congress came up with independent regulatory commissions in order to delegate its oversight responsibilities without giving too much power to the executive branch.
Most regulatory commissions are run by boards of commissioners, who are appointed to fixed terms by the president and confirmed by the Senate. The appointments are bipartisan (no party can have more than a one-person majority), and the president cannot remove a commissioner absent any malfeasance. Most commissioners are either industry experts, academics, or former elected officials.
The first of these commissions appeared in 1887, when Congress established the Interstate Commerce Commission (ICC) to regulate the rapidly industrializing economy. Since then, scores of commissions have been created, including the Federal Reserve Board of Governors (1913), the Federal Trade Commission (1914), the Securities and Exchange Commission (1934), the National Labor Relations Board (1934), the Equal Employment Opportunity Commission (1964), and the Nuclear Regulatory Commission (1974). Most of these commissions have fewer than 2,000 employees.
Government Corporations
Sometimes referred to as quasi-governmental agencies, these entities are created when the government activity is commercial in nature. Government corporations behave like private companies in that they generate revenues through buying and selling property, lending money, or participating in other market activities.
Government corporations should not be confused with government sponsored entities (GSEs), which are shareholder-owned companies that are chartered by the federal government to promote certain social policies, such as home ownership. The Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Student Loan Marketing Association (Sallie Mae) are all GSEs.
Like a private corporation, a government corporation is headed by a chief executive officer, who is chosen and supervised by a board of directors or commissioners. The board of directors is selected by the president, much the same way as for an independent regulatory commission. Unlike private corporations, however, a government corporation has no public shareholders, retains all its profits, and does not pay taxes. The United States Postal Service is the most recognizable government corporation. With almost 900,000 employees, it is the largest employer in the United States. The Federal Deposit Insurance Corporation (FDIC), Export-Import Bank, and Amtrak are also government corporations.
