Study Guide

Federal Bureaucracy - Terms

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Airline Deregulation Act of 1978

Passed with bipartisan support, the Airline Deregulation Act phased out the Civil Aeronautics Board and deregulated the airlines.

Attorney General

This person is the head of the Justice Department. The Attorney General, appointed by the president and confirmed by the Senate, is a member of the cabinet.


A bureaucracy is the administrative system within a large organization. By dividing the work within the organization into specialized roles governed by clear rules and by arranging authority along hierarchical lines, bureaucracies attempt to efficiently manage the activities of the organization.

Civil Aeronautics Board

Created by the Civil Aeronautics Act of 1938, the Civil Aeronautics Board was designed to promote and regulate the emerging commercial airlines. By regulating routes, fares, and schedules, the CAB aims to protect the new industry and provide Americans with safe and extensive commercial passenger air service.

Civil Service

This refers to the process of filling government positions by examination rather than appointment. Introduced at the federal level in 1883 with the passage of the Pendleton Act, the civil service system sought to eliminate the distribution of government positions as a form of patronage and instead fill government positions on the basis of merit.

Cabinet Departments

These are the fifteen largest executive departments: Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Justice, Homeland Security, Housing and Urban Development, Interior, Labor, State, Transportation, Treasury, and Veterans Affairs. Their heads are labeled Secretaries, except for the head of the Justice department, who is labeled the Attorney General. These department heads make up the president's cabinet.

Clean Air Scientific Advisory Committee

Created under the Clean Air Act (passed in 1970 and amended in 1977), this committee of scientists advises the Environmental Protection Agency administrator responsible for enforcing the Clean Air Act on air quality conditions and standards. The CASAC is only an advisory group; it has no enforcement authority, but in creating the committee, Congress insisted that its recommendations should be followed.

Community Reinvestment Act

The Community Reinvestment Act was passed in 1977 (and revised later in 1995 and 2005) to encourage banks to participate in the “redevelopment” of low and moderate income areas of the community.

Note the “re”s in here. The community was developed once. It forgot that it ran under the financial auspices of business. It made stupid decisions. And it went bankrupt. Then, instead of it being developed…like Detroit was first developed under the auspices of Hank Ford in the ‘30s and ‘40s and had to be redeveloped after it failed.

Investment was needed initially. The people who promised to pay back the money they borrowed…didn’t. And now, needing more investment, they need reinvestment. This Act requires all kinds of bank disclosure in their lending choices and practices, with records fully available for public inspection…the implication being that there was a whole lot of corruption in the process involved in the failure of the given community.

The presumption is that, if records are made public, at least the criminals will be able to be identified after they’ve absconded with the dough.


This refers to the reduction or elimination of government rules on business and other private activities. Advocates of deregulation argue that excessive government regulation reduces private freedom and inhibits economic growth.

Discretionary Authority of Administrative Discretion

This refers to the degree of autonomy enjoyed by agency officials to establish policies or take actions independent of congressional or presidential directive.

Environmental Protection Agency

This is an independent regulatory agency responsible for enforcing the federal government's anti-pollution laws and environmental regulations. It was created in 1970 by President Richard Nixon through a reorganization of several federal agencies earlier created by Congress.

Executive Office of the President

Created in 1939, this agency assists the president in managing the federal bureaucracy.

Executive Orders

These are rules or regulations issued by the executive branch that have the effect of law. They are used by presidents to flesh out the details of Congressional legislation and guide the executive agencies. The "ordinance power" gives the president the authority to issue executive orders.

Federal Bureaucracy

The federal bureaucracy consists of the roughly 500 departments, agencies, administrations, authorities, and commissions that carry out responsibilities assigned to them through Congressional legislation.

Federal Reserve Board - FRB

This seven-member board governs the Federal Reserve System and sets monetary policy for the United States; that is, by adjusting interest rates and reserve requirements, the "Fed" regulates the amount of money in circulation.

Government Corporations

These are government-owned enterprises that provide services for a fee or engage in a commercial activity. One example is the United States Postal Service. Amtrak, or the National Railroad Passenger Corporation, is also a government corporation founded in 1971 to revive passenger rail travel.

Hatch Act

Passed by Congress in 1939 and amended in 1993, this act regulates the political activity of federal employees. Federal employees may not run for partisan public office, nor may they engage in political activity while on duty.

Independent Executive Agency

These are executive branch agencies, created by Congressional legislation, that do not fall under the jurisdiction or control of the primary executive departments (such as the Department of Agriculture or Department of Defense). Their responsibilities are defined by the Congressional legislation that created them. As a result, some of these agencies are more independent in their operations than other executive agencies. Some of these independent executive agencies serve regulatory purposes, such as the Environmental Protection Agency and the Federal Communications Commission. Others advance specific objectives deemed worthy of government support, such as the National Science Foundation.

Legislative Veto

This refers to any legislation authorizing Congress to overturn a presidential decision. One type of legislative veto is a Congressional requirement that the president submit his decisions regarding the implementation of a bill to Congress for approval. In 1983, in Naturalization Service v. Chadha, the Supreme Court ruled certain types of legislative vetoes unconstitutional. But through agreements with the executive branch such as "report and wait provisions" negotiated during the legislative process, Congress has retained the ability to challenge executive decisions regarding implementation.

Line Agencies

These are federal agencies that perform duties. Unlike the staff agencies that are more advisory in nature, line agencies engage in some sort of activity. Some line agencies are regulatory; others perform services.

Mortgage Backed Security

This is a type of investment in which individual or group investors purchase a stake in a group of mortgages that have been bundled together. The return on these investments is fed by homeowners as they make payments on their mortgages that have been pooled with others. According to many, these poorly regulated securities contributed to the mortgage crisis of 2008.

Muller v. Oregon

This 1908 United States Supreme Court decision established the authority of governments to regulate the workplace. Muller challenged a 1903 Oregon law which limited the work day to ten hours for female laundry and factory workers. Muller argued that this violated the rights of employers and employees to enter into contracts freely. But the Court ruled that the state had a legitimate, and in this case more compelling, obligation to protect the health, welfare, and safety of its citizens.

Munn v. Illinois

This 1877 United States Supreme Court ruling established the authority of governments to regulate private business. When grain warehouse owners challenged the legitimacy of an Illinois state law that regulated warehouse and elevator rates, the Court ruled that state governments could regulate private property "when such regulation becomes necessary for the public good."

Office of Management and Budget

Named the Bureau of the Budget when it was created in 1921, the Office of Management and Budget (OMB) is the executive agency responsible for assisting the president with the formation of the annual federal government budget. Its director is appointed by the president and confirmed by the Senate.

Office of Personnel Management

The OPM is responsible for hiring personnel for most government agencies. It establishes the rules which govern federal employment. Its director is appointed by the president subject to confirmation by the Senate.


This refers to the practice of distributing government jobs and contracts by politicians to rewards supporters and donors. Patronage was widely practiced at all levels of government during the nineteenth century, until civil service reform introduced merit-based hiring practices.

Pendleton Act

This civil service reform measure, passed in 1883 shortly after President James Garfield was killed by a deranged office seeker, made some federal jobs attainable only through competitive processes that usually began with a civil service exam. Originally, only about 10% of all federal jobs were controlled by this act; today, the vast majority of federal positions are attainable only through merit-based procedures and competitive exams.

Report and Wait Provisions

This is one device used by Congress to exercise influence over a bill or agency after a piece of legislation has been signed into law and delegated to the president for execution. These provisions, attached to legislation, require that the president report all intended actions pertaining to an agency or bill to the appropriate Congressional committee for review. The committee may not overturn these decisions; to do so would constitute a "legislative veto" ruled unconstitutional in 1983. But by building in time for review, Congress has the opportunity to mobilize political opposition or draft new legislation relevant to the proposed executive action.


This title is given to the heads of all of the executive departments except for the Department of Justice. The head of the Justice Department is called the Attorney General. These Secretaries, appointed by the president and confirmed by the Senate, make up the majority of the president's cabinet.

Spoils System

This term is used to describe the patronage system. Government offices were distributed to political supporters and donors after elections in order to strengthen party unity. President Andrew Jackson was the first American president to use federal positions for this purpose.

Staff Agencies

These are executive agencies that provide advice or assistance to the president or other executive branch officials. They are more advisory in nature; unlike the line agencies, they do not exercise regulatory functions or deliver services.

Subprime Mortgage

See: Subprime. See: Mortgage. See: Subprime Meltdown.

A prime mortgage is a home loan of, say, $450,000 granted to a power couple with no kids, where she earns $285,000 a year as a divorce lawyer and he earns $240,000 as a proctologist. They bought a $600,000 home, putting $150,000 down (low risk to the bank of the home being worth less than $450,000 plus costs), and this couple has over a million bucks invested in the stock market. Very prime. Very low odds of failing to pay on this mortgage.

Subprime is the couple who stretches to get there. She's a non-union school teacher making $52,000 a year; he's a Home Depot manager making $48,000 a year. Together, they make $100,000, and they want a house as close as they can get to the laywer-and-doctor couple. So they try to borrow $250,000 to buy a $300,000 home, putting just $50,000 down. And no, they have no brokerage account, no real savings. They are...subprime. Sorry, but keepin' it real.

They just didn't have the financial horsepower that the prime couple had, so they're gonna pay higher interest rates, have a way harder time getting a loan, and when they do, very nervous that Home Depot gets Amazon'd, and they're trying to make payments as a one-salary family. Bad sitch.

West Wing

The president's Oval Office, the Cabinet room, and the offices of most of the president's most important advisors are located in the "West Wing" of the White House.

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