2.4 Types of Bureaucratic Agencies

Many students find it challenging to differentiate between the four types of bureaucratic agencies: (1) Cabinet Departments, (2) Independent Executive Agencies, (3) Independent Regulatory Commissions, and (4) Government Corporations.

1 – Cabinet Departments

The first category of agencies is the cabinet departments. Because of the “Department” in the name, we know that if the agency is called Department of Health & Human Services, we know it is part of the cabinet. You should be able to explain what each of the agencies does within the bureaucracy. For example, the Department of Transportation works to implement laws associated with highways, interstates and public transportation like buses and subways.

2 – Independent Executive Agency

The second type of agency is probably the most difficult because there is not an easy way to identify them. But students should use the process of elimination from the other three to determine this type of agency.

Students should ask: (1) is it a cabinet position? (2) is it regulating something? (3) is it charging for its services? If the answers to all three of these questions is no, then you know it’s an independent executive agency. And if any of the answers to the questions above is yes, then you know it’s that respective agency.

If it’s not a cabinet department, and it’s not a regulatory agency, and it’s not a government corporation that charges for its services, then chances are good that it’s an independent executive agency. Great examples are NASA (fits this description: not Cabinet, not regulatory and not charging for its services .... so it has to be an independent executive agency). Another example is the National Archives, that is not a Cabinet Department, it is not a regulatory agency, it does not charge for its services, so it is an independent executive agency.

3 – Independent Regulatory Commission

The third category of agency is the independent regulatory commission. These are agencies that regulate or punish wrongdoing for people, groups, corporations, etc. that do not follow the rules. Examples are the FCC (regulate broadcasting, say something inappropriate and be fined or banned from the airwaves), the SEC (determining if people bought and sold stocks illegally or had information that the public didn’t have), and the Federal Trade Commission (determining if a product

is being advertised to do something that it can’t possibly do ... age-reducing cream, you’ve won $1 million, cigarettes are good for you).

Independent regulatory commissions act as judges in their respective areas of expertise, determining if someone acted legally or illegally in what they have done. But they only can pursue violators within their area of expertise. The FCC cannot take action against illegal stock traders, as that’s the SEC’s job. Likewise, the SEC cannot take legal action against people who said something inappropriate on the television or radio airwaves because that’s the FCC’s job.

4 – Government Corporation

The last category is the government corporation. This one is easier to identify because they charge for their services. The US Postal Service is a great example because they charge us to mail a letter. The Tennessee Valley Authority also charges for electricity and AMTRAK charges for us to ride on their trains.

These government corporations operate separately from the government, like a private corporation does, but they are funded by the government when they cannot pay all of their bills. Many times, these agencies tend to operate in the red (they lose money) because of the constraints that Congress has placed on them to be open in money-losing parts of the country (USPS and AMTRAK) and won’t let them shut down locations that lose money or not stop in locations that aren’t worth servicing. But because members of Congress fear what constituents might think about their only railroad station shutting down, they keep the pressure on, which keeps the bills piling up, and in many cases keeps these agencies from being profitable.

... So how do I tell the difference between these agencies?

To determine the classification of an agency, ask: (1) is it a cabinet position? (2) is it regulating something? (3) is it charging for its services? If the answers to all three of these questions is no, then you know it’s an independent executive agency. And if an answer to any of the questions above is yes, then you know it’s (1) a cabinet agency/department, (2) an independent regulatory commission, and (3) a government corporation, respectively.