It was quite an experience to read Rob Portman’s article about his deregulation bill (“Portman introduces ‘Job Creation Act,’ February 10th). Given the fact that the economy we have now is the direct result of “financial deregulation,” it is difficult to see how he expects “deregulation” to produce jobs.
When the Republicans controlled the House of Representatives from 1995 to 2006, they engaged in an orgy of deregulation which resulted in the Enron catastrophe of the early 2000’s and the Wall Street crisis of 2008. During the deregulation-obsessed Bush administration, which Portman served for two years as “trade representative,” 40,000 American factories closed and America lost one third of its manufacturing jobs. It is also interesting, considering the Republicans’ self-proclaimed concern for jobs, that a bill which gives tax breaks to companies that move jobs to China was passed in 2005 by a Republican Congress and signed by George Bush, Jr.
The financial crises of the last decade were the direct result of the repeal of the Glass-Steagall Act and the repeal of other New Deal legislation that was passed in response to the Great Depression. The Glass-Steagall Act was a bill sponsored by Senator Carter Glass (D-VA). The congressional inquiry into the stock market crash of 1929 revealed that reckless and irresponsible speculation by bankers had been a major cause of the bank failures of the Depression. The Glass-Steagall Act separated investment banking from savings banks in order to prevent the savings of average citizens from being jeopardized by the “casino” mentality which periodically infects investment banking.
Laws such as Glass-Steagall and other New Deal regulations were intended not only to put the economy back on a sound foundation, but to prevent another Depression. These measures laid the foundation for the prosperity that followed in the 40’s, 50’s and 60’s. The wild swing from boom to bust that had characterized much of America’s economic history prior to that time was replaced by steady growth. The repeal of Glass-Steagall and other New Deal legislation made the crisis of 2008 possible.
When Ronald Reagan deregulated the savings and loans in the 1980’s, the result was the savings and loan crisis (cost to taxpayers: $180 billion). Deregulating the electric utilities during the Gingrich era resulted in the Enron catastrophe. Although Enron, WorldCom, Global Crossing, and other corporations committed crimes for which some of their executives were prosecuted, some of the scams that these corporations engaged in were legal due to deregulation and therefore were not prosecuted.
In the wake of the Enron scandal, the Republican-controlled House then legalized some of the crimes that Enron was prosecuted for, and had the brazen mendacity to call it a “reform” bill. Needless to say, George Bush, Jr., signed it quickly.
In addition to the negative effects deregulation has on the national economy, the individual consumer, and the taxpayer, deregulation puts the honest businessman who wants to do the right thing at a competitive disadvantage to the other kind.