Regulation after Bush

What does the future hold for regulating Wall Street?

Regardless of who wins today’s election, both Barack Obama and John McCain have staked out different positions on issues involving economic regulation – and each is very different than the outgoing president.

The Economists’ Voice looks at what we might expect in the post-Bush era:

While  the  presidential  candidates  have  been  diverted  by  critical  issues  ranging  from  Barack  Obama’s  taste  in  lettuce  to  John  McCain’s condo,  it’s  hard  to  deny  that,  once  elected,  serious  questions  involving  economic  regulation—everything  from  housing  finance  to  alternative  energy  mandates—will  be  front  and  center.  And  here,  at  least,  the  divisions  are  clear:  Obama  would  use  a  heavy  hand  to  push  the  economy  back on  track,  while  McCain  would  do  his  best  to  put  the  free  back in  free  markets.

Or maybe  not.

Ever  since  the  New  Deal,  Democrats  have  largely  accepted  the  label  as  the  party  of  regulation—defenders  of  the  weak  from  the  vagaries  of  soulless  capitalism.  Republicans,  for  their  part, position  themselves  as  the  nemeses  of  the  social  engineers  and  do-gooders  who  would  sap the  economy  of  vigor.  But once in office, reality bites. Thus, with  more  than  a  little encouragement  from  Detroit,  Ike  committed  the  GOP  to  the  biggest  public  works  project  in history— the  Interstate  Highway  System.  Richard  Nixon  imposed  price  controls to contain inflation, while Ronald Reagan  protected  the  swooning  steel  industry  from foreign competitors and the first President Bush championed  market  intervention  in  the  name  of  cleaner  air  and  accommodations  for  the disabled. The second Bush hasn’t stood on principle  either,  lavishing seniors  with  heavily  subsidized  prescription  drugs  and  supporting  bailouts  for  both investment  bankers  and  the  giant  private  mortgage  insurers.

Democrats,  of  course,  have  been  no  better  at  sticking  to  their  script.  Carter  deregulated  airlines  and  trucking,  while  Clinton  deregulated  telecommunications  and  nuclear  enrichment  as  well  as  opening  the  door  to  cheap  Mexican  imports.

Thus, while Obama and McCain may both lull  true  believers  with  the  bromides  of  an  earlier generation,  a  subtler  mix  of  ideology  and  interest  group  muscle  is  bound  to  drive  the  regulatory  agenda  once  elected.  Consider  just  a  few  of  the  big  choices  ahead.


“Regulation after Bush”
Robert Hahn and Peter Passell
The Economists’ Voice: Vol. 5 : Iss. 4, Article 5. (2008)

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