As President Obama and the House Republicans prepare for an enormous budget fight this spring over the direction of government spending, House Republicans are poised to gut funding for countless government agencies and initiatives, including the healthcare reform and financial regulation bills, basic education and healthcare funds, and environmental protection. The Republicans loudly argue that everyday Americans would be better off with an economy free of regulation. They could not be farther from the truth; an economy free of regulation and government intervention would be an unmitigated disaster where the wealthy would trample over the poor and middle class.
The simple fallacy that the economy will be stronger without government interference or regulation can be disproven by examples and services so basic that we take them for granted. We usually trust that the mutual funds or asset managers that we invest our money with won’t steal it because doing so is blatantly illegal. Despite the Bernie Madoff scam, the Securities and Exchange Commissin has done a reasonably good job ensuring that scams have been a rare occurrence and has been empowered under the new financial regulation legislation to expand investigations for criminal activity in the financial world. The legislation has also empowered the Department of the Treasury and the Federal Reserve to protect American consumers against unfair credit card and lending practices.
These financial regulators must now spend the funds to hire new employees and support more initiatives, but according to the current SEC chair, the agency’s current low budget is “compromising the agency's ability to police the financial markets.” Instead of increasing funding to fulfill these responsibilities, Republicans plan to cut the budget for financial services regulators by 16 percent for the rest of 2011, effectively bringing all the necessary hiring and expansion for regulation to a halt. Defunding will help financial institutions do anything they desire to make a profit, regardless of its legality or effect on the everyday American.
Government regulation has arguably been most effective in protecting the environment against negative market forces. In an unregulated world, businesses would buy every open piece of land, cut down most forests, and burn coal or drill oil wherever convenient. Instead, we live in a regulated economy where plenty of oil drilling, coal burning and land development is allowed, but within limits that still allow for National Parks, historic monuments, and clean air and water. Proposing to cut the budget for the Environmental Protection Agency and Department of the Interior by 14 percent, Republicans would weaken all of these protections, and leave Americans at the mercy of heavily polluting corporate forces. Taking away funds from these agencies would be popular with mining and energy executives, but average Americans will lose the essential environmental protections that are necessary to their livelihood.
Of course, there is also the healthcare marketplace, perhaps the Republicans’ most glorified battlefield for their so-called “economic freedom.” The Republicans propose to cut the 2011 budgets for the Department of Health and Human Services by 13 percent, significantly hurting the efforts to implement the healthcare reform bill. A bill that has already been passed will have to, in the words of Ezra Klein, “limp forward,” not being as effective as it should be in reforming the insurance market, stopping insurers from refusing patients with pre-existing conditions, and testing new pilot programs to reduce medical costs.
These are not the only regulatory functions that will be affected by the proposed cuts; everything from the safety of our food to workplace conditions will be at risk with a weakened and defunded government. Republicans frame many of these budget cuts as necessary to reduce the deficit. In reality, however, Republicans are avoiding the main long-term causes of America’s budgetary problems. Large entitlement programs and defense spending are the major federal fiscal outlays, while the financial regulation and healthcare reform bills, as well as many EPA rules, actually save Americans money over the long term. The Republican spending plan clearly favors the short-term interests of large businesses over the long-term interests of American citizens or the federal government.
Regulating the market economy is the one way in which citizens can organize to make sure that the interests of businesses do not actively harm the interests of everyday Americans. As the budget fight commences, Democrats must aggressively fight the efforts of Republicans to stifle regulations by illustrating the positive effects of government interventions in our market economy. We must realize that when we walk outside, drink water, invest our money, and buy healthcare, intelligent regulations make our lives safer and more secure.
Ravi N. Mulani ‘12, a Crimson editorial writer, is an applied mathematics concentrator in Winthrop House.