The blame for bloated economy

[formerlurker]

Granted, there is significant recent legislation that eased financial restrictions. Most often mentioned is the Gramm-Leach-Bliley Act, which, as The New York Times described it on Monday, "removed barriers between commercial and investment banks that had been instituted to reduce the risk of economic catastrophes." Some argue that the law, which allowed traditional banks and investment firms to be affiliated under one holding company, helped bring on the credit meltdown. Even if true, how was that George W. Bush's fault? The law was signed by President Bill Clinton in 1999, after being passed by lopsided majorities in both houses of Congress.

Gramm-Leach-Bliley's lead sponsors were Republicans, but the 34 Democratic senators who voted for the bill surely weren't scheming to "let the market run wild." Ditto the 151 Democrats - among them future Speaker Nancy Pelosi - who voted for the measure in the House. Then-Treasury Secretary (and current Obama adviser) Larry Summers didn't denounce the bill as "laissez-faire jungle capitalism" - he praised it for "promoting financial innovation, lower capital costs, and greater international competitiveness." Clinton himself defends the law to this day.

This is not to say that Bush hasn't also been responsible for legislation having a decided impact on the country's regulatory climate. Declaring that free markets must not be "a financial free-for-all guided only by greed," he signed the Sarbanes-Oxley law, a sweeping overhaul of corporate fraud, securities, and accounting laws. Among its many tough provisions, the law created a new regulatory agency to oversee public accounting firms and auditors, and imposed an array of new requirements for financial reporting and corporate audits. Whatever else might be said about Sarbanes-Oxley, it was no invitation to an uninhibited capitalist bacchanal.

Like the alligators lurking in New York City sewers, Bush's massive regulatory rollback is mostly urban legend. Far from throwing out the rulebook, the administration has expanded it: Since Bush became president, the Federal Register - the government's annual compendium of proposed and finalized regulations - has run to more than 74,000 pages every year but one. During the Clinton years, by contrast, the Federal Register reached that length just once.

Similarly, the administration has broken every previous record for regulatory agency spending. According to researchers at Washington University and George Mason University, appropriations for federal regulatory functions have shot up during the Bush years. Adjusting for inflation, the regulatory budget has grown from $25 billion in fiscal year 2000 to an estimated $43 billion in FY 2009 - a 70 percent increase. "In constant dollars," writes James Freeman in the Wall Street Journal, "the Bush regulatory budget increases vastly exceed those of predecessors Clinton, Bush, Reagan, Carter, Nixon, and, yes, Lyndon Johnson." Staffing has skyrocketed, too. Regulatory agencies employed 175,000 people in 2000. They employ nearly 264,000 today. (Some of that reflects the Transportation Security Administration's takeover of airport security screening in 2003.)

Amid the stress and storm of the financial crisis, "deregulation" makes a convenient villain. But the facts say otherwise: The nation's regulatory burden has grown heavier, not lighter, since Bush entered the White House. Too little government didn't make the economy sick. Too much government isn't going to make it better.

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/11/19/the_blame_for_bloated_economy/

[Woody]

That's exactly my retort when I hear "Bush's deregulation" is at fault:  "Can you tell me exactly what was deregulated, and how it caused this?"

Similar: When someone says they support the troops: "Exactly how do you support the troops?  Do you think kindly of them from time to time, or something more?"

If anyone asks, I thank them in person when I can, and over 70% of my charitable giving goes to organizations directly supporting military families.