Bill Clinton summarized the GOP theme for 2012: “We left him a total mess, he hasn’t cleaned it up fast enough, so fire him and put us back in.” [MST] Now Sen. Marco Rubio (R-FL) is pushing the theme in Las Vegas:
Obama “doesn’t understand the free enterprise system,” Rubio said, arguing government is too big and is hurting small business and job growth with too many regulations and taxes. [LVRJ]
Fact check time. Actually in terms of the total number of regulations adopted, the Obama Administration is well behind the administration of President George W. Bush. President Bush approved 931 regulations in his first three years, President Obama has approved 886. [FC] So, what would those “too many regulations” concern?
Investment Sector Regulations
The first, and most obvious source of Republican distress over regulations are those which seek to curtail the antics of the investment sector. Implementation of the Dodd Frank Act means that financialists, eager to pick up where they left off before their pipe dreams of exploiting securitization in the housing market exploded like a pipe bomb, don’t care to have any restrictive oversight of their transactions in the derivatives market. The MegaBanks would ever so much like to go back to the days before the Volcker Rule and be able to use insured deposits as a back stop for their proprietary trading. And, the MegaBanks don’t want to write ‘living wills‘ in case their trading desks get out of hand (again) and bring the bank down into insolvency or illiquidity.
The banking sector is also feeling the heat from the Consumer Financial Protection Bureau — which is (to their horror) protecting consumers. Most recently American Express felt the hammer come down on their illegal practices:
“The Consumer Financial Protection Bureau (CFPB) today announced an enforcement action with orders requiring three American Express subsidiaries to refund an estimated $85 million to approximately 250,000 customers for illegal card practices. This action is the result of a multi-part federal investigation which found that at every stage of the consumer experience, from marketing to enrollment to payment to debt collection, American Express violated consumer protection laws.” [CFPB]
Federal regulators also fined American Express $27.5 million for the illegal activities, and about 250,000 American Express customers will be getting refund checks.
Back in September 2012, the FDIC and CFPB ordered Discover to pay $200 million to 3.5 million card holders and fork over a $14 million civil penalty for deceptive practices. Discover also agreed to stop its deceptive marketing, to make restitution to customers who made purchases, provide refunds to customers without requiring more consumer actions, and to submit to an independent audit. [CFPB]
Further, what may have the financial sector’s panties in a bunch are the proposed rules from the CFPB on home mortgages. The CFPB explains:
Mortgage Terms: Under the proposed rule, creditors would have to make available to consumers a loan without discount points or origination points or fees, unless the consumers are unlikely to qualify for such a loan. These options would enable a consumer buying or refinancing a home to better compare competing offers from different creditors, better able to compare loan offers from a particular creditor, and decide whether they would receive an adequate reduction in monthly loan payments in exchange for the choice of making upfront payments.
Interest rates and points: Consumers can pay points, which are expressed as a percentage of the loan amount, and fees to covers costs associated with origination or prepaid interest charges. While these points and fees come in many different names and combinations, they all should function similarly to reduce the interest rate and thus a consumer’s monthly loan payments.
Qualifications for mortgage initiators: Under state law and the federal Secure and Fair Enforcement for Mortgage Licensing Act, loan originators currently have to meet different sets of standards, depending on whether they work for a bank, thrift, mortgage brokerage, or nonprofit organization. The CFPB is proposing rules to implement Dodd-Frank Act requirements that all loan originators be qualified. The proposal would help level the playing field for different types of loan originators so consumers could be confident that originators are ethical and knowledgeable.
Steering: In 2010, the Federal Reserve Board issued a rule that was designed to curtail the practice of loan originators directing consumers into higher priced loans based not on the consumer’s interest, but on the possibility that the loan originator could earn more money. The Dodd-Frank Act included a similar provision banning the practice of varying loan originator compensation based on interest rates or other loan terms. The CFPB’s rule would implement the Dodd-Frank Act provision and clarify certain issues in the existing rule that have created industry confusion.
Mandatory arbitration: The proposal implements Dodd-Frank Act provisions that, for both mortgage and home equity loans, prohibit including mandatory arbitration clauses in loan documents and increasing loan amounts to cover credit insurance premiums.
OK, now who wants to go back to a system in which mortgage terms were intentionally incomprehensible, when a homeowner could pay points and be essentially paying for nothing, when homeowners were steered into mortgage deals in the interest of the bankers, when there were no background checks of any kind on mortgage sellers and no required training, and when if serious problems arose there was no way for the “little guy” homeowner to have his day in court?
Does anyone really want to go back to the “say anything” days of credit card marketing? Money kept in the pockets of middle class working Americans by not allowing mortgage manipulation and credit card rip offs is money they could be saving or spending on their families — a far better way to grow this economy than by allowing the rip-off artists to game the system for their own benefit.
Health Care Regulations
Contrary to right wing radio talkers, there has been no government take over of health insurance in this country, and contrary to the hopes of the Single Payer advocates there is no government sponsored health care for anyone other than people over 65 who are enrolled in Medicare.
What we did get in the Affordable Care Act were requirements that health insurance corporations selling group or individual policies provide comprehensive health care insurance coverage.
Under the terms of the Affordable Care Act when the insurance corporation says it is selling you or your business a “comprehensive” or “basic” policy, the policy must include coverage of preventative health care services, inoculations, cancer screenings, and between 80% and 85% of what they take in as premiums must be used to pay for HEALTH care — NOT executive compensation, advertising campaigns, or other non-medical administrative expenses.
So, would we like to go back to the bad old days of denial of coverage for pre-existing conditions (like being born with a food allergy, or having chicken pox), or for autism screening, for mental health care services, or when the insurance corporations could charge more for women’s policies just because they were women?
We could, for the sake of the MegaBanks and the large health insurance corporations, shave many of the Obama Administration’s new regulations, but the ultimate loser would be 99% of Americans who can’t afford to be ripped off, and shouldn’t be paying health insurance policy premiums for basic services they aren’t getting.
About Those Taxes
Let’s haul out this chart again, illustrating the point that the federal tax rates at their lowest rate at least since 1979.
The chart doesn’t conform to the received wisdom of some in the corporate media and many in the Republican Party — but that’s where we are. There have also been some 18 tax breaks for American small businesses. The President has also suggested a tax reform package which would cut taxes for those earning less than $200,000 per year. [WH] The median income for a family in Nevada was $48,927 in 2011. [DoN]
So, where are all those regulations and taxes ‘hurting’ American small business owners? The garage owners, the beauty shop operators, the small independent retailers, the lawn care services, the framing subcontractors, the dry cleaning companies, the small hardware store owners, the local lumber yard?
The Republicans need a cover story. If a regulation impinges on the bottom line of Merger Mania Wealth Management LLC, then they decry all regulations as an impediment to economic growth. If a regulation requires Bleedem Health Inc. to report a higher “medical loss ratio” then all regulations are detrimental to our economic growth rate. It’s the old “de-regulation mythology” of the last three decades — and we saw where it got us in 2007-2008.
The Republicans need a narrative. “Tax and spend” Democrats has served nicely. No matter that the tax rates are the lowest since the Eisenhower Days, no matter that the rates can be graphed to illustrate the point. The narrative remains because it serves the interests of large corporations and major banking operations. Tax dollars appropriated to subsidize multi-national oil corporations are ‘beneficial,’ but tax dollars expended to train workers for 21st century jobs or veterans who seek college degrees ‘create a culture of dependency?’
We DO understand the free enterprise system, and we understand that it works best when there’s a level playing field, with rational controls to prevent exploitation, and consideration given to our entrepreneurs and our labor force of the future. The short-term vision of the current GOP leadership mirrors the myopia of our current corporate titans — what works to increase the Quarterly Earnings Report is good. Tomorrow we’ll leave for later.
This Scarlett O’Hara School of Business Administration combined with the Mr. Magoo Department of Finance perspective is more destructive of American economic progress than the tepid regulations of the Dodd Frank Act and the implementation of the Affordable Care Act provisions combined.
Perhaps they just don’t understand the free enterprise system?