In a 2008 piece in the Financial Times, Congressman Barney Frank, Chairman of the House Financial Services Committee, opined that the financial collapse was clearly an indictment of “America’s 30-year experiment with radical economic deregulation.” Leaving aside Congressman Frank’s diagnosis, it is worth considering briefly the question of deregulation. There is no better guide than the Regulators’ Budget Report produced by the Weidenbaum Center (Washington University, St. Louis) and the Regulatory Studies Center (George Washington University).
Some points worth reviewing:
- Despite the above quote, during the period 1980 -2010, regulatory budgets (expressed in 2005 dollars to adjust for inflation) increased from $15.3 billion to $50.4 billion. In short, they more than tripled, greatly outpacing the growth in GDP.
- What of the presidency of George W. Bush? Between the year Bush entered office (2000) and the year he left office (2009), inflation adjusted spending increased from $28.7 billion to $46.3 billion.
- Ah yes, but didn’t Bush starve the financial regulators, hence the crisis? Once again, we have an ugly fact that slays a beautiful theory. Under Bush’s watch, financial and banking regulatory budgets increased (once again, in inflation adjusted terms) from $2.2 billion to $2.6 billion.
It is too early to make a judgment of how the Obama administration will perform relative to its predecessors, but the 2011 requests ($52.5 billion) are well above the levels he “inherited ($46.3 billion).
Adjusted for inflation, the proposed regulatory budget for 2011 would be 343 percent greater than when Reagan was elected. So much for a “30 year experiment in radical deregulation.”
Read the Regulators’ Budget. Like Pileus, it’s free, informative, data driven and remarkably free of invective.