Democrats Adopt New Motto: Regulate, and Then Regulate Some More

COMMENTARY Government Regulation

Democrats Adopt New Motto: Regulate, and Then Regulate Some More

Dec 15, 2006 3 min read
COMMENTARY BY

Former Distinguished Fellow

Michael is a former Distinguished Fellow at The Heritage Foundation.

Corporate America, "fat cat" investors, entrepreneurs--and maybe even anyone with a special yen for French fries--could be in for a bumpy ride for the next couple of years. Especially if they drive an SUV.

That's because so many liberal Democrats rode a wave of heated rhetoric to electoral victory last month. In their campaigns, liberals railed harshly against a litany of homegrown "evils." Some were entire industries: oil and natural gas, pharmaceuticals, tobacco, fast food chains--and virtually any sector that dares emit a greenhouse gas. Others were specific firms--Wal-Mart and Halliburton, for instance.

Also demonized were whole segments of the population: wealthy individuals who, it is said, simply refuse to pay their "fair share" of taxes; nobs who dare invest in overseas "tax havens"; overpaid corporate CEOs; physicians (They must be filthy rich, right?); mom-and-pop entrepreneurs who do not buy health insurance for their employees; and bubbas with a weakness for tobacco, fatty foods, gas-guzzling SUVs and guns.

If the liberals who vowed to bring these "enemies of the people" to heel actually follow through on their rhetoric, a large slice of America may soon feel a pinch. For some, it could mean a higher tax bill; for others, enhanced regulatory burdens. Still others will face the prospect of endless "oversight" hearings or multi-billion dollar civil lawsuits and criminal prosecution for purely economic crimes.

How, precisely, will this unfold on Capitol Hill?

First, the good news. The "pay-as-you-go" (PAYGO) budget standard on which Democrats campaigned should constrain their ability to dramatically expand federal spending. Indeed, on November 21, incoming Speaker Nancy Pelosi (D.-Calf.) announced that the new motto of the Democratic Party is "no new deficit spending." Last week, the incoming chairman of the Senate Budget Committee, Kent Conrad (D.-N.D.), echoed Pelosi, saying: "As a basic principle, we should say everything's got to be offset. You want to do something, bring us the money. Show us the money."

If the Democrats apply PAYGO to all categories of spending, and not just to entitlement programs, politically attractive schemes will run head-on into the PAYGO buzz saw--the requirement that proposals that would increase spending pay for them, either by offsetting spending cuts or tax increases. This requirement could be a legislative stake in the heart for liberal plans to hike spending on higher education, alternative fuels, mass transit, housing, or health care. With Bush in the Oval Office and at least 40 conservative senators determined to pounce on any tax increase, liberals will find it next to impossible to advance an agenda that adds to the taxpayers' fiscal burden.

So, if massive new spending increases are unlikely, where else might the new congressional leadership turn to advance its liberal agenda? Rather than tax and spend, the real new motto for the Democratic Party could well be: regulate, and then regulate some more.

Consider some of the regulatory initiatives the new power brokers have in store for us:

  • The Internet: Liberals have long sought to make Internet accessibility the newest entitlement. Expect to see legislation to make "affordable" broadband access available to all Americans within five years, privacy legislation that will limit online marketing and advertising practices, and the imposition of net neutrality requirements on Internet providers.

  • Global Warming and Energy Independence: The quest for "energy independence" could lead to costly mandates. Automakers will be required to increase fuel efficiency. And consumers may be forced to make greater use of alternative fuels such as wind, biomass and ethanol. Liberals also want to give the Environmental Protection Agency authority to regulate carbon emissions, a potentially debilitating burden on the industrial sector.

  • Price Controls: Liberal have an irrational fondness for price controls. In addition to boosting the federal minimum wage, they will try to dictate pricing in the health sector (by controlling drug prices and the fees Medicare and Medicaid will pay doctors for treating the elderly and the poor), the energy industry (by enacting draconian "price gouging" laws that will penalize the oil industry if and when prices spike again), and executive compensation (by making it easier for shareholders to mount legal challenges to "excessive" CEO pay packages).

  • Consumer Protections: A few examples of this wide-ranging agenda include regulating "abusive" mortgage lending practices, imposing tighter safety standards on food and drugs, stipulating the interest rates on student loans, and regulating the investment practices of pension funds.

These regulatory initiatives may not set off budgetary alarm bells, but they would place an unforgiving straitjacket on the most innovative parts of our economy and set us on a course to European-style stagnation. It is on this terrain that the major legislative battles in the 110th Congress will be fought.

Michael Franc who has held a number of positions on Capitol Hill, is vice president of Government Relations.

First appeared in Human Events