Originally published in the Greenwich Time, 3:28 pm, Saturday, December 19, 2015
In 2016, Americans face the challenge of reclaiming our Constitutional system. If we get this right, we can hope to restore the American Dream for our children and grandchildren. We cannot afford to get this wrong.
The first job of the next Congress must be to curtail government overreach, especially the alphabet chain of arbitrary and opaque bureaucracies that is strangling our economic growth and undermining the will of the electorate. Congress can only do that if it reclaims its job of actually making the laws we must all live by.
If states are laboratories of our democracy, my own state of Connecticut is an experiment in government bloat. Forbes ranks us in 2015 45th in the cost of doing business, 44th in economic climate and 41st in regulatory environment — dismal numbers whose consequence is the steady exodus of employers big and small. Take the example of Borgeson Universal Co., which recently moved to South Carolina after more than 100 years of operating in Torrington, fed up with the tentacles of the administrative state digging deeper and deeper into wages, benefits and work practices, while income taxes, property taxes, budget deficits and public pension liabilities spiral higher.
At the national level, we find 2,224 new federal rules dropped on us on a late pre-Thanksgiving Friday afternoon; the American Action Forum estimates the total cost of regulation in 2015 at $183 billion. The regulatory agencies — from the EPA to the FCC to the completely unaccountable Consumer Financial Protection Bureau (CFPB) — don’t bother to mask their arbitrary arrogance. Career politicians in Congress don’t bother to use the power of the purse to rein them in.
Especially troublesome is the creeping paralysis of American capital markets by Dodd-Frank, 848 pages of statute that, according to the Mercatus Center at George Mason University, will require over 28,000 new separate regulatory restrictions by dozens of regulatory agencies, more than for all other legislation since 2009 put together.
More new rules were added to the Banks and Banking chapter of the Code of Federal Regulation in the past four years than were even in existence in 1980, and, according to Senator Elizabeth Warren, the process has “just begun.” This is not the rule of law — it is the rule of unelected bureaucrats.
Dodd-Frank is especially destructive because it starves small businesses, historically our economy’s largest job creator, of the credit they need to grow. Lending institutions large and small bear the costs of monitoring compliance with tens of thousands of hastily manufactured stipulations
For smaller banks the costs become prohibitive. Small banks, which in 2014 held 51 percent of all small business loans and 77 percent of all agricultural loans, are getting squeezed out of the lending business. Loans to small businesses are down 38 percent since 2006, with early-stage businesses hardest hit.
To that we add in opaque capital rules. Dodd-Frank significantly expanded the scope of the Federal Reserve, especially in devising stress tests to evaluate the soundness of financial institutions; the Fed uses the tests to set capital levels banks must hold against various assets.
Or perhaps it doesn’t; we will never know. The stress test model is growing in the dark, another constantly mutating creation of unelected and unaccountable bureaucrats. The secrecy is another cost to the economy, but valuable to ex-regulators, who go on to highly compensated jobs with big law firms to help their clients navigate the regulatory morass. Dodd-Frank should be renamed the “The Lawyer and Lobbyist Income Enhancement Act.”
The solution to the regulatory overreach that is strangling our economy is not easy, but it is simple. Congress must reclaim its prerogative as the legislative branch. We need Representatives and Senators who are committed to their Constitutional responsibilities. This may require significant turnover from co-opted incumbents to legislators doing their actual jobs as rule-makers.
The choice in Connecticut in 2016 will be a clear one.
August Wolf, of Stamford, is an Olympian, a wealth manager, a father of four, and the only declared Republican candidate for Connecticut U.S. Senate in 2016. Wolf is running to replace current U.S. Sen. Richard Blumenthal, D-Conn.