Since it was signed by President Obama, House Republicans have threatened to essentially repeal the Affordable Care Act by refusing to fund it. “I can’t imagine a Republican Congress is going to give this President the money to begin this process,” House Minority Leader John Boehner (R-OH) has said. A spokesman for House Minority Whip Eric Cantor (R-VA) even has a list of “possible targets for defunding.”
Could Republicans attempt to do the same to the Dodd-Frank financial regulatory reform legislation? Before Congress left for its current recess, the federal bank regulators — including the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Treasury Department — requested funding to begin implementing the bill, but were shot down by Republican opposition:
The request for additional short-term money ran into tough criticism from Republicans, who sought a “clean” spending bill without the increases. House Republicans opposed the Obama administration’s request for money for the Treasury Department because it creates a new Consumer Financial Protection Bureau (CFPB) with oversight of consumer products, including home loans and credit cards. With Republicans set to gain additional seats, or possibly control of Congress, in the midterm elections, the battle over appropriations will likely continue in a lame-duck session of Congress.
“The implementation of that good and historic law is in jeopardy if the CFTC doesn’t have increased resources,” Bart Chilton, a CFTC commissioner, said last week. Let’s not forget, many Republicans have expressed a desire to repeal Dodd-Frank outright, and if they can’t get that, defunding agency efforts to implement the new rules is the next logical step.
Right now, the agencies are implementing Dodd-Frank with whatever money they can scrape together from their existing budgets, but of course setting up a new consumer protection agency and creating the infrastructure necessary to police previously unregulated portions of the financial system requires some additional money. I’d also argue that it’s worth investing over the long-term in a system aimed at protecting the American taxpayer from a repeat of 2008’s financial meltdown.
There’s also a fairly simple solution for finding the funds necessary to implement the bill, in a time of necessary fiscal restraint, if they can’t be found elsewhere: a bank tax. Remember, Republicans scuttled such a tax during the last-minute negotiations over Dodd-Frank, which left Democrats scrambling for another way in which to make the bill’s resolution authority deficit neutral (which they found). Since we’re talking millions that are needed for Dodd-Frank implementation, but billions are able to be raised via a bank tax, the rest could be used to reduce the deficit or be dedicated to job creation programs.
A regulatory system only works if regulators have the resources to do their job and if their pay is adequate enough that they actually attract people who can competently go head-to-head with Wall Street’s finest minds. Refusing to fund enhanced regulations is an implicit show of support for the previous regulatory framework, which was a stupendous and spectacular failure.