Senate Republicans last week successfully defeated an omnibus spending bill that would have funded the government through the end of the current fiscal year (October 2011). To avoid a government shutdown, the new plan is to pass a continuing resolution that funds the government at the current level through March 4, 2011.
The resolution unveiled by Senate Democrats, aside from the obvious benefits of keeping the normal functions of government rolling ahead, also addresses some key problems. Chief among them is covering the $5.7 billion shortfall in Pell Grants, which would have resulted in award cuts if it wasn’t addressed.
However, the resolution does not include funding for the implementation of the Dodd-Frank financial reform law. Under the omnibus, the Securities and Exchange Commission would have seen its budget increase to $1.3 billion from $1.1 billion, and the CFTC would have gone from $169 million to $286 million.
Already, the SEC has halted implementation of a variety of measures under the law as it waits for funding. Included in this halt are new regulations for credit rating agencies and an office for financial markets whistleblowers. The Commodity Futures and Trading Commission (which is charged with implementing the derivatives title of the bill) has said that its current funding level “is far less than what is required to properly fulfill our significantly expanded role.” “The implementation of that good and historic law is in jeopardy if the CFTC doesn’t have increased resources,” Bart Chilton, a CFTC commissioner, has said.
If the prospects for enhanced funding next year looked promising, this would be less of a problem. However, House Republicans are threatening to deny funding to the agencies implementing the bill when they take control, and in particular to kneecap the newly-created Consumer Financial Protection Bureau before it even gets off the ground. This is much the same game that the GOP is threatening to play when it comes to funding the Affordable Care Act, which also got tripped up by the omnibus spending bill’s defeat.
One of the most legitimate criticisms of Dodd-Frank is that it left too much discretion to the regulators to design and implement new rules. Denying those regulators the funding to do an adequate job is a good way to make government look ineffective and then use government ineffectiveness as a justification for policy changes.