A lot of rightful facepalming has been made over GOP Rep. Paul Ryan’s odiously awful budget proposal adding some 50 million Americans to the ranks of the uninsured and basically handing over trillions to the one percent, but in addition to all that the GOP would end up obliterating Dodd-Frank and leaving us with the same “oversight” we had in 2007 when the financial meltdown came barreling through our lives. Suzy Khimm over at Ezra Klein’s Kaplan Nerd Farm details the carnage:
The Ryan budget, however, would actually repeal the FDIC’s new resolution authority, arguing that it would have the opposite effect of what’s intended by allowing bank regulators “to access taxpayer dollars in order to bail out the creditors of large, ‘systemically significant’ financial institutions.” By doing so, Ryan says he would “end the regime now enshrined into law that paves the way for future bailouts.”
His blueprint doesn’t go into much further detail to explain why this is the case. But other critics of Dodd-Frank have argued that it could enable the FDIC to take control of failing firms and rely on taxpayer funds to keep the systemically important parts running through a government-run “bridge” financial company. That’s likely why Ryan believes the cost of the new resolution authority could far exceed the Congressional Budget Office’s $26 billion estimate.
While outside analysts across the political spectrum have shared Ryan’s concerns that Dodd-Frank doesn’t do enough to stop Too Big to Fail, their specific worry is often quite different than Ryan’s: they’re worried that bank regulators have too little authority, not too much, to quickly take down failing firms. It’s unclear, for example, how swiftly and forcefully the FDIC would use the new rules to liquidate a highly troubled, systemically important firm.
Repealing that authority as Ryan proposes eliminates a new government channel for intervention, but it wouldn’t explicitly prohibit future bailouts, which could become more likely if systemically risky banks aren’t wound down in an orderly fashion.
Of course they would be, that’s the point. Banks are profitable now only because they got trillions in mulligans from the Bushies (and FOX News has done a terrific job of lying to the American people, convincing them that President Obama bailed out the banks, not Bush and Hank Paulson, and conflating the Obama stimulus with the Bush bank bailout on purpose.) Here’s the thing: I know everyone says that Ryan’s budget proposal is just empty posturing that has no effect on the actual budget, but if there’s a GOP Senate to go along with the House in 2013, these proposals will end up on the President’s desk.
Let’s not pretend that the GOP getting into actual power will moderate the Ryan Plan. This is their plan for America’s future, where the rising tide lifts all yachts and drowns the rest of us who can’t tread water. And speaking of the Kaplan Nerd Farm, when Ezra Klein says things like this:
Today, the Republican Party is in a different place, and my theory is that it’s because they’ve committed themselves to a set of fiscal priorities — lower taxes, higher defense spending, no entitlement changes for 210 years, and lower deficits — that can only be reconciled through draconian cuts to programs for the poor.
The result is that when Republican politicians stop speaking for themselves and begin speaking for their party, their fiscal proposals have to reflect those priorities, and so they end up cutting deep into programs for the poor, even though that may not be their personal preference. But that is, of course, just speculation.
I have to have a good, long laugh, because the dude has it so backwards it’s actually funny. Draconian cuts to the poor
at the expense to give more to the rich was exactly what the Republican party has been engineering since 1980. We’re just in the endgame now. They didn’t “accidentally leave themselves no other choice” any more than any other fanatical group of nutjobs have throughout history. The cuts have been the point all along, knucklehead. Like I said, let’s stop pretending that a series of unfortunate and non-preventable accidents led the GOP to this sad fate. This is deliberate, it has been deliberate, they believe this stuff period, and we have to recognize that first thing.
[UPDATE:] Oh, and for the folks still convinced that none of this is deliberate and that the Ryan Budget will quietly die in the House because it’s an election year, well that’s not happening either.