Two wings of the Republican Party engaged in political combat on Wednesday, June 25th over an important question of regulation of the financial sector of our economy. The result was about as one-sided as it could be -- the social/religious conservatives who believe that the main function of government should be to impose various personal behavioral choices on individuals beat those whose main goal is loosening what they believe to be inefficient restrictions on the free market economy by better than 9 to 1.
The subject was the bill passed -- during a Republican Congress -- that puts tighter regulation of gambling on the Internet and does it by imposing on banks, credit unions and other financial institutions the job of policing this particular effort at prohibition. Some of us -- Rep. Ron Paul and myself for example -- would like to see the whole bill repealed so that individual choices regarding gambling can prevail over the views of others that adults should not be allowed to spend their own money in this way. But in the Financial Services Committee on Wednesday, a more moderate effort to relieve some of the regulatory pressures of this scheme was under consideration. Representative Peter King offered an amendment to the law to instruct the Department of the Treasury and the Federal Reserve not to proceed with very tough regulations of the financial system until some important questions about the scope of all were clarified.
While falling short of the full reform many of us wanted, it was an important step towards making this law much less of an intrusion into people's lives, and was very much sought after by the banks, credit unions and other financial institutions. In fact, the amendment proposed by Peter King -- the Senior Republican on the Homeland Security Committee, which is relevant since some of those seeking to ban gambling have tried to argue that this is necessary in some way to diminish terrorism -- was backed by the Chamber of Commerce, Grover Norquist and the Americans For Tax Reform, and the Financial Services Roundtable. On the other side were the various conservative social and religious groups who voted that adults should be protected from themselves by banning gambling. Democrats on the Committee were overwhelmingly on the side of their Republican Colleague, Peter King, and voted 29 to 4 in favor of the King amendment. Before the meeting, various members of the economic interest groups that were supporting that amendment had expected to get a significant number of Republican votes as well. But then the religious right and their allies stepped in. As a result, a number of Republicans who had committed to vote for the bill switched their votes, and the final vote on the Republican side was 28 in favor of insisting that Treasury and the Federal Reserve impose these stringent and intrusive regulations, and only 3 against it. Combining the overwhelming Democratic vote in favor and the even more overwhelming Republican vote against produced a tie -- 32 to 32, and in this game, a tie means that the amendment is defeated.
In other words, the leading economically conservative organizations and representatives of financial institutions who are argued that the proposed regulations would interfere with the functioning of our financial system had the support of less than 10% of the Republicans. 90+ % of the Republicans voted along with the social conservatives to maintain the position that the federal government should be restrictive of individual choice in the matter of gambling and should compel the banks to be the banks to be the enforcers.
I regret the fact that this became partisan. I was hoping that it wouldn't be, and I have been working closely with some of those most dedicated to economic deregulation of the appropriate sort.
But it became partisan because the religious/social extreme conservatives continue to be in control of the Republican Party on a whole range of issues, and they demonstrated once again that it is they and not those dedicated to what they believe are free market principles who have the upper hand in internal Republican Party disputes.