MSGP in the News: Why political positions on financial policy are extra important this year

November 7, 2016

MSGP in the News: Why political positions on financial policy are extra important this year

This ran in the Washington Examiner on Sunday, Nov. 6th. The winning Senate & House candidates should tell us their policy views before the next Congress starts in January.

Why political positions on financial policy are extra important this year

The economy is always important to voters, but this year we should be extra vigilant when examining candidates’ economic policy positions. Why? Because we don’t have great weapons at our disposal to combat an economic downturn.

The usual policy levers, like lower interest rates and fiscal stimulus, aren’t as available as they were in 2007 at the start of the last recession. We may be, as the expression goes, bringing a knife to a gunfight. In any event, both easier money (think quantitative easing or negative interest rates) and fiscal stimulus are poor economic substitutes for true pro-growth policies.

One effective tool we do have is regulatory reform. Surprisingly, this is an area of bipartisan agreement. Both Hillary Clinton and Donald Trump have pledged to boost small-business lending via regulatory relief for community banks.

Yet, many of those running for office haven’t had to take a position on this issue. Many of the key Senate races feature a challenger that has never held federal office and hasn’t publicly commented on community banking regulations.

Want a growing economy? Want greater economic opportunity? There’s only one real avenue. We need more new businesses.

Older businesses fail every day. The ones that keep going don’t add enough jobs, as they get more efficient or lose out to international competition.

Consider a well-known example: Netflix and other streaming media services have killed off the video rental business. One industry was replaced by another. Fortunately for the United States, many streaming services like Netflix and Hulu are American firms. We can replace lost Blockbuster jobs with new Netflix-type jobs.

What if the streaming-video industry was instead created in Canada or Japan? The U.S. would miss out on all the jobs and wealth creation that comes with a new domestic industry. We’d get to use the cool new technology, but that’s about it.

Even that example is admittedly imperfect, since most new businesses aren’t Silicon Valley-type firms. They are “mom & pop” sandwich shops and nail salons, which often need bank loans to get going. That’s where regulatory relief comes in, and why my organization has a six-question candidate questionnaire about these kinds of issues.

Ask those running for Senate and House in your state to fill out our survey. Even if we don’t have answers by Election Day, voters can still ask winning candidates to state their plans before they take office in January.

Let me say this to our candidates: We respect that you got in the ring, but please always remember one thing. You are running to be public servants, and we are the public. That tells you the dynamic that governs our relationship. We pay you to do a job. Other than national security, your number one job is creating economic opportunity.

All we want is to work and provide for our families. Politicians have the tools at their disposal to make that happen. The U.S. is like a great car that just needs an oil change. So let’s get to it: Change the oil, i.e. pledge to relieve lenders from the regulatory deluge putting people out of work and destroying families (financial pressure is a top cause of divorce).

Why don’t candidates just say if they agree with Clinton, Trump and others that we need regulatory relief for small lenders?

Community banks are no threat to the financial system. About 2,000 local banks have failed since 2008 and markets didn’t even flinch. Why are community banks being hit by regulations like the Volcker Rule (which ‘prohibits proprietary trading’ by banks) that is only intended to deal with Too Big To Fail institutions? This is the sort of ridiculous regulation that is hurting you and your neighbors.

Kyle Hauptman is executive director of Main Street Growth Project. 

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MSGP advocates for common-sense financial regulation reforms. We’re on the side of Main Street businesses, workers, savers and investors.