Wednesday, January 03, 2007

Democrats: There Is Such a Thing as Too Much Regulation

As Democrats take power in Congress, speculation has swirled around the question of why Republicans lost. But there is a factor – a costly factor affecting American businesses – that has gone largely unnoticed.

In the summer of 2002, in response to Enron and WorldCom, Congress passed a slew of business regulations called the Sarbanes-Oxley Act. Although it was written largely by the then-Democratic-controlled Senate, most Republicans barely criticized the law when they regained power. Even when studies showed its costs were several times greater than anticipated and it was crippling small public companies, GOP leaders were reluctant to take on the law for fear of being saddled with the albatross of Enron.

But Congress’ reluctance began to change in the weeks preceding the 2006 elections. Two weeks before the election, a member of the House went on CNBC and said Sarbanes-Oxley wasn’t all it was cracked up to be. This politician said while “there’s a need for it” and “you need the transparency,” the law clearly had “unintended consequences.” The House member then said flatly, “I don’t think you need the whole package.”

Democrats: There Is Such a Thing as Too Much Regulation

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