Democrat strategists wondering why support for Congress and the president has plummeted need look no further than the financial regulation law. The beltway chattering class heralds it as another big legislative victory. Yet a small section of this latest two thousand-page law exemplifies the hubris of a political class that simply doesn’t share the same priorities as the American people.
Nearly everyone agreed that something needed to be done to improve the relationship between the government and the financial sector. After all, today’s high unemployment and anemic growth are part of the lingering fallout from the crisis in the banking system. New, better defined rules are needed so that taxpayers never again have to send billions to bail out banks and other big businesses in a seemingly ad-hoc manner.
Opinions differ about the value of the many new regulations and oversight bodies being created by this new law. But here’s an initiative that Americans will instinctively recognize isn’t going to prevent the next financial crisis: twenty new offices of “Minority and Women Inclusion” and a mandate that the government consider the gender and racial ratios of the financial institutions with which they do business.
Yet that’s part of this law. Section 342 (as first identified by the indispensable Diana Furchtgott-Roth of the Hudson Institute) dictates:
“each agency shall establish an Office of Minority and Women Inclusion that shall be responsible for all matters of the agency relating to diversity in management, employment, and business activities,” and that “The procedures established by each agency for review and evaluation of contract proposals and for hiring service providers shall include, to the extent consistent with applicable law, a component that gives consideration to the diversity of the applicant.”
We’ll have to wait and see exactly how this provision is implemented, but its intent is clear: corporations are meant to feel pressure from the federal government to meet some diversity threshold. No, it doesn’t create an explicit quota, but it is certainly a step in that direction.
For taxpayers, this section means twenty more offices filled with over-paid federal workers. For companies, it’s a new distraction from their core businesses. Another set of bureaucrats’ perspectives and power will be taken into account when making business decisions. The biggest businesses, as always, will have the easiest time figuring out how to comply with whatever rules or “guidance” emanate from the new entities. They can hire lawyers to focus on compliance and create new positions, if necessary, to make the numbers work. Smaller businesses will find it harder, since they have fewer resources to waste.
Americans will instinctively know the most unfortunate effect of this provision. Another layer of red tape for businesses is another barrier to job creation and economic growth. The millions who are unemployed don’t care about the race or gender of the person they hope will be offering a new job. They want a growing economy. They want jobs. They know this won’t help the economy grow.
Americans concerned about our increasingly intrusive government should also rightly view this as a first step toward more sweeping mandates on American businesses generally. And businesses will recognize this too. Those quickest to adjust to the brave new world will recognize that in the future they likely won’t just be judged on their company’s performance, but on the color and sex of those who are performing. They’ll quickly join the numbers game. Those whose gender and race might allow them to “benefit” from such a system will be insulted in the process, creating questions about whether their positions are truly earned.
Yet the merits of quotas are really a secondary issue. What’s most telling is that in a law that is supposed to reinvigorate our ailing economy and create a more secure financial system that will facilitate business creation and expansion, Washington couldn’t resist trying to advance the broader, liberal, ideological agenda. Liberal leaders don’t want to debate quotas on their merits. Instead, they’ll just try to slowly sneak them in to law.
It’s this hubris, this absolute disdain for the American people, that has made so many loathe Washington and the elected class. Jobs have been the number one concern of the people since President Obama’s inauguration. Yet Americans have watched as Washington rammed through a pork-laden stimulus package that had little to do with private sector job creation, and then launched a year long crusade to remake our health care system in spite of overwhelming opposition.
Due to the due diligence of Furchtgott-Roth, Americans now know about the step toward gender and racial quotas in the financial regulation law. But what else is Washington trying to foist on us without our knowing? This question—the fact that this question has to be asked—is the reason so many want real change in Washington once again.
Carrie Lukas is Vice President of Policy and Economics at Independent Women’s Forum.