The Heritage Foundation’s Daily Signal has a brief interview with neurosurgeon Ben Carson, who announced Monday that he’s running for president, in which they got him to say a few interesting things about his policy positions. The most notable specifics: He doesn’t want to adjust federal entitlements until the economy has improved, and he likes certain kinds of regulations — such as Glass-Steagall, a now-repealed law that separated traditional banks and investment banks. What to make of those two ideas?
His argument on entitlements is confusing. After all, conservatives, including Carson, worry that increasing budget deficits and a growing national debt pose a serious threat to the American economy in a number of ways. The largest single driver of those factors going forward is entitlements — so making them more sustainable, to say nothing of more pro-growth, is a step toward a stronger economy. Moreover, putting off reforms to unsustainable or unfunded entitlements will either force tax increases or squeeze important investments the federal government does make (basic research, defense, infrastructure, etc.), or both. Our entitlements would become somewhat more affordable if the economy were growing faster, but Carson’s statement that much stronger economic growth is “not going to be that difficult” is ridiculously naive. So this leaves us with Carson essentially disavowing entitlement reform — which is politically understandable but also disappointing. (Not touching Medicare and Medicaid is also incompatible with basically any plan to transform our health-care system, which Carson has said he’d like to do.)
What about the second point, that Glass-Steagall is a good kind of regulation? He happens to share that view with Elizabeth Warren (and a few Senate Republicans), but I won’t dismiss it on those grounds. Glass-Steagall, which divided traditional banking activities (lending, deposit-holding, etc.) from investment-banking ones (underwriting bonds, conducting stock offerings, etc.) was passed in the years after the 1929 crash, he explains, and it was finally, totally repealed in the 1990s. But the fact that Glass-Steagall was passed after 1929 doesn’t mean it was a good response to that crash, or remains a good idea now. It was part of a much larger package of reforms that more directly addressed what caused the 1920s stock bubble (loose ethics, lack of transparency), and were almost certainly a good idea.
Today, it’s very hard to say what good Glass-Steagall would do to justify its costs. Advocates of restoring it like to point out that the 2008 crash happened in its absence (Carson implies repeal “caught up with us”), but it’s very hard to draw a connection between that financial crisis and the traditional bank–investment bank mergers the law had prohibited. The reason people like Senator Warren favor a new Glass-Steagall is because it’s a simple and appealing way to put the brakes on Wall Street — don’t let Gordon Gekko play with my bank deposits — but the reality is much more complicated and the case for the law is quite weak. Caron’s right that there are good and necessary regulations, but the case for them had better be pretty strong. For Glass-Steagall, it’s not.