The GOP Just Voted Against States’ Rights to Shield Wall Street From Competition

Goldman Sachs CEO Lloyd Blankfein. Photo: Brendan Smialowski/AFP/Getty Images

Congressional Republicans have spent much of the past four months arguing that states should be freed from the burden of federal health-care regulations, because local governments know how to serve their residents better than bureaucrats in D.C.

During that time, they also voted to repeal an Obama-era rule that requires investment advisers to put their clients’ financial interests above their own. The GOP argued that such a regulation actually hurts investors because it restricts “choice.”

Along with its commitments to states’ rights, and maximizing consumer choice, the Republican Party has long maintained that the government should do more to encourage Americans to save for retirement. The Heritage Foundation, a premier conservative think tank, has called for doing this by automatically enrolling private-sector workers in retirement plans unless they opt out of them.

So, you can imagine Republicans’ elation when the Obama administration passed rules empowering states, cities, and counties to auto-enroll their workers in such plans, without having to worry about conforming to federal regulations.

But you can only imagine that elation — because it never actually existed. In fact, the GOP found the measures outrageous. And this week, congressional Republicans began repealing them. As the New York Times reports:

By a single vote, the Senate gave final approval on Thursday to a measure to block cities and counties from organizing retirement savings accounts for workers who have no access to employer-sponsored plans.

The 50-49 vote was a startling reversal for many Republicans, who have argued for much of their careers that overzealous federal regulators were trampling the rights of state and local governments. In this case, congressional Republicans protested that President Barack Obama’s rules gave local regulators too much leeway

… Under the law that governs pensions, employers must show that they are managing their retirement programs on behalf of their workers, not the investment funds — a provision some Republicans argued that state and city plans could skirt.

In fact, many states that have passed legislation to take advantage of the Labor Department regulation have included a similar “fiduciary responsibility” requirement in their auto-enrollment programs. And Congress has acted to reverse an Obama administration regulation that demanded that all investment advisers make their clients’ interests paramount.

The GOP’s measure would kill nascent plans in New York City, Philadelphia, and Seattle to establish savings accounts for their low-income workers. Soon, the Senate is expected to kill a parallel rule, which had empowered states to appoint private money managers to oversee portable savings accounts for workers who lack them. If the GOP repeals both measures, around 13 million people could lose access to retirement accounts.

All of which raises the question: If the Republican Party doesn’t actually stand for states’ rights, expanding consumer choice, or encouraging fiscal probity, does it stand for anything?

But it would be wrong to think that the GOP lacks deeply held convictions that it applies consistently, no matter the context. It’s just that those convictions aren’t the ones the party advertises.

From the GOP’s perspective, there’s nothing inconsistent about opposing a federal rule that requires all investment advisers to put their clients’ interests first, while also opposing state-based retirement funds because they wouldn’t be bound by a nearly identical federal rule: In both cases, Republicans’ stances are guided by the question What would Wall Street want us to do?

As the Times notes, the leading opponents of Obama’s retirement rules were “investment banks that fear competition from state and local governments.”

The GOP stands for freedom; specifically, the freedom of widely reviled industries to insulate themselves from competition, lawsuits, and public-interest regulation, by buying off Republican lawmakers.

The GOP Picks Wall Street Over States’ Rights