We know that massive government spending propelled by a Democratic Congress and administration has helped inflation spike to a 40-year high of 7.5 percent, but many Americans would be surprised to learn that several of the most conservative legislatures in the U.S. are now seeking to raise our tax bills as well.
Red states across the country are advancing bills that will restrict the free enterprise of private businesses and raise the cost of borrowing for cities, counties, states, and ultimately taxpayers. States, including South Dakota, Arizona, West Virginia, and Missouri have introduced bills that would force financial institutions to conduct business with certain types of businesses, like gun makers or retailers - regardless of the creditworthiness of those companies - or risk being excluded from the municipal bond market. However, this effort to punish major banks for their social stances runs contrary to traditional conservative values of limited government and a free market, and legislators should not be in the business of picking industry winners and losers.
This legislation is following the passage of a law in Texas that bans financial institutions from participating in the state’s municipal bond market so long as they limit business with the firearm industry. As conservatives have long known, intervening to defend one industry over another is government overreach and limits competition amongst lenders, making this a surprising move for Republicans. Municipalities, but ultimately taxpayers, will be forced to pay more for critical infrastructure investments in these states that restrict the field of potential lenders they can use to underwrite loans. This problem only gets worse as the Fed starts to raise rates, as is expected this month.
While the future of many of these bills has yet to be determined, gratefully some lawmakers have stood by their conservative principles to oppose these attempts to restrict the free market. Recently, the South Dakota Senate Committee on Commerce and Energy voted to defer Senate Bill 182 after some members found this kind of legislation to be a solution in search of a problem. Instances of lending discrimination against these disfavored industries are limited at best, and while many South Dakotan legislators took issue with the stances some financial institutions have taken, they did not think it warranted a big government approach.
And while Republicans in Arizona voted to pass their version of the firearm discrimination bill (HB2473) out of the House Judiciary Committee, several Republicans on the committee warned that these actions would create a slippery slope of government intervention across the private sector and from both sides of the aisle.
We are already seeing this in blue states. Democrats in Washington state recently introduced a bill that seeks to levy a surcharge fee against global banks that fund fossil fuel projects. Yet another example of inappropriate overreach seeking to impose a political agenda on what should be a free market in America. Private businesses should have the right to choose whom they do business with and consumers hold the power to reward or reject these companies based on their own practices and policies.
Republicans should not risk compromising their own values by imitating the left’s desire to force government control on private industry. Free enterprise drives competition and keeps costs low for everyday Americans. The same applies to the lending market. If these bills seeking to box out some banks from the municipal bond market are successful, municipalities will have fewer options and higher rates for projects, costing taxpayers far more in an economy still reeling from record inflation. Republicans must stand up for the free market and the rights of private businesses, and for American taxpayers.
Matt Mackowiak is the president of Potomac Strategy Group, a Republican consultant, a Bush administration and Bush-Cheney re-election campaign veteran and former press secretary to two U.S. senators. His national politics podcast, “Mack on Politics,” may be found on iTunes, Google Play, and Stitcher.