In the 1970s, Congress deregulated the airlines. It happened when the Democrats held the majority. Deregulation of various industries was very chic among Democrats at the time, allowing them to look conservative.
Nevada’s U.S. Senator Howard Cannon, who chaired the Senate Commerce Committee, tried to stop airline deregulation but ran head-on into Edward Kennedy.
The Economist reported, “Cannon is almost alone in his skepticism. Sen. Kennedy brushed aside [Cannon’s] questions with an implied question of his own: what is wrong with getting lower fares for the public, no matter what harm it may do to the present system?” Kennedy went around the Nevadan and built support for deregulation in Cannon’s committee. Unable to stop it, Cannon retreated and said he would sponsor the bill himself in order to keep some control over the process.
President Jimmy Carter signed airline deregulation on Oct. 24, 1978. It nearly destroyed the airline industry. Instead of fostering competition, as sponsors had promised, it set off a series of bankruptcies and mergers that put more than a hundred airlines out of business, including historic carriers like Eastern, Braniff, Pan Am, Continental, Northwest and TWA. Two aviation experts have pointed out that the losses that piled up equaled the airlines’ profits for the previous 60 years. No one brags any more about having helped deregulate the airlines.
In the 1990s, Congress deregulated the financial community. President Clinton recommended it to a Republican Congress, which hardly needed the encouragement. The Gramm-Leach-Bliley Act repealed the Glass-Steagall Act, enacted by Congress in the 1930s to keep banks out of the insurance business and prevent another Wall Street collapse.
Nevada’s U.S. Sen. Harry Reid voted to repeal Glass-Steagall and later said he made a mistake. During the 2008 Wall Street meltdown Reid said deregulation “paved the way for much of this crisis to occur.” Congress also passed the Commodity Futures Modernization Act, exempting credit-default swaps from regulation. The 2008 meltdown was so severe there were those who said it threatened the very existence of the United States.
Also during the 1990s and early 21st century, state legislatures deregulated their power generating markets in varying degrees at the demand of Enron, which wielded huge campaign contributions and pseudo-intellectual “studies” calling for deregulation. Half the states went along, including Nevada, where deregulation was something everyone “knew” was essential. Nevada did it in electricity and gas. Consumer advocates who urged caution were ignored.
Soon, the families of the working poor were being evicted from homes because their power bills shot out of sight. Companies shut down, unable to pay suddenly astronomical power bills. Havoc spread across the West, particularly in the three Pacific Coast states, as blackouts and brownouts roiled society.
Transcripts of Enron telephone calls (like Nixon, the corporation provided evidence of its own guilt with recordings) laid out the frauds in detail. States like Nevada were even pulled into the act when California-generated power was sold to Nevada, then sold back to California at ridiculous prices, something that regulation had prohibited.
When it was all over, Nevada’s Valley Electric Association had to pay Enron $14 million for electricity that the fraudulent corporation never supplied, and Nevada’s attorney general went to court against Enron.
Why recall all this deregulation? Because regulation protects taxpayers and serves the public interest, and because Donald Trump and other predators are again eyeing the deregulation weapon against the public:
“Is It Time to Deregulate All Electric Utilities?” asked the Wall Street Journal in November.
“Trump is preparing to gut Wall Street oversight” reported the Washington Post in February.
Remember last time.
Dennis Myers is an award-winning journalist who has reported on Nevada’s capital, government, and politics for several decades. He has also served as Nevada’s chief deputy secretary of state.