By: Daniel Libit

After a decades-long battle in Washington, the word “deregulator” passed away last week, succumbing to the political complications of an economic meltdown. Although its precise age was not known, it was thought to be in its mid-40s.

The word and its close associates (“deregulate,” “deregulation”) gained prominence and popularity in the mid-1970s and had been embraced by Republicans since the Reagan Revolution. Nevertheless, the term’s life was fraught with discord, misuse and misunderstanding.

“The word is something that raises eyebrows for people,” recalled James Gattuso, a former associate director of George H.W. Bush’s Council on Competitiveness. “It’s been a term that has been used much more often by opponents.”

In recent years, “deregulation” and “deregulator” were used pejoratively by Democrats against Republicans, although many Republicans still embraced it. In a 2003 interview with CNN, John McCain avowed, “I am a deregulator. I believe in deregulation.”

It was not until the past two weeks that the term became afflicted with a life-threatening stigma.

“In [the current] Bush years, there’s been a lack of affirmative steps to regulate, so ‘deregulation’ is being used to describe a state of not being regulated,” explained Gattuso. “A strange aspect of the use of the word [last] week is, for the most part, there really hasn’t been any real deregulation of financial services.”

On Capitol Hill, many friends and supporters of the word have not abandoned the concept, as evidenced by the recent wails over the Wall Street bailout legislation. But by last week, they had all but orphaned the term “deregulation” when referring to themselves.

Meanwhile, Democrats who hoped to kill the very idea of deregulation seemed well on their way.

“I’m already seeing that it’s working,” former House Republican leader Tom DeLay told Politico last week. “The Republicans are already running for the hills.”

DeLay fondly recalled how he used to go by the nickname “DeReg” before becoming “The Hammer.”

“I worked my entire career trying to remove regulations, and that’s one of the major things I did,” he continued. “It wasn’t very visible, but I’m a free market nut, and I believe in the market.”

The truth about deregulation has been somewhat obscured by the commotion of the past two weeks. Republicans blame Democrats for unfairly using the term to malign their economic philosophies and their presidential nominee. But Republicans share some blame for the way many in their party uncritically embraced the word over the years.

“I think Republicans have probably used the term in very sloppy ways,” said James C. Miller, Ronald Reagan’s budget director. Miller drew an analogy to what occurred with the word “privatization” during the 2005 debates over Social Security.

“Before that, ‘privatization’ was a fairly useful term,” Miller recalled. “Then it became exploited. But that word happened to be applicable. It just was turned [around] because of its association with a policy, and people were able to demagogue it to death. In this case, I think it’s the misapplication of ‘deregulation.’”

According to Florida Atlantic University history professor Mark Rose, the term “deregulation” entered the vernacular with Dwight D. Eisenhower’s presidency in the 1950s, although at that point it was often spelled with a hyphen. It began to gain popularity when President Gerald Ford loosened regulations on the trucking industry in the mid-1970s, and it became widely fashionable during Jimmy Carter’s presidency in relation to the airline industry.

“I think the most important thing to say is, nobody can be in favor of ‘deregulation’ on principle,” said Alfred Kahn, a Cornell professor who is considered the father of airline deregulation. It was Democrats such as Carter and Sen. Edward M. Kennedy (D-Mass.), he noted, who first endorsed the idea, albeit for different reasons.

“It came to be used widely — to some extent wisely, to some extent idiotically — to recognize that, for many industries, regulation is not serving public interests but private interests,” Kahn said.

Michael Ettlinger, vice president of economic policy at the Center for American Progress, said that “deregulation” suffered in the same way “regulation” once did.

“I think that ‘regulation’ became a dirty word because an incessant drumbeat [associated] the word ‘regulation’ with over-regulation, bad regulation,” Ettlinger said. “There were lots of horror stories about important things not being able to get done because government interfered. So ‘deregulation’ … became a popular word because of the case built against regulation.”

Gattuso and others say that the concept of deregulation was politically vulnerable because it was easier for the public to see the fallout from lax regulation than from over-regulation.

“Right now, we have a nice tidy little folk tale about what happened” in the financial services industry, said the Cato Institute’s Tom Firey, although he said it is only “partly true that the financial center ran amok, and now we are all suffering with the results of that.

“The fact is that the story is much more complex, and there are a lot of reasons to look for areas to deregulate that are going to get missed for a while.”

In that case, mourners will be heartened to learn that the term is survived by “smart regulation” and “regulation reform.”

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