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these entitlements not only paid their way, but also helped finance defense and other governmental expenditures. And in any case, they did not add to the deficit; rather, they have been used to mask and reduce it.
It is now estimated that the S & L crisis will cost the taxpayers $500 billion. Was this the result of deregulation or a failure to eliminate federal deposit insurance? The Reagan administration pushed strongly for deregulation, but never asked Congress to modify the deposit insurance, which has been in effect since the Great Depression and has overwhelming popular support. Had there been no deregulation, the staggering S & L losses that we face today would not have occurred. Since elimination of the deposit insurance would have been impossible politically, it would appear that deregulation was the operative cause of the S & L crisis.
It has been said that one of the functions of government is to establish the wise restraints that make men free. This paradox is applicable to the S & L case. In short, the S & L managers needed the wise restraints that had been imposed by the regulators prior to deregulation. Once such free enterprisers have all reasonable restraints removed, they
See LETTERS, p. A-5
95.4%