Magazine Disconnect: Bad Politics Good for Gun Business?

February 15, 2016 02:00 PM

The day President Obama announced the post-San Bernardino executive actions, White House adviser Valerie Jarrett appeared on MSNBC’s “Morning Joe” to explain his decision to circumvent Congress.

The conversation displays the disconnect between some in Washington and an American consensus on background checks for gun purchases.

“What can the President do?” Scarborough asked Jarrett. “Can the President close the gun show loophole to make sure that terrorists can’t walk into gun shows – not have a background check – and walk out with assault style weapons?”

“What the [Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF)] is doing today is giving guidance that says it doesn’t matter where you buy a gun: in a store, or in a gun show, or on the Internet,” Jarrett said. “If you’re in the business of selling guns, you need to get a license and make sure you do background checks on the people to whom you sell them.”

“Does the President have the legal authority to do that?” Scarborough asked. 

“Absolutely,” Jarrett answered.

“Then why didn’t the President do that after Newtown?” Scarborough asked, referencing the 2013 attack that killed 27 people in a Connecticut elementary school. “We’ve been debating this for a couple of years now. The priority is to get Congress to act,” Jarrett replied. 

Following Sandy Hook, the President released 23 different executive actions in 2013, and called for Congress to pass gun control reforms that included the expansion of background checks that ensured that anyone who sold guns to have a license and conduct a background check on the purchaser. 

A gun reform bill never received a vote in the Senate even though 90% of Americans supported background check proposals. Jarrett blamed the NRA’s influence in Washington.

Scarborough, a former Republican congressman from Florida, interjected and turned to liberal commentator Larry O’Donnell, highlighting the broader support for background checks.

“Eighty percent of Republicans who vote in early primary states support increased background checks, 80%! This is not about gun owners across America,” Scarborough said. “This isn’t about the NRA. This is about three or four people running the Washington branch of the NRA.”

“Whatever it is, it kept the Republicans from supporting legislation when the vast majority of Americans supported it,” Jarrett said returning to the President’s newest executive actions.

Following the mass-shooting in Oregon last year, President Obama returned to his legal team to discuss what other actions he might be able to take. The executive action to expand background checks by hobby dealers and gun show sellers was included in these discussions. 

Critics argue that nothing the President enacted in the wake of the Newtown shooting or the San Bernardino attack would have prevented those attacks from happening. But gun control advocates argue that no one in Congress has taken any step to create policy that might have stopped similar attacks in the future. Bipartisanship is improbable on this issue in 2016.

And even though recent executive actions might actually increase the accessibility of guns for law-abiding citizens, gun advocates argue such rules threaten Second Amendment rights. 

More fear spread. Another sales surge happened. Gun stocks surged.

Welcome to Washington

Tom Diaz was Democratic counsel to the U.S. House of Representatives Subcommittee on Crime and Criminal Justice from 1993 to 1997, where his subject matter specialties included terrorism and firearms regulation.  He is also the author of “Making a Killing: The Business of Guns in America” and “The Last Gun: How Changes in the Gun Industry Are Killing Americans and What It Will Take to Stop It.” 

Now retired, he’s very candid about the political dysfunction of Washington on gun control.

Looking ahead to the President’s final year, he doesn’t expect anything to happen on gun control.

“President Obama has little option to pass comprehensive gun control. In terms of legislation, I don’t think there is anything that would be a threat to manufacturers or imports,” Diaz says. “It’s just not going to happen at the Federal level. I can’t see circumstances under which there would be serious legislation.”

That reality pushed the President to navigate a small window in his power on gun rules. 

But it turns out these rules could be very positive for the gun companies. 

“After the announcement, Smith & Wesson revised their forecast and the stock shot up,” he says. “It’s all good news. Actions like this scare people who are likely to buy guns. It doesn’t impede manufacturing. There are plenty of other things that he could have done.”

Diaz says that the executive actions are more likely to facilitate gun purchases in the future.

“Obama could have picked a fight over semi-assault rifles. Instead, what he actually did was facilitate the process of buying a firearm. First, they are boosting the FBI staff to streamline background checks for purchases. The reason to do this is that there is a rule – if the background check is not done in three days, a person can receive a gun. There’s a drop-dead date. So, with demand surging, they’re trying to speed that up and prevent cases where it falls into a fourth day.”

In this case, pro-gun regulation can be pro-gun and pro-safety at the same time.

However, the actions do have limitations, particularly on the background check rule for kitchen table dealers is to force people to come under federal licensing system. It will be difficult to expand background checks and bolster the ATF’s reach licensing kitchen table dealers.

“The dirty secret is that the ATF lacks the amount of people to do this,” Diaz says. “I do not think this expansion to smaller dealers will make a big difference. It doesn’t stop bad gun dealers.”

The improbability of wide-scale confiscation

“The government wants people to get licenses,” he says. On the license issue, Diaz has listened to the fringe political talking points for years. One of the most popular is that any attempt to boost registration, licensing, or background checks is part of a plan to create a national registry or is part of a broader confiscation effort. But such events are statistically improbable.

“These recent rules can’t be considered a backdoor effort,” he says. “To hear that is just political craziness. There is no national registry, and there never really could be. The ATF is prevented by law to automate the registration of gun transactions. The FBI has to destroy background information after three days. And when the ATF wants to trace guns, they have to go through a warehouse of paper files in West Virginia.” 

Diaz explains that pro-gun efforts in the past ensured these rules be put into law decades ago. 

Meanwhile, the government lacks the technological prowess, resources or know-how to secretly or openly conduct such a wide-scale effort. 

“Even if it did happen, could you imagine the resources the government would need to go out and gather several hundred million guns?”

Even if politicians wanted to confiscate guns on a massive scale, bureaucratic, legal, technological and manpower shortfalls would significantly hinder them from doing so, and likely always will. 
But the most important reason – according to Diaz – is that such an effort simply isn’t worth it and never will be. 

“There are groups of Americans who are serious about the government needing to take the guns from their cold dead hands,” Diaz says. “For a government and its leaders, it’s just not worth going down that path.”
In the end, the debate on the Constitutional authority of executive actions and the connection between gun ownership and crime reduction – far more worthy conversations — are cast aside for hyperbolic talking points of Washington advocacy groups on both sides of the issue. 

That’s by design and it’s good for business, particularly as President Obama enters his final year of office. Translation: The gun debate will continue to fuel positive momentum for gun sales and investors.

About the Author

Garrett Baldwin is the Managing Editor of the Alpha Pages and the Features Editor of Modern Trader. An author and Baltimore native, he earned a BS in journalism from the Medill School at Northwestern University, an MA in Economic Policy (Security Studies) from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University.