Don't know why you're being downvoted. You astutely point out that just as defunding can cause a move toward privatization (or the belief that only private enterprise can solve a given problem), so too can overregulation lead toward nationalization (or even at state/local levels, the belief that only government can solve it).
Because some people feel that businesses being strangled by regulation is a favorite straw man those in favor of deregulation trot out to protect their interests. The original scenario, at least in the opinions of some people, is a nice summary of the abuses of privatization while the down voted scenario is a right wing bogeyman meant to scare the ignorant into voting against their own interests. (In some people's opinion)
