Ron Paul Strikes Gold By Chadwick Matlin
| Posted Thursday, July 2, 2009 - 3:38pm
Why the oft-marginalized congressman is the greatest threat
to Obama's regulatory plan.
Ron Paul's legislative history is a lesson in principled
failure. Among the bills he has co-sponsored: ending U.S.
cooperation with the United Nations, a repeal of antitrust
law "to restore the inherent benefits of the market
economy," and stripping the government of the right
to set a minimum wage. Just last week, he again introduced
a bill "to repeal the Gun-Free School Zones Act of
1990," which would presumably make schools less safe
but which would reinforce our right to bear arms. For Paul,
ideology almost always trumps politics.
None of these bills, I should note, have picked up much
support. And Paul's track record with economic legislation
isn't any better. His perennial efforts—shifting the
country back toward a gold standard, abolishing the personal
income tax, and dismantling the Federal Reserve—are
nonstarters. They so change the very fabric of this country
that Paul can't marshal his colleagues to his side.
Which is why Paul's most recent legislative accomplishment
is so impressive. He has rallied the majority of the House
to support his new cause: an audit of the Federal Reserve.
Legislators are sick of not knowing what's going on inside
Bernanke's fortress, especially as the Fed becomes further
enmeshed in the nation's fiscal policy. Paul's little bill
has become emblematic of a larger movement, one that could
spell trouble for Obama's troubled regulatory plan. Ron
Paul—always an enemy of regulation—is now an
enemy of Obama. And a mighty powerful one at that.
Paul wants to audit the Fed primarily because he wants
to destroy it; the audit bill is just the latest chapter
in Paul's lifelong crusade against it. His vendetta is fueled
by the belief that the Federal Reserve is unconstitutional,
a central bank within a country that doesn't allow central
banks. That the Fed can manipulate the currency and "create
legal tender out of thin air" is heresy. And so Paul
attempts to dismantle it the only way he can: through legislation.
Thus we come to the audit. For Paul it's a foot in the
door to a much larger goal. To the 244 co-sponsors—74
of them Democrats—it's a way to show their constituents
that they're worried, too, about where taxpayer dollars
are going. It's an amusing dissonance between the leader
of the rebellion and his revolutionaries. The two parties
are after entirely separate goals, one (transparency) vastly
more achievable than the other (the end of the Federal Reserve).
This again makes Paul's coalition all the more remarkable.
The distrust of the Fed has reached a point at which a majority
of House members are following a radical into battle. Congress'
frustration was evident last month when Bernanke got roasted
in front of Congress, putting his future as Fed chairman
and the health of Obama's regulatory plan in doubt.
Obama's proposal is to make the Fed a super-regulator;
one that can both intervene and responsibly interfere whenever
necessary. It would keep tabs on all the financial institutions
that are too big to fail—banks and insurers, mainly—and,
theoretically, keep the economy safer from major shocks
like the one we just went through. But critics say that
the Fed is partly to blame for getting us into this mess,
and its track record when trying to cushion a bank's fall
is suspect.
This is where the trouble begins. The Obama administration
hasn't promised to make the Fed any more transparent despite
making it all the more powerful. Already over the past year
the Fed's role has become as large as the financial crisis
was urgent. Yet we don't know anything more about how the
Fed does its business now than we did before it started
guaranteeing trillions of dollars of assets. The Fed's responsibilities
have matured, but its personality has not. It is still the
gifted child that can do whatever it wants—and its
parents are still so in awe of its intelligence that they
don't ask any questions.
The audit bill would change that; Obama's regulatory plan
would not. The Obama administration has offered typical
platitudes about accountability but doesn't have specifics
about how it would work. Ironically, a regulatory plan that's
all about increased openness and transparency for the markets
may fail to apply the same standards on its newly empowered
regulator.
And so we're building toward a very interesting clash within
the financial and political communities. Think of it as
a math proof: Because of Ron Paul and the audit bill, we
already know that Congress doesn't like the Fed. It feels
this way because of the relationship between two variables:
power and accountability. The Fed has too much power and
too little accountability. Congress believes the two variables
should have equal values. They do not, so Congress does
not approve. Now, if you give the Fed more power but not
more responsibility, this is going to make Congress upset.
So upset that they may not pass the new regulatory legislation.
And so Obama finds himself in a difficult spot. He needs
Congress on his side for a host of other legislation, so
he may need to appease them here. But if he makes the Fed
more accountable, the agency becomes even more a part of
the government than it already is. This would be fine, except
for the fact that the Fed isn't supposed to be a part of
the government. So there's that.
But something has to give. Paul's Gang of 244 is fed up.
They're ready to kill something. It will probably be Obama's
regulatory plan. Then again, with Paul leading the charge
you never know. It may be something central, something federal,
something reserved. Never underestimate Ron Paul. Even if
there's no reason not to.