By Tim Cavanaugh
Here is a portion of a letter I received from a House staffer. It's a message of support for Rep. Spencer Bachus (R-Alabama), and will be delivered to presumptive Speaker of the House John Boehner (R-Ohio) and Majority Whip Eric Cantor (R-Virginia).
The copy I have has no signatures, but I'm told it will be signed by the ranking Republican members of the House Financial Services Committee, including Ron Paul (Texas). Paul staffers have not replied to emails and phone calls seeking confirmation.
As I noted Thursday, Spencer Bachus has supported the majority of the most fiscally unsound, expensive and destructive pieces of legislation that have come before him in the past ten years -- including but not limited to Medicare Part D, the 2008 farm bill (a $300 million monstrosity that passed over President Bush's veto), and most importantly the Emergency Economic Stabilization Act that produced the $700 billion TARP. Bachus is even worse than I noted earlier, about which more in a moment. So why is Paul supporting somebody who is so clearly his ideological and economic nemesis?
Ron Paul has spent a long time in Congress without getting shots at substantial leadership positions, and his support for the profligate Bachus appears to be collegial deference in exchange for which his own ascension to the Subcommittee on Domestic Monetary Policy and Technology won't get blocked. The hypocrisy of the support is evident in the faintness of the letter's praise. Bachus is lauded for working "hand-in-glove with his fellow conferees," for having "presided over a meeting of all the Republican conferees" of the Financial Services Committee, and for both "formulating" and "executing" a strategy of failed opposition to the Democrats' financial reform bill. Carefully eliding Bachus' documented history of support for bailouts in all forms, the letter gives him props for rallying Republicans around a message of "no more bailouts." Guess you have to start somewhere.
But Paul's support for Bachus can at least be excused as professional courtesy to a senior congressman. There is no such excuse for Boehner and Cantor, who will make the decision on Bachus' chairmanship, and who -- whether they know it or not -- are being watched closely for evidence that they have learned anything from Tuesday's election.
Bachus is not just an out of control spender. He is directly implicated in the most important domestic failure of the last decade: the refusal to rein in Fannie Mae and Freddie Mac during the fight over the 2005 Federal Housing Finance Reform. This bill had the potential to impose tighter financial restrictions on Fannie and Freddie, turn off their direct line to taxpayer support, and allow the Federal Housing Finance Agency (then known as the Office of Federal Housing Enterprise Oversight) to take a much stronger role in regulating the GSEs. During negotiations over this bill, Bachus:
-- opposed an amendment by Ron Paul that would have eliminated Fannie and Freddie's ability to borrow from the Treasury;
-- opposed an amendment by Scott Garrett (R-NJ) to strike the increase in the Conforming Loan Limit for the GSEs;
-- opposed an amendment by Former Rep. Jim Leach (R-IA) to strengthen the minimum capital requirements for Fannie and Freddie;
-- and opposed an amendment by Ed Royce (R-California) authorizing the FHFA to limit the portfolios of Fannie and Freddie based on the systemic threat they posed.
Note that Royce, who is challenging Bachus for the chairmanship, supported all of the above. The rejection of these sensible restrictions on the GSEs meant that the House version of the bill ended up substantially weaker than the Senate version, and the bill never made it to reconciliation. By 2005 the housing bubble was already topping out, but three more years of mischief might have been avoided if Bachus and the House Democrats had been serious about regulating the GSEs -- both of which subsequently went bust and had to be rescued by Treasury. Fannie and Freddie continue to cost us billions of dollars every month in bailout money.
But this is not the end of Bachus' trail of economic destruction. In February 2008, after the disinflation of American real estate had begun and the credit unwind was in full swing, Bachus decided that Fannie and Freddie (which at this point had only six months left to live) should drastically expand their portfolios of bad and doubtful mortgage debt. So he voted for the Recovery Rebates and Economic Stimulus for the American People Act -- a $117 billion pig that upped the GSEs' conforming loan limit to $729,750. Assuming a 20 percent down payment, this means the government was now redefining an average home as one costing close to a million dollars -- at a time when real estate values were two years into a decline that still shows no signs of ending. (Again, Royce and Paul opposed this idiotic-on-its-face misadventure.)
If Bachus' bizarro economics were simply manifestations of loyalty to the free-spending Republican leadership, it might be understandable. But his love of wasting other people's money is so strong he can't even say no to the harebrained schemes of the Democratics. As I noted the other day, his only objection to the American Recovery and Reinvestment Act (popularly known as the Obama Stimulus) was that it didn't offer enough pork. And he even went against his own party leadership to vote yes on the Obama Administration's notorious "Cash For Clunkers" program.
Boehner and Cantor have a Bachus problem. Politicians don't like to rock the seniority boat when giving out assignments. But last week's landslide vote indicates an electorate that doesn't just want to rock the boat but to sink it. Bachus is manifestly unfit to head the Financial Services Committtee, and the country's fiscal crisis is too dire for nice-guy gestures toward a complacent, mediocre congressman. If Boehner lets Bachus take over the Financial Services Committee, the Tea Partiers, and anybody else hoping for fiscal sanity, will know that he does in fact intend to let them down, as quickly as possible.