Tag: rand paul

Rand Paul’s “No” on Trade Promotion Authority Gets It Backwards

Not entirely unsurprisingly, the Senate failed to reach cloture on Tuesday, falling eight votes shy of the 60 needed to start the timer on debate over Trade Promotion Authority (TPA), which will be needed to conclude the Trans-Pacific Partnership (TPP) negotiations and bring it to a timely vote in Congress.  The cloture vote concerned two of four pieces of trade legislation voted out of the Finance Committee two weeks ago (TPA and Trade Adjustment Assistance).  Senate Majority Leader Mitch McConnell excluded the other two bills, which contain language that would attract Democratic support. So, while I wouldn’t bet the ranch on TPA’s passage, there’s still room for horse trading.

In more surprising (and disappointing) news, one senator who will say “no” if TPA makes it to the floor for a vote is Rand Paul, who explained his reasoning on a New Hampshire television news broadcast:

We give up so much power from Congress to the presidency, and with them being so secretive on the treaty, it just concerns me what’s in the treaty.

Let me take Paul’s issues with power, secrecy, and content in order.

Fact Checking a Fact Checker: About Rand Paul and Reagan

Washington Post fact checker Glenn Kessler gives Senator Rand Paul Three Pinocchios for making the following claim on TV:

Ronald Reagan … said we’re going to dramatically cut tax rates. And guess what? More revenue came in, but tens of millions of jobs were created.

Before examining whether or not “more revenue came in,” consider just how dramatic the Reagan-era tax changes really were.  Under the first bill in 1981, all personal tax rates were eventually reduced by 23%.  But it is often forgotten that these rate reductions in were foolishly delayed until 1984.  By then, however, the 49% tax bracket was down to 38%, the 24% rate to 18% and the 14% rate to 11%.  

When the 1986 Tax Reform took effect in 1988, higher marginal tax rates fell further to 28-33% for those previously in tax brackets of 38-50%.  The corporate tax was cut from 46% to 34%.  After being reduced to 20% from 1982-86, however, the top capital gains tax was raised to 28% in 1987 before being rolled-back to 20% in 1997 and 15% in 2003.

Mr. Kessler mainly takes issue with Senator Paul’s comment that “more revenue came in” after the highest marginal tax rates on income or capital gains were reduced (I’ll deal with jobs issue in a separate blog).

Is Rand Paul Arnie Vinick?

Rand Paul might take some inspiration from the final season of NBC’s late, lamented The West Wing. In that final 2005 season, presidential candidates battled to succeed President Jed Bartlet (Martin Sheen). The eventual nominees were Democratic Rep. Matthew Santos (Jimmy Smits) and Republican Sen. Arnold Vinick (Alan Alda).

Peter Funt, son and heir of Candid Camera creator Allen Funt, wrote in 2008 that the West Wing writers were in touch with Obama strategist David Axelrod as they created the Santos character, who was sort of a “test market” to “soften up millions of Americans for the task of electing the first minority president.” And he noted that Obama’s staffers “especially like the ending” of the West Wing plot, in which Santos narrowly defeats Vinick.

But Funt left out the part that might make Paul supporters optimistic. After the libertarianish Vinick got the Republican nomination, former Democratic strategist Bruno Giannelli (Ron Silver) went to him and told him that with his image he could win a landslide victory: You, he said, “are exactly where 60 percent of the voters are: Pro-choice, anti-partial birth, pro-death penalty, anti-tax, pro-environment and pro-business, pro-balanced budget.”Now, that’s not exactly Rand Paul’s policy portfolio. But Paul’s positions similarly cut across partisan divides and just might appeal to that same 60 percent majority.

The high point of the West Wing campaign was a debate that broke the rules of both presidential debates and television drama: The “candidates” threw out the usual formal debate rules and just questioned each other, and the actors improvised their questions and answers on live television from a partially written script. They actually did two live performances that night, for the East Coast and the West Coast.

Rand Paul’s Challenge: Can a Libertarianish Candidate Succeed?

Rand Paul and David Boaz with book Libertarian MindAs Sen. Rand Paul announces his presidential candidacy, I’ve been talking about it in the media. At the Daily Beast, I write about his chances:

The Republican base may be divided into establishment, tea party, Christian right, and libertarian wings. Paul starts out with a strong base in the libertarian wing, which gave his father, Rep. Ron Paul, 21 percent of the Iowa caucus vote and 23 percent of the New Hampshire primary in 2012. With his strong opposition to taxes and spending and his book “The Tea Party Goes to Washington,” he’s also well positioned for the tea party vote. His pro-life views will make him acceptable to religious conservatives as the field narrows.

The wild card may be who can attract voters who don’t usually vote in Republican primaries. Paul’s stands on military intervention, marijuana, criminal justice reform, and the surveillance state give him a good shot at getting independents and young people to come out for him….

After the 2012 election Los Angeles Times columnist James Rainey wrote that the country is mildly “left on social issues and right on economics…. a center-libertarian nation.”

No other candidate is trying to appeal directly to that center-libertarian vote. That’s the big new idea that Rand Paul will test.

Rand Paul and the Libertarian Vote

In a series of studies and an ebook, David Kirby and I have been examining the libertarian segment of the American electorate. Sen. Rand Paul (R-KY) is about to test that analysis.

Paul has been arguing that he’s the Republican who can expand the Republican base to include more young people, independents, and even minorities. That was part of the message in the advance video he posted on the web Sunday night. And he argues that a more libertarian approach to such issues as marijuana, criminal justice, mass surveillance, and overseas wars could help do that.

In our studies, we’ve found that a large portion of Americans give libertarian answers to broad values questions. In their 2014 Governance Survey the Gallup Poll found that 24 percent of respondents could be characterized as libertarians (as compared to 27 percent conservative, 21 percent liberal, and 18 percent populist). The percentage has been rising over the past decade:

Gallup Poll libertarians in the electorate

Other studies show different numbers. Our own original study, “The Libertarian Vote,” using stricter criteria, classified 13 to 15 percent of voters as libertarian. A Zogby poll found that when asked if they would define themselves as “fiscally conservative and socially liberal, also known as libertarian,” fully 44 percent – 100 million Americans – accepted the description. That’s a large segment of the electorate not in either party’s camp.

Rand Paul has as strong a record on fiscal conservatism as any Republican candidate, stronger than most. And he seems to be the only one who could make a claim for the “socially liberal” element among libertarian-leaning voters. He’s urged that we stop putting young people in jail for drug use, and he’s shown that he’s willing to use that issue against Jeb Bush and other competitors. He tells young people that “the phone records of United States citizens are none of [the government’s] damn business.”

Of course, like all candidates Paul has a balancing act to put together a winning coalition. He wants to hold on to the libertarian base that gave his father, Rep. Ron Paul (R-TX), 23 percent of the New Hampshire primary vote and $40 million in small contributions. But he’ll need more that, and he’ll look for more votes among both the conservative Republican base and non-traditional Republican voters.

His recent statements that gay marriage “offends myself and a lot of other people” and represents a “moral crisis” have disappointed a lot of libertarians (as well as a lot of gay voters, who probably weren’t likely to be in his camp anyway). The bigger question is whether such nods to the religious right will drive away voters he needs, especially the young people and Silicon Valley techies he’s been aggressively courting.

Many people have suggested that Paul’s somewhat non-interventionist foreign policy views won’t sit well with Republican voters. They should read fewer neoconservative pundits and more polls. According to a CBS/New York Times poll last June, 63 percent of Republicans thought the Iraq war wasn’t worth the costs. Paul is likely to be the only one of 10 or so Republican candidates to take that position. As neoconservatives and John McCain beat the drums for military action in Syria in 2013, Paul opposed it. Republicans turned sharply against the idea —  70 percent against in September 2013. Americans, including Republicans, are getting tired of policing the world with endless wars. Interventionist sentiment has ticked up in the past few months as Americans saw ISIS beheading journalists and aid workers on video. But I would predict that 9 months from now, when the voters of Iowa and New Hampshire begin voting for presidential candidates, Americans will be even more weary of nearly 15 years of war, and U.S. intervention will be even less popular than it is now. 

One advantage Paul starts with: political scientist Jason Sorens rates New Hampshire and Nevada, two of the four early primary states, among the six most libertarian states in the union. Iowa and South Carolina, not so much. But a libertarian-leaning Republican can count himself fortunate that early headlines will come out of frugal New Hampshire and fun-loving Nevada.

Despite his views on gay marriage and abortion rights, on a broad range of issues – from taxes and spending to spying, criminal justice, marijuana, and a skeptical approach to unnecessary wars – Rand Paul is going to present Republican voters with the most libertarian platform of any major presidential candidate in memory. If we’re in a libertarian moment, perhaps generated by government overreach in the Bush and Obama years, Paul should benefit. Win or lose, he’s going to give Republicans a clear “more freedom, less government” alternative to both the party establishment and the religious right.

Does Fed Leverage and Asset Maturity Matter?

Debate over whether to subject the Federal Reserve to a policy audit has occasionally focused on the size and composition of the Fed’s balance sheet. While I don’t see this issue as central to the merits of an audit, it has given rise to a considerable amount of smug posturing. Let’s step beyond the posturing and give these questions some of the attention they deserve.

First the facts. The Fed’s balance sheet has ballooned over the last few years to about $4.5 trillion. And yes, the Fed discloses such. No argument there. The Fed, like most central banks, has traditionally conducted its open-market operations in the “short end” of the market. The various rounds of quantitative easing have changed that. For instance the vast majority of its holdings of Fannie & Freddie mortgage-backed securities ($1.7 trillion) have an average maturity of well over 10 years. Similarly the Fed’s stock of treasuries have long maturities, about a fourth of those holdings in excess of 10 years.

Now the leverage question. We all get that the Fed cannot go “bankrupt” like Lehman. But that’s because “bankrupt” is a legal condition and one from which the Fed has been exempted. Just like Fannie and Freddie cannot go “bankrupt” (they are considered legally outside the bankruptcy code). The eminent economist historian Barry Eichengreen tells us the Fed’s leverage doesn’t matter as “the central bank can simply ask the government to replenish its capital, much like when a government covers the losses of its national post office.” Some of us would say that’s a problem not a solution, just like it is with the Post Office.

Others would suggest the Fed’s leverage doesn’t matter because “the Fed creates money”. Again that misses the point. Any losses could be covered by printing money, but isn’t that inflationary?  And that, of course, is just another form of taxation. So it seems Senator Paul’s primary point, that the Fed’s balance sheet exposes the taxpayer to some risk has actually been supported, not discredited, by these supposed rebuttals.

Let’s get to another issue, the maturity of the Fed’s assets. There’s a good reason central banks generally stay in the short end of the market. It avoids taking on any interest rate risk.  When rates go up, bond values fall. Yes the Fed can avoid recognizing those losses by simply not selling those assets. But that creates problems of its own. If we do see inflation, normally the Fed would sell assets to drain liquidity from the market. But would the Fed be willing to sell assets at a loss? At the very least there would be some reluctance. And yes they could cover those losses by printing money, but that’s hardly helpful if the Fed finds itself in a situation of rising prices.

The point here is that the Fed’s balance sheet does raise tough questions about its exit strategy.  Perhaps the economy will remain soft for years and the Fed can exit gracefully.  Perhaps not.  I raised this possibility before Congress a year ago.  I don’t know anyone with a crystal ball on these issues.  But one thing is certain, this is a debate we should be having.  Its the “nothing to see here, move along” crowd that poses the true risk to our economy.

Fact Checking the Fed on “Audit the Fed”

With the introduction of bills in both the House (H.R. 24) and Senate (S.264) allowing for a GAO audit of the Federal Reserve’s monetary policy, officials at both the Board and regional Fed banks have launched an attack on these efforts.  While we should all welcome this debate, it should be one based on facts.  Unfortunately some Fed officials have made a number of statements that could at best be called misleading. 

For instance Fed Governor Jerome Powell recently claimed “Audit the Fed also risks inserting the Congress directly into monetary policy decisionmaking”.  I’ve read and re-read every word of these bills and have yet to find such.  H.R. 24/S.264 provide for no role at all for Congress to insert itself into monetary policy, other than Congress’ existing powers.  I would urge Governor Powell to point us to which particular part of the bill he is referring to, as I cannot find it.

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