Ron Paul gets it right (and Obama gets it wrong)

Rep. Ron Paul (R-TX) is like Ozzy-era Black Sabbath: You shouldn’t dislike the music just because of the fans. To be sure, the music isn’t consistently awesome – and in fact some of it just blows – and the majority of die-hard Sabbath worshipers grasp nuance and refinement the way Sarah Palin grasps basic sentence structure. Nonetheless, those tunes that are great really are great, and at least you can talk to Sabbath fans about some subjects, as opposed to, say, Toby Keith fans, where reconstructive dental surgery is always a possibile outcome of straying into controversial topics.

So it is with Paul, who is pretty darn close to espousing the libertarian ideal. In libertarianism there is much for a progressive to love, especially for gays and pot smokers… doubly so for gay pot smokers. The simplicity of the idea, the harkening back to the rugged forging of a new nation where only an individual’s own limitations (and occassionally those pesky natives) stood in the way of Man meeting his potential, has broad appeal.

Rep. Ron Paul: When he's right, he's right

Also, he was against the Iraq War. This is a permanent feather in his cap, never to be taken away. Not even if Ozzy-era Ron Paul someday becomes Ronnie James Dio-era Ron Paul and just sounds terrible all the time.

That is a ways away, though, as evidenced by the latest-breaking news from Capitol Hill. Proving himself once again a contributor to the national dialogue, while so many of his Republican colleagues remain steadfast detractors, Paul is challenging the Obama administration to live up to its pledge of transparency. On this issue, he is right on the money.

Late Thursday afternoon, the House Financial Services Committee, chaired by Rep. Barney Frank (D-MA), approved a measure to assess upfront fees against large Wall Street firms to help pay for the dissolution of nonbank financial institutions, whereas taxpayers have hitherto been footing the bill. Included in the proposal was a plan to audit the operations of the Federal Reserve Bank.

From the New York Times:

The votes on fees and on the Fed audit came despite objections from the Obama administration. They illustrated the strong sentiment in Congress to curb the central bank’s power and assure voters that taxpayers won’t be on the hook for future Wall Street failures.

If Mr. Frank can win final passage in his committee in two weeks, the House could vote on the full overhaul next month.

On auditing the Fed, the committee adopted a plan by Representative Ron Paul, Republican of Texas, that had the support of a bipartisan roster of more than 300 members of Congress. It would give the Government Accountability Office the authority to audit the entirety of the Fed’s balance sheet, credit facilities and all securities purchase programs. Critics, led by Mr. Frank and Representative Melvin Watt, Democrat of North Carolina, argued that Mr. Paul’s proposal was too intrusive and could indirectly lead to higher interest rates. They proposed a more limited audit.

“If we open all of the discussions, the deliberations, the transactional gives and takes, what we will do is scare off capital because other governments will not deal with our Fed,” Mr. Watt said.

Mr. Paul, who ran a long-shot campaign for president last year, argued that Mr. Watt’s more limited proposal would exclude much of the Fed’s work from scrutiny.

“There is no reason in the world why this country and our people can’t know eventually about what’s going on in the Federal Reserve,” Mr. Paul said.

Mr. Paul could not be more correct. The Federal Reserve has always been a problematic institution, right down to the not-quite-private, not-quite-public status under which it operates. Lately, it has been arguably more powerful than any president’s economic advisory council or any Congressional committee, and, first under Alan Greenspan and later Ben Bernanke, became an instrument of making Milton Friedman economics official U.S. policy. Greenspan pressed for financial services deregulation and supported the bubble-driven markets of the late 1990s and early 2000s, and was a disciple of the perverse and nonsensical ideology of Ayn Rand’s Objectivism. (Greenspan has since apologized, sort of, but not for being a Randian.)

Paul and his followers have a great deal of animus toward “fiat money” systems in general (wherein only government-sanctioned currency is legal tender, and the value of currency is not linked to or backed by actual assets, such as gold). The Federal Reserve is the administrator of America’s fiat money structure, and thus the cries of “End the Fed” shouted by Ron Paul adherents.  Notwithstanding the many ways dismantling the Federal Reserve Bank is an unnecessary and currently impossible task, the basic sentiment is not one shared by The National Razor. Fiat money is fine.

What is not fine is the idea that the entity to which the economic fortunes of this country are tied should operate under such a cloud of secrecy. That somehow the White House travel office received more official scrutiny in the late ’90s than the Fed may go some way toward explaining how things got so incredibly FUBAR this decade, and where we should turn our collective probing gaze to fix the fiasco in the next.

Sadly, the Obama administration is not on board. With Treasury Secretary Timothy Geithner an alumnus of the New York Federal Reserve Board, and Chief Economic Advisor Larry Summers, well, just a schmuck, the “change we need” is looking a lot like the mess we’ve had. That Obama’s sweeping overhaul plans for the federal government do not currently include the (semi)governmental institution at the center of the crisis only confirms how necessary it is that the Fed be audited and, if need be, restructured. Goldman Sachs and AIG may have been “too big to fail,” but the Federal Reserve is not too big to be investigated.   

If anything, Obama should be at the vanguard of this push. Ron Paul is vehemently opposed to the health insurance reform bills being considered by Congress if they include a public option, which means that his followers, mainly registered independents, are as well. They may never come around to embracing a public option with open arms, but mollifying them with action on their most important issue, the Fed, will help immensely. On days like today, when the non-partisan Congressional Budget Office released an estimate that the Senate health reform bill under consideration would reduce federal budget deficits by close to $200 billion over the next decade, it would behoove the administration to be able to tout such a victory without having to face uncomfortable questions about transparency and defend an entity that was complicit in our financial turmoil.

Not only that, it would be doing what Obama promised to do.