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Dan
Calabrese
Read Dan's bio and previous columns here
October 1, 2008
House GOP Picks Some
Time to Rediscover Its ‘Principles’
House Republicans picked a heck of a time to rediscover their
free-market “principles.” The pork-barreling GOP luminaries – who during
their time in the majority couldn’t be bothered to get federal spending
under control, fix Social Security, reform the tax code or lift the ban
on offshore drilling – are suddenly committed to limited government.
The same underachievers who didn’t raise a finger when they had the
power to keep Fannie Mae and Freddie Mac from endangering the nation’s
entire financial structure, nor to exercise leadership on reform of the
Community Reinvestment Act (which the Bush Administration wanted), now
can’t countenance the prospect of taxpayer dollars at risk.
One of the leaders of this oh-so-principled conservative revolt is
Congressman Thaddeus McCotter, a Michigan Republican who – sensing that
his 15 minutes of fame had arrived – took to the House floor on Tuesday
with a rambling, incoherent speech that portrayed the bailout debate as
a choice between the loss of short-term prosperity and the permanent
loss of liberty.
Among other odd citations, McCotter lauded the example of Andrew Jackson
and his refusal to renew the charter of the Second Bank of the United
States in 1832. Presumably not an American history scholar, McCotter
regaled us from the House floor with the following bluster:
In the 1832 bank panic, Andrew Jackson had the question of
whether he would remove the Bank of the United States Charter. The
people in the bank did not like that. They threatened the prosperity of
the people of the United States during a panic. Andrew Jackson looked at
these bankers and said, “There are no necessary evils in government. The
Treasury to you, gentlemen, is closed.” This was an act of courage on
the part of President Jackson because he understood what was at stake
was not merely an ephemeral prosperity or the needs of people with their
hand out. Andrew Jackson understood this was about majoritarian rule.”
Wow! If Old Hickory wouldn’t let those nasty central bankers put the
screws to the common man, surely Thundering Thaddeus McCotter would be
no less courageous!
Too bad Thad the Bad got things just a little wrong.
The bank panic wasn’t in 1832. It was in 1837. And guess who caused it!
What happened in 1832 was the Bank War, in which establishment figures
like Henry Clay and Daniel Webster urged Jackson to re-charter the
central bank. Jackson, whose past experiences with debt caused him to
feel hostility toward banks, refused to re-issue the charter. Against
the advice of his first two secretaries of the Treasury, Jackson removed
all Treasury deposits from the Bank of the United States and placed them
instead in a series of privately held banks around the country.
This, plus his curious decision to ban the use of bank notes in the
purchase of federal lands, led to the Bank Panic of 1837, which ushered
in a five-year period of deep unemployment and severe inflation.
Those who don’t learn from history are doomed to repeat it. Those who
don’t have the slightest idea what happened in history have a patron
saint in Thaddeus McCotter.
But I guess you have to give the man credit. Despite not knowing what he
is talking about, he helped lead his side to victory – if that’s what
you want to call it. They sent the financial markets reeling to the tune
of $1.1 trillion in value in a single afternoon, which is $400 billion
more than the cost of the bailout they found so objectionable. In their
courageous defense of “Main Street,” they jeopardized the ability of
small and midsize business throughout the nation to access lines of
credit they need to fund operations and make payroll.
Great job, Thaddeus. What a great defender of the common man you are.
But McCotter would not be engaging in such foolishness if he did not
fear the public, which is as responsible in its own way for the problem
as are this clueless congressman and others like him.
The bailout is wildly unpopular with the public. That’s because the
public doesn’t understand how financial markets work, and believes the
media template that the problem was caused by Republican “deregulation”
rather than by government pressure on lenders to approve mortgages for
unqualified borrowers who would not be able to pay them back.
Why Republicans are not making this political case more forcefully is a
mystery to me. It is an easy case to make. The Carter Administration
created the CRA. The Clinton Administration strengthened it. When the
Bush Administration tried to clean it up, Democrats stood in the way
(not that the majority congressional Republicans stood up to them
in the slightest). Fannie and Freddie bought up the bad mortgages that
resulted, and here we are. All this had about as much to do with
deregulation and tax cuts as a gopher has to do with astrophysics.
The entire economy is about to collapse, and a cadre of House
Republicans refuses to solve the problem because that would be
government action, they just can’t compromise their free-market
principles. No. Not them. Never.
Didn’t Thaddeus McCotter ever tell you about the time Andrew Jackson was
fighting the Civil War and Oliver North came to him with bad news about
an attack by the Germans? It doesn’t get any more profound than that,
man.
© 2008 North Star
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