Calling Sen. Rand Paul’s rhetoric regarding the Federal Reserve “dangerous and irresponsible,” via Politico, the Wall Street-backed establishment GOP is pushing back on what’s become a Paul talking point, just as it was for his father, Rep. Ron Paul.
Paul could face a significant challenge if he emerges from Iowa with a legitimate shot at the Republican nomination. Because experts say he gets many of his arguments about the Fed flat wrong. And the establishment wing of the GOP — backed by piles of Wall Street money — views Paul’s approach to the Fed as dangerous and irresponsible.
“He seems to have a poor understanding of what’s actually on the Fed balance sheet and how the bank operates,” said James Pethokoukis, a scholar at the conservative American Enterprise Institute. “And if you don’t have a firm grip on one of your signature issues, people eventually are going to doubt other things you have to say.”
But the fact is, the refrain has a receptive audience — a younger one, at that — the GOP is going to have to win over if it wants to have any chance with millennials.
Rand Paul traveled to Des Moines, Iowa, recently and delivered a sure-fire applause line. “Anybody here want to audit the Fed?” the Kentucky senator asked. “Anybody feel that the Fed’s out to get us?”He followed it up with an op-ed comparing the Federal Reserve to Lehman Brothers and calling it essentially bankrupt. The bash-the-Fed routine, perfected by Paul’s father, former Texas congressman Ron Paul, is political gold with libertarian voters suspicious of all federal authority, especially a central bank with a $4.5 trillion balance sheet.
In the final analysis, all the talk of the Fed may help Paul connect with certain libertarians voters and raise money from them, but it’s unclear how far he’d actually go to effect a change. Mounting opposition could force Paul to tamp down his rhetoric, or at least give assurances behind the scenes so as to prevent a full scale economic revolt against his campaign from deep-pocketed donors. It’s one thing to want to run for president. It’s another to accumulate enough financial backing to compete effectively.
The thinking in these circles is that should Paul emerge as a viable threat to get the nomination, an even larger outpouring of money and organizational muscle will be deployed to stop him, in large part out of fear of what a President Paul might do to the Fed.
“If he comes out of Iowa or begins to emerge with any kind of strength, I think you will see the GOP establishment go on red alert because they are going to view him as a dangerous person,” said one financial services industry executive who did not want to be quoted on record criticizing Paul. “The Fed is the pre-eminent central bank on the planet and no one wants to put that at risk.”
Fear of Paul emerging as a potential nominee is part of what is driving the gush of Wall Street money to Bush, and to some extent to Govs. Chris Christie of New Jersey and Scott Walker of Wisconsin.
“He seems to be moving to the position of abolishing or severely limiting the actions of the Fed,” said Pethokoukis. “Every other advanced economy has a central bank. We are going to somehow do something different? That’s going to strike a lot of business people and people on Wall Street as a very extreme and not very responsible position to take.”