The theme of this week’s Republican Party debate was the economy, and how the candidates plan to address this ever-present issue. While the range of answers and proposals cast a wide net, especially on the topics of taxes and entitlements, one running theme throughout the night was the candidates’ disdain for the heavy-handed policies of the Federal Reserve. Nearly all of the GOP candidates took aim at the central bank in their attacks, much to the delight of their conservative and libertarian bases.
Bashing the Bankers
In many ways, the GOP field did well to distinguish itself from their Democratic counterparts in regard to big banks and big money interests. Where the Democrats frame themselves as the party against Wall St, this seems merely to be a convenient excuse for enacting socialist policies. The Republican candidates singled out the Fed—and its seemingly unbridled influence over policy—as the leading cause of the country’s economic woes.
Rand Paul was in familiar territory when he accused the Fed of destroying the country’s currency and financial system, carrying the torch from his well-known father (and also former presidential candidate), Ron Paul. The junior Paul laid blame for the housing boom and the housing collapse “at the feet of the Federal Reserve.” He was joined by Ted Cruz, who has consistently sounded the alarm that the Fed has too much power.
Much like in the last debate, Cruz had one of the most powerful moments of the night when he explained how the Fed operates beyond the scope of normal checks-and-balances. “What the Fed is doing now is it is a series of philosopher-kings trying to guess what’s happening with the economy.” In many circles, the central bank is called the “unelected 4th branch of the U.S. government.” Cruz has been a supporter of legislation introduced in the Senate by Paul that calls for Congress to audit the Federal Reserve.
Even with his relative inexperience as a political outsider, Dr. Ben Carson also offered a succinct explanation of why over-regulation is not the answer to the Fed problem. Carson conceded that, “I think we should have policies that don’t allow [banks] to just enlarge themselves at the expense of smaller entities,” but he also stressed that risk-taking and an entrepreneurial spirit are the qualities that made the American economy great.
Former Arkansas governor Mike Huckabee indicated that he would shake up the leadership at the Fed, specifically calling out Chair Janet Yellen. Whoever is the next president will have to wait until her tenure as Chairperson expires in 2018 to do so. (Yellen cannot be removed from the Fed’s Board of Governors until 2024.)
During the preliminary debate, both Rick Santorum and Chris Christie went after the Fed, as well. Santorum rightly pointed out that the Fed’s seemingly perpetual policy of abnormally low interest rates punishes savers, hurting Americans who are responsible with their finances. Santorum joined many of the other candidates in calling for a repeal of the Dodd-Frank regulatory legislation. Meanwhile, Christie had one of the sharpest barbs of the night when he lambasted the central bank for its political meddling and use of policy tools as a way to pay political favors to the Obama Administration. “The Fed should be audited,” he boomed, “and the Fed should stop playing politics with our money supply.”
Perhaps the only candidate to take a less negative stance on the Fed was Ohio governor John Kasich. While Kasich did admit that he doesn’t “like what the Fed is doing,” he said he would be even more concerned if Congress had the power over the purse strings and monetary policy instead.
Huckabee, Cruz Support Gold Standard
As possible solutions to the problem of how the country’s banking system operates, both Mike Huckabee and Ted Cruz voiced their support for exploring a gold standard. Cruz suggested that “what the Fed should be doing is, number one, keeping our money tied to a stable level of gold, and, number two, serving as a lender of last resort.” Cruz has been adamant about this point as he perhaps attempts to peel off libertarian support for Rand Paul.
Reiterating this point (with some flexibility), Huckabee said, “Tie the dollar to something fixed, and if it’s not going to be gold, make it the commodity basket. What we need to do is to make sure that they tie the monetary standard to something that makes sense, rather than to their own whims.”