MENU

Reason.com

Free Minds & Free Markets

Rand Paul, on Trump: ‘I Think He Will Sign Audit the Fed if We Can Get it to Him’

Given the state of the modern GOP, that’s a very big “if.” But the senator is trying for a vote again this week.

Rand Paul speaks to reporters on Capitol Hill, January 2018. ||| JOSHUA ROBERTS/REUTERS/NewscomJOSHUA ROBERTS/REUTERS/NewscomSen. Rand Paul (R-Kentucky) this week is once again trying to overcome his own party's reluctance to act in power how it campaigned in opposition, by introducing his stalled-out bill to audit the Federal Reserve as an amendment to The Economic Growth, Regulatory Relief, and Consumer Protection Act, a Dodd-Frank semi-rollback that's expected to pass with bipartisan support.

"I think it always has a chance of passing, but the hardest part is actually getting a vote on things," Paul told me in an interview today. "You never know unless you try."

If Republican politicians meant what they said, Audit the Fed would already be the law of the land. The proposal, first introduced and popularized by longtime congressman and three-time presidential candidate Ron Paul, was included in the last two GOP platforms, passed by the House of Representatives in 2012 (by a 327-98 vote) and 2014 (333-92), and campaigned on by Donald Trump ("It is so important to audit The Federal Reserve," Trump tweeted in February 2016).

Yet it's a different story when the GOP holds power. The latest House Audit the Fed bill, sponsored by Paul pal Rep. Thomas Massie (R-Kentucky), was put in that Raiders of the Lost Ark warehouse, while companion Paul legislation didn't even get that far. (Paul did whip 53 votes back in January 2016, but that fell short of the 60 required; see my interview with him at the time for more.)

As for President Trump, Paul's father Ron complains that "he has not even uttered the words 'Audit the Fed,' or talked about any changes to monetary policy, since the election." Yet the younger Paul, who—in contrast to Senate colleagues such as Jeff Flake—has maintained a productive relationship with Trump, remains hopeful. "We've talked about Audit the Fed before and the fact that he supported it during his campaign," he said. "I think he will sign Audit the Fed if we can get it to him. The hardest part that we have to overcome is the institution of the Fed itself. The biggest lobbyist on Capitol Hill against auditing the Fed is the Fed."

That obstacle was only made more difficult after Trump appointed as his new Federal Reserve Chair the central bank's principal spokesman against Paul's legislation: Jerome Powell. (The senator was one of just 13 votes against Powell's confirmation). Powell reiterated his opposition to Audit the Fed during confirmation hearings. "Congress has chosen to shield monetary policy from a policy audit," he told senators. "That has been a wise choice made to show respect for the independence of monetary policy….A [Government Accountability Office] audit would be a way for Congress to insert itself into the making of monetary policy on a meeting-by-meeting basis."

||| ReasonReasonPaul dismisses such arguments. "I kind of think it's unseemly that…an entity created by government lobbies its own government not to have sunlight and not to be audited," he said. "What we have now is…a fake audit. What you see is that there is an audit by the GAO, but they don't audit any of the things that the Fed owns. The Fed owns over $4 trillion worth of stuff, and none of that is reported in the audit. I kind of tongue in cheek say, 'Yeah, they audit how much coffee they buy, they audit what their salaries are, and, you know, whether or not they're going to Las Vegas on a holiday on government expense.' That is audited, but then the $4 trillion worth of stuff is not. We don't know whether it's marked to market, we don't know whether they bought it from their cousin. There needs to be more sunlight on what they own, what they pay for, and what it's valued."

What is Paul's impression of Powell's approach to monetary policy? "I think he's—like so many that have been at the Fed—he's a strong believer in basically price controls on money. This is basically the Fed fixing the interest rate. I think there's some irony that some people who claim to be limited government people—would be against price controls on bread, houses, furniture, et cetera, on almost every item in the economy—but then when it comes to the price of something that's in every transaction, the price of money, they're for fixing that price. I think every argument against price controls and the distortions it causes go doubly so or triply so for money, because money is a part of every transaction. If you fix the price of money, you send a signal to the economy often that everything's just fine."

So will Paul's amendment get a vote? "Well, it needs the acquiescence of the majority party," he said. "The Republican party has to allow it to happen." That's not promising news. "Typically in the last year or so, almost no amendments have been voted on."

So Republicans are all in favor of auditing the Federal Reserve, except when they have the power to do so. It's enough to make the naïve turn cynical about politics.

"I think that's one of the biggest frustrations, when you talk to constituents, or when I am home on the weekends and meet fellow Kentuckians," Paul said. "They're like, 'You guys promised if we gave you the House, you'd do this. Then you said we have to have the Senate. Then you said we have to have the presidency. We gave you all three. What are you guys doing up there?'

"Particularly on the debt: I think people are very unhappy with the idea that we're going back to trillion-dollar annual deficits when we control all three branches of government. That really got me going and very upset. I think you'll find that a lot of people outside the Beltway are in the same position as I am."

Photo Credit: JOSHUA ROBERTS/REUTERS/Newscom

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • loveconstitution1789||

    Audit the fed is good but there might be some more important tasks for Congress to complete before election 2018.

    Repeal ObamaCare for one.
    Cut Social security, medicare, and medicaid are others.

  • Juice||

    Auditing the fed is too pie-in-the-sky. The goals you listed here are more realistic.

  • Hugh Akston||

    Wait until you hear about his goal to round up and deport 11 million people.

  • Francisco d'Anconia||

    And that wall ain't gonna build itself.

  • Chipper Morning Baculum||

    Wait until you hear his plan to prevent voter fraud, called Audit The Dead.

  • BigT||

    Audit Obamacare, repeal the Fed....or something.

  • timbo||

    Good on ya buddy for trying.
    But reigning in the FED is like reigning in the military industrial complex.

    Far too much special interest money is involved in keeping these shadow institutions going. It will always get shot down at zero hour.

    If you have not noticed, 3 things are now off limits for discussion among American politics:
    1. The FED and its capital misallocation, purchasing power destroying antics
    2. The MIC. Too many jobs both directly and indirectly depend on never ending wars and unchecked tax payer expense for the purpose of patriotism and nationalism.
    3. Entitlements.
    It is suicide to mention curtailing these wastes and crimes and it is really nice in the swamp. That's why the most corrupt place on earth will remain so.

  • TLBD||

    The difference with the FED, though, is that the average American has no idea what they do. It is not political suicid... though it might be suicide.

    I mean really, wtf are they doing with 4 trillion dollars? Where did that number come from?

  • Nardz||

    3. Welfare Industrial Complex
    Structurally no different from the MIC, and an even larger portion of the budget.

    What's needed is an audit of specific programs. Let's start with the WIC

  • Gaear Grimsrud||

    4. The War on Drugs complex.

  • Will Nonya||

    The "War on Drugs Complex" is a subset of the larger Law Enforcement Industrial Complex. It includes the Drug was as well as the civil forfeiture, prison crowding, militarization of police etc etc.

  • Chipper Morning Baculum||

    If Rand wants Trump to sign this, all he has to do is start spreading rumors that the Federal Reserve Board members are laughing at Trump behind his back and say that Trump is too scared to challenge their authority.

  • Hugh Akston||

    It would also help to be the last person to talk to Trump before this lands on his desk.

  • Citizen X - #6||

    It occurs to me that a libertarian who snuck into the White House and whispered policy ideas into a sleeping Trump's ear could do a lot of good.

  • timbo||

    The dumbo approach.

  • Hugh Akston||

    They would have to navigate a minefield of big mac wrappers and discarded shirts to get to the bed.

  • Citizen X - #6||

    Discarded shirts? Are you implying that Steve Bannon is still lurking in there?

  • Hugh Akston||

    Trump has instructed his cleaning staff that if his shirts are on the floor it's because that's where he wants them.

    If I were implying Bannon's presence, I would have mentioned a rotting pile of sloughed flesh on the floor.

  • Chipper Morning Baculum||

    Just how far away are we from Trump hiding his poo, so Putin can't get his grubby paws on it?

  • I am the 0.000000013%||

    All good strategies. If only someone in the government actually wanted a smaller government...

  • Citizen X - #6||

    Nobody enters into a career with the goal of making that career obsolete.

  • Chipper Morning Baculum||

    What about bank robbers?

  • BigT||

    Suicide bombers?

  • DenverJ||

    Disease cure researchers.

  • John||

    Is there any reason being given not to audit the fed other than FYTW? I honestly can't think of a reason why someone would object to this other than "FYTW and I don't want you to see how corrupt we are". Are the opponents of this even trying to give a reason to object to this?

  • ||

    I too wonder this. I'm not a conspiracy nut, but I can understand those who rail against the Fed.

    Why hasn't it been given at least a cursory audit at least once a decade?

  • BestUsedCarSales||

    I think they oppose it because it is bringing politics into the monetary policy of the Fed. Which is a strong argument, as we all know there is no politics at all currently involved with the Fed. None at all.

  • John||

    Okay, but what is political about an audit? It is just numbers.

  • BestUsedCarSales||

    So, I was being sarcastic if that wasn't clear. But I believe their argument is that it involves the government forcing their way into it which leads to an inherently political confrontation.

  • TLBD||

    John was born without a sarcasm meter.

  • Chipper Morning Baculum||

    You know what else John was born without?

  • Hugh Akston||

    Hitler?

  • Citizen X - #6||

    You know how cockroaches run when you turn on the light? It's like that, except less sanitary.

  • Chipper Morning Baculum||

    I told you to stop inviting Crusty to stay at your house.

  • timbo||

    I think the main reason is that the fiat scheme is so obviously rife with danger that they cannot open that closet.

    Every fed reserve bank in every country on earth is operating the exact same scheme of debt devaluation, fiat shenanigans, and implied bailouts to the connected few.

    Just as it is obvious that it needs to be audited and ended, it is also obvious that it will never be because it will be the end of the current massive debt bubble fueled by bond market manipulation, currency debasement, and the flight for return in the stock market. Every asset class in the investment markets are in bubble territory except cash which is a net negative return any way you look at it.
    It is much easier now to just keep doing the same thing over and over again and hope you are not in power when the music stops.
    To do anything else is political suicide and might trigger the massive imminent collapse that the world has never even dreamt of.

  • vek||

    Of course a sane person could just slowly unwind the crazy during good economic times, but that would make too much sense. Even if you buy into the concept of fiat currency systems being a great idea, interest rates probably should have gone up years ago, and they've completely done everything wrong, even according to Keynes himself!

  • NotAnotherSkippy||

    Is there any reason TO do this? I just don't understand this religious conviction that this will accomplish anything. Ready for the big reveal? The fed can "print" as much money as it wants with a few button pushes. Is that news to anyone?

    #whatsthepoint?

  • Brett Bellmore||

    The reason to do this is that it's simply insane to run financial institutions of any sort on the honor system. Regular audits are the default unless you have something to hide.

    The moment somebody objects to doing an audit is the moment you know one is absolutely necessary. That's the case for any organization whatsoever.

  • Philadelphia Collins||

    The point is that Article 1, Section 10 of the Constitution is being ignored. And not for our benefit.

  • TW||

    Because they're already audited and this is just political grandstanding?

  • Brett Bellmore||

    Is the audit as fake as your link?

  • vek||

    They have not had a PROPER audit in their entire history. Period. Giving up a few pointless numbers, while ignoring all the important numbers, is NOT a proper audit.

  • Fist of Etiquette||

    Top. Men.

  • Ygrittesngravy||

    I generally really like Welch's writing, but he needs to avoid writing anything that relates to economics or monetary policy. I share some of the concerns regarding the Fed for sure, but the FOMC setting a short-term policy rate and then attempting to nudge short-term rates is hardly the same as establishing appropriate lending rates throughout the wider economy.

    Nice straw man, Matt.

  • Hugh Akston||

    You're obviously a man who appreciates a good straw man, considering that you're responding to arguments that Matt never made in this post.

  • Gilbert Martin||

    But, but the fed is independent and not political!

    It can be trusted implicitly!

  • ||

    seeing how the FED has never been aduated, it's LONG OVERDUE.

  • mondo_cane||

    The US Constitution gives the power to coin money to Congress. But they, being politicians, have slipped their responsibility in favor of placing the responsibility and the blame for economic problems on the Fed.

    The Federal Reserve was created in 1913 as the United States Central Bank during the era of progressivism which also included such lovelies as the income tax and the direct election of senators. All approved by that famous stalwart of governance, Woodrow Wilson.

    Jefferson was absolutely against a central bank and standing armies because central banks enable standing armies. The Federal Reserve gives us the means to deficit spend (borrow to finance) the great gift to the deep state allowing the US to wage our constant and ongoing foreign wars.

  • Jacks61||

    And the problems keep getting compounded. If the Social Security Trust had been left alone, many of the problems we are seeing in the last 20 years wouldn't exist.

    Many people (voters) don't know what happened in the Reagan years. Yes, they started "borrowing" from the SS Trust. It has never ended and it's never been paid back. The word entitlements has been twisted in recent years by politicians to try and justify their incompetence. And their thievery.

    How many millions of taxpayers work their entire life, die near retirement age and never get a penny of what they've paid into the system? The Govt' just keeps that money.

  • NotAnotherSkippy||

    Horseshit. Johnson unified the trust funds with the general fund. Medicare has required funding from the general fund since day one. And even if the Johnson's government had stopped raiding the SS trust fund it still wouldn't last beyond about 2035 and that fiction would only have been true AFTER Reagan increased withholdings and changed the retirement age in the 80s.

    So count yourself amongst those voters who don't know what's going on.

  • NotAnotherSkippy||

    If yoi want to call the welfare state foreign wars, that's your choice. But your fellow citizens will probably resent being called foreigners.

  • vek||

    At the end of the day the Fed and the manipulations it enables are truly at the heart of most of the biggest issues of the day. The size of government could not be what it is without the Fed enabling it. Unfortunately it does seem to be one of those issues that just goes over the heads of 99% of people. Even many libertarians seem to not get it... And if libertarians don't rail against a massive, manipulative, government entity because it flies over their heads, what are the odds normies will??? About zero.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online