The modern day TEA Party movement has people with many different views on foreign policy and social issues, however TEA Partiers are generally united in basic principles of fiscal responsibility and government accountability.
Herman Cain is perceived by many members of the TEA Party to support the basic principles of the movement. The movement started as a pro-liberty, ANTI-BAILOUT campaign. Here, I will attempt to provide two strong reasons why all TEA Partiers, both conservatives and libertarians, should be unified in opposing Herman Cain's candidacy for the presidency.
1. Herman Cain's support (past AND present) for the Troubled Asset Relief Program (TARP)
TARP was the bank bailout bill passed in October 2008. Cain says to this day that he supports the original intention of the bill. The bill gave $850B to the Treasury to buy up bad (illiquid (worthless)) assets from banks. This is an atrocious idea in itself- instead of allowing markets on this paper to clear, Congress decided to try to prop up the banks which held this garbage. Instead of making banks take heavy losses on mortgages with which they had profited greatly over the previous 4 years, the taxpayers were forced to take the losses. In the interest of supposed macroeconomic stability, Herman Cain supported exactly this.
Cain's current stance is that TARP was mismanaged. Yes, it is true, that Treasury Secretary Paulson actually used the funds in a different way than was required by the bill passed by President Bush, and in this sense, is statutorily a criminal. Instead of buying up bad assets, Paulson injected liquidity into these banks by buying preferred stock in them. He also forced some banks to take the money, even healthy banks. The stated reason for this was if the government was buying up assets from certain banks, this would put these housing assets and banks into question by the public. By infusing healthy and unhealthy banks with liquidity, Paulson hoped to prevent the public from knowing which banks actually needed it.
However, let's pretend for a moment that the TARP funds were used as called for by the bill passed by Congress and signed by Bush. Every member of Congress who voted for it, and President Bush who signed it, would be criminals as per the Constitution. The Constitution does not give positive grant to Congress to bailout banks or to stabalize the macroeconomy by what ever means necessary. But Herman Cain supported TARP, and he still does.
And while doing brief research for this article, I found out that Cain actually DID support the change that Paulson made to the administration of TARP, at least at the time.
Summary of Cain's position of TARP:
a. Herman Cain supported TARP.
b. Herman Cain supported Paulson's deviation in spending TARP funds from what was statutorily directed by Congress
c. Herman Cain now supports the original intention of TARP, but opposes the way Paulson administered it.
There is no TEA Partier I've ever spoken to who supported the bank bailouts in any form. Again, the modern day movement started as a response to the bank bailouts.
2. Herman Cain's opposition and flip-flopping on the issue of auditing the Federal Reserve
Cain served as the chairman of the board for the Federal Reserve Bank of Kansas City (one of the 12 regional Federal Reserve banks). It's one thing to work for the Fed. I'm sure there are many fine people who work there. I'm even beginning to think that Bernanke isn't corrupt, but that he's just utterly incompetent. And to his credit, Cain has spoken out against QE2 and the Fed's current management. However, Cain claims that based on his time at the Fed, he has no reason to suspect that there's anything bad going on in secret. He also claims that there are "so many internal audits, it's ridiculous" (like that's ever stopped agencies that had the force of government before). He goes on to say that he suspects that people are calling for an audit of the Fed because they don't know how it works. I can tell you, I know how it works, between the 12 regional banks, the FOMC, the NY fed trading desk, the discount window. It's because I DO understand the basics that I want to know the particulars of every single secret transaction.
He completely ignores what the congressional "Audit the Fed" bill actually does. This bill removes previously enacted restrictions on the authority to audit the Federal Reserve Board of Governors and the Federal Open Market Committee. The bill removes the following restrictions of an audit from subsection b of section 714 of title 31 of the US code, and calls for audits of these four areas:
1. transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization
2. deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations
3. transactions made under the direction of the Federal Open Market Committee; or
4. a part of a discussion or communication among or between members of the Board and officers and employees of the Federal Reserve System related to clauses (1)–(3) of this subsection.
I would argue that transactions with foreign central banks and governments, discount window loans and FOMC transactions are all extremely important for the American people to know.
I think I have heard audio, since, of Cain changing his mind, that he does support an audit. I could not find it, however, as I was writing this. If I remember correctly, he supports it, but does not suspect that it will turn up anything strange. Right... just like how the information turned up in the FOIA requests by Bloomberg and Fox News for bailout details was all just peachy.
By the way, Freedom Works and Americans for Prosperity (right of center groups, heavily identified with the TEA Party) and Democrats.com and the Green Party (progressive groups) all support the Audit the Fed bill.
Any Tea Partier who knows these two things about Cain should absolutely NOT support him. These issues are huge to TEA Partiers. And given that Cain actually worked at the Federal Reserve, it is hard to believe that his response to auditing the Fed is based on ignorance instead of some sort of deceit or cover (either way it is inexcusable).
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