Senate rejects Paul’s push to audit the Fed

Greg Nash

The Senate on Tuesday rejected Sen. Rand PaulRand PaulOvernight Energy: Trump outlines 'America First' energy plan in North Dakota Overnight Regulation: GOP slams new Obama education rules Paul blocks chemical safety bill in Senate MORE’s (R-Ky.) controversial proposal to audit the Federal Reserve, turning aside a bill that has drawn the ire of the business community and the White House. 

The Senate voted 53-44 on taking up the presidential hopeful’s measure. Sixty votes were needed to move forward.

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Paul won some bipartisan support for the legislation, with Sen. Bernie SandersBernie SandersTrump and Sanders whip up debate buzz Sanders wins over W.Va. superdelegate Boxer: Sanders appeals to young voters with grandpa effect MORE (I-Vt.), another presidential candidate, voting in favor. Democratic Sen. Tammy BaldwinTammy BaldwinSenate panel passes 4.5B defense bill Dem introduces bill to block new government hacking powers The Trail 2016: The campaign that never sleeps MORE (Wis.) backed the bill as well.

Sen. Marco RubioMarco RubioTrump encourages Rubio to reclaim Senate seat The Trail 2016: Interleague play Rubio: I'd speak on Trump's behalf at convention MORE (R-Fla.), who is also running for president, supported moving forward with Paul’s legislation, while White House rival Sen. Ted CruzTed CruzFiorina returns to attack Clinton's 'lust for power' Trump clinches GOP nomination Eleven states sue Obama over transgender bathroom directive MORE (R-Texas) missed the vote. Sen. Bob CorkerBob CorkerThe Trail 2016: Interleague play Top Republican urges Rubio to run for reelection Senate GOP ties Iran sanctions fight to defense bill MORE (Tenn.) was the only Republican to vote against the bill. 

Paul had pressured Sanders and Sen. Elizabeth WarrenElizabeth WarrenTrump sticks by 'Pocahontas' nickname after being challenged Trump: Warren ‘as Native American as I am’ The Hill's 12:30 Report MORE (D-Mass.) to back his proposal, portraying it as a test of their commitment to taking on Wall Street.

“We’ve had a lot of Democrats who claim that they’re concerned about big banks and big banks controlling things and a revolving door between Wall Street and big banks and the Federal Reserve,” Paul told reporters during a conference call Monday. “We’ll see if any of those loud voices — Bernie Sanders, Elizabeth Warren — are they loud voices that really are for more oversight of the banking system?” 

Warren voted against the bill. 

Sanders, who in the past worked with Paul’s father, former Rep. Ron Paul (R-Texas), on similar “Audit the Fed” legislation, said the new bill would help build on his 2010 push to require an audit of the central bank’s emergency lending.

“Requiring the Government Accountability Office to conduct a full and independent audit of the Fed each and every year, would be an important step towards making the Federal Reserve a more democratic institution that is responsive to the needs of ordinary Americans rather than the billionaires on Wall Street,” the Independent senator said in a statement. 

Paul’s legislation, which would increase congressional oversight of the Fed and require it to undergo an audit by the Government Accountability Office, faced an uphill battle. Ahead of the vote, only 26 Republicans had signed on as co-sponsors.

Sen. Dick DurbinDick DurbinFunding boost for TSA sails through committee Senate panel passes 4.5B defense bill Reid: 'Lay off' Sanders criticism MORE (D-Ill.) told The Hill while he expected the vote would be close, “at this point I think it’s going to be difficult for the Republicans to get 60 votes.”

Democrats suggested that Senate Majority Leader Mitch McConnellMitch McConnellOvernight Healthcare: Momentum on mental health? | Zika bills head to conference | Only 10 ObamaCare co-ops left Trump outlines ‘America First’ energy plan Senators hope for deal soon on mental health bill MORE (R-Ky.), who supported the bill, was wasting floor time by making Paul’s legislation the first bill of 2016. McConnell backs Paul’s presidential run.

Senate Minority Leader Harry ReidHarry ReidMcCain files B amendment to boost defense spending Dems to GOP: Cancel Memorial Day break Sanders fundraises for Feingold in Wisconsin Senate race MORE (D-Nev.) dismissed Paul’s proposal as a “sham.”

“Republicans have been trying to undermine the Federal Reserve mandate to strive toward full employment,” he added on Tuesday morning.

Sen. Sherrod BrownSherrod BrownThe Hill's 12:30 Report Clinton urged to go liberal with vice presidential pick Groups urge Senate to oppose defense language on for-profit colleges MORE (D-Ohio), the ranking member of the Banking Committee, added ahead of the vote that the legislation “really solves nothing but to politicize the Fed.” 

For Paul, the vote in the Senate was a chance to grab the spotlight ahead of a weekend trip to New Hampshire, the second contest in the Republican primary.

After a promising start, he has struggled to break out in the field and is now coming in near the bottom of the polls. 

Fox Business Network announced that the Kentucky Republican didn’t qualify for the main-stage debate on Thursday night, and Paul has refused to participate in the earlier undercard bout.

Republicans broadly argue that recent policy decisions by the Federal Reserve — including its handling of the 2008 financial crisis — underscore the need for more oversight of the powerful central bank.

Sen. Pat Toomey (R-Pa.), who is up for reelection in November, said that while he had been skeptical of Paul’s legislation, “the dangerous behavior that the Fed has engaged in for years now means they have squandered the right to be independent.”

Sen. Richard Shelby (R-Ala.), the chairman of the Senate Banking Committee, had previously voiced opposition to Paul’s proposal, but voted Tuesday to move forward with it.

“I think we ought to debate it,” he told reporters on Monday evening. “I’m interested in oversight and that might be what he’s interested in.”

Federal Reserve officials have fought fiercely against Paul’s legislation, suggesting that it would allow Congress to weigh in on financial policy “in real time.”

Fed Chairwoman Janet Yellen sent a letter to Senate leadership late last week saying that she opposes the bill and warning, if signed into law, it could damage the economy.

The White House last year called Paul’s proposal “dangerous.”

“What that bill is about is about Congress supplanting its judgment as to what monetary policy should be,” said Jason FurmanJason FurmanEconomy adds only 160K jobs in April GOP blasts Obama for slow economic growth Jobless claims tick up but reflect healthy labor market MORE, chairman of Obama’s Council of Economic Advisers. “Congress shouldn’t be telling the Fed what to do with monetary policy.”

Business groups had also expressed strong opposition to the bill.

The U.S. Chamber of Commerce, the most powerful industry lobby in Washington, issued an open letter urging senators to vote against the legislation, calling it “unnecessary.”

“Creating outside pressures that could politicize monetary policy decisions would likely harm the market foundations needed to fuel the free enterprise system,” wrote Bruce Josten, the Chamber’s executive vice president of government affairs.

Tuesdays’ vote was the first time Paul’s legislation was allowed to come up. 

Conservative groups rallied behind the measure, with FreedomWorks legislative affairs manager Josh Withrow saying late last week that if central banks “have nothing to hide from the American people, they shouldn’t fear transparency.”

This story was updated at 7:45 p.m.

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