Rep. Ron Paul and Ben Bernanke are locked in a clash of titans.
Paul, the 74-year-old House libertarian from Texas with the high-pitched voice, has fought for decades to kill off the Federal Reserve.
Bernanke, the mild-mannered ex-Princeton professor and chairman of the bank, is waging a high-stakes battle for the Fed’s reputation. And he’s doing everything possible to knock out Paul.
The fight is still in the early rounds. But with the full House expected to vote this week to give government auditors more power to scrutinize the Fed, Paul has the upper hand.
The Senate is a much more difficult round for Paul, though a similar stew of liberal and conservative support is starting to simmer in the upper chamber behind the Republican’s wonky auditing measure.
Bernanke and Paul have never met one-on-one behind closed doors, Paul’s office said. The battle has taken place in public — on blogs, with grassroots activists and during congressional hearings.
Bernanke has testified against the provision, given lengthy media interviews, written op-eds and attempted to lift the cloud of secrecy that hangs over the bank.
The Fed is audited, he argues, but allowing government scrutiny of interest rate decisions will politicize the Fed. Opening the door to congressionally requested audits would compromise the market’s confidence in the bank.
Paul, a longstanding supporter of a new gold standard, made his case formally in his recently published book, End the Fed.
The 2008 presidential candidate’s crusade is no longer a quixotic quest. He is a prime beneficiary of the grassroots anger this year against government bailouts for Wall Street.
First introduced in February, Paul’s bill to audit the Fed has gained 317 co-sponsors, a shocking three-quarters of the House. The bill has not won over many Democrats in leadership, but it has picked up several committee chairmen, including Reps. Bart Gordon (Tenn.), Jim Oberstar (Minn.) and John Spratt (S.C.).
Rep. Alan GraysonAlan Mark GraysonDeSantis tops Crist, Fried in poll of Florida governor race Florida Rep. Val Demings officially enters Senate race against Rubio Demings raises Democrats' hopes in uphill fight to defeat Rubio MORE (D-Fla.), a prominent Paul ally on the bill, has provided a huge boost to the effort with his firebrand strain of liberal politics.
Grayson has publicly slammed the Fed, going so far as calling its top lobbyist a “K Street whore” before apologizing. Paul himself said the full force of “lobbyists for the Fed” is stacked against him.
As the popularity of the Paul-Grayson measure rose this year, Bernanke’s fell.
Praised by many economists for taking the necessary steps to right the economy over the last year, his overall public approval has soured. A Rasmussen poll in November showed that just 21 percent of those surveyed thought Bernanke should be reappointed. Meanwhile, 79 percent of those polled said auditing the Fed is a good idea.
Republicans have jumped behind Paul, who stood out in last year’s GOP presidential primary for his outspokenness against the Iraq war.
“There needs to be Fed independence and accountability for those dollars to at least look back at those decisions,” said Rep. Kevin BradyKevin Patrick BradyOn The Trail: Retirements offer window into House Democratic mood Members of Congress not running for reelection in 2022 Trump war with GOP seeps into midterms MORE (R-Texas).
But the political value is plain as Republicans argue the government is taking too large a role in the economy.
“The Fed becomes for Republicans a very convenient, always controversial, always misunderstood, very specific whipping boy that they can ride to potential victory in 2010 and 2012,” said a Washington-based financial lobbyist.
Bernanke has the normally powerful Rep. Barney Frank (D-Mass.) in his corner. But as chairman of the House Financial Services Committee, Frank couldn’t eke out a compromise.
Frank rarely loses battles, but an attempt — with Rep. Mel Watt (D-N.C.) — at a deal on the audit issue simply fell short at the committee level. Liberal activist Robert Borosage, who is campaigning against Bernanke’s nomination for a second term, said the compromise effort was nothing more than “the establishment alternative.”
The committee voted 43-26 in favor of Paul’s amendment as 15 Democrats on the panel bucked Frank.
The vote drew a bright line between the senior Democrats atop the committee and the freshman and sophomore members.
“I think some of the newer members are in the most vulnerable districts,” said Rep. Brad Miller (D-N.C.), a Paul-Grayson co-sponsor who instead joined Frank in voting against the Paul amendment. “They were certainly getting the calls that I was getting, and they were reading the politics differently.”
Frank and Paul are both veterans of the House, and while they are on nearly opposite ends of the political spectrum, they have a mutual respect. The two have worked closely on an Internet gaming measure.
Many Democrats and Republicans on Capitol Hill say that Frank, despite his partisan rhetoric, is a pragmatist.
“I never felt [Frank] was against me,” Paul said.
Frank said last week the language wouldn’t be changed when the House heads for the vote. Ten of the 13 House members on the Rules Committee are among Paul’s backers, including Chairwoman Louise Slaughter (D-N.Y.).
“Absent some change in the way the public is reacting, I don’t see any changes,” Frank said. “I think there is this tension within the Republican Party. A lot of their people who traditionally have a lot of influence are troubled by this, but they may be cowed by the anger at the Fed.”
In the Senate, Paul has found support from Sens. Jim DeMint, the conservative Republican from South Carolina, and Bernie SandersBernie SandersShame on Biden for his Atlanta remarks — but are we surprised? Overnight Health Care — Biden faces pressure from Democrats on COVID-19 Sanders calls out Manchin, Sinema ahead of filibuster showdown MORE, the Independent from Vermont who calls himself a proud socialist.
A left-right coalition of interest groups on the outside is joining forces against Bernanke.
Bob Cusack contributed to this article.