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10.01.2008 0

DeMint’s Principled, Necessary Stand

  • On: 10/16/2008 15:46:06
  • In: Economy

  • By Howie Rich

    In a political climate which has sadly seen the leaders of both parties roll over and play dead when it comes to protecting our individual liberties and best interests as taxpayers, United States Senator Jim DeMint (R- S.C.) is emerging as an increasingly dynamic exception to the rule.

    Tired of watching his colleagues on both sides of the aisle—and in the Oval Office—abdicating their responsibility to the people who elected them, DeMint has taken it upon himself to start exposing their costly subservience to the sacred cows and special interests that have long ruled the roost in Washington D.C.

    Most recently, DeMint has taken aim at Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation), two quasi-governmental mortgage behemoths who are currently feeling the crunch of America’s precipitous housing downturn.

    Last week, DeMint took the eminently sensible position that if taxpayers were going to finance a $300 billion bailout of these two entities, then Fannie Mae and Freddie Mac ought to be restricted from making political contributions or hiring lobbyists on the taxpayer dime.

    “If Americans are forced to (bail out) Fannie Mae and Freddie Mac, their lobbying and political activities should stop,” DeMint said.

    Interestingly enough, while DeMint was making his case, Fannie and Freddie were busy planning gala receptions at glitzy hotels in the housing “bust-markets” of Denver and Minneapolis, sites of the Democratic and Republican national conventions.

    As are most efforts to separate politicians from their cocktail parties and special interest paydays, DeMint’s path of principled resistance has made him a pariah among politicians of both parties. Of course, it has also served to peel back the scab on one of the roots of corruption in the political process – government’s failure to play by the same set of rules that citizens and businesses must abide by.

    Specifically, if a “company” like Fannie Mae or Freddie Mac is receiving a taxpayer-funded benefit unavailable to other companies, then it should not be permitted to turn around and spend that money to bribe politicians or to engage in propaganda on their behalf.

    But shelling out big bucks on elected officials is nothing new to Fannie or Freddie. Over the past decade, the pair combined to spend more than $170 million lobbying the federal government. And over roughly that same time period, executives at the two “companies” have stroked $16.2 million worth of campaign checks to members of Congress.

    “Fannie and Freddie have long been distinguished by their outsized influence,” a recent Associated Press report concluded. “They spend heavily on lobbying and hire liberally from Capital Hill’s revolving door and their executives give top dollar to political campaigns. They’ve also funneled contributions into select charities and think tanks.”

    In fact, two years ago, Freddie Mac was forced to pay the largest civil penalty in Federal Election Commission history when it used “corporate resources” to sponsor 85 different fundraisers for federal candidates. And just last year, several top Fannie Mae executives settled with the government for a fraction of losses incurred during a 2004 accounting scandal which – like Enron – featured manipulated earnings and the awarding of exorbitant executive bonuses.

    DeMint deserves tremendous credit for going against the political grain in his efforts to hold Fannie Mae and Freddie Mac accountable. Frankly, the fact that more elected officials haven’t joined him is a sad testament to the far-reaching influence these “firms” continue to enjoy in Washington—and the inevitable corruption and special treatment that accompany our lax ethics laws.

    If Fannie and Freddie want the taxpayers to bail them out, then they should be required to immediately cease all lobbying and political activity, as DeMint has recommended, and be held to the same standard as any other entity seeking a loan—full repayment plus a premium within a specified time frame.

    Absent those terms, politicians are once again doing nothing more than defaulting on their obligations to the taxpayers.

    The author is Chairman of Americans for Limited Government.

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