The Magazine

The Crony Capital

Capitalism, Washington, D.C., style.

Jun 23, 2014, Vol. 19, No. 39 • By JIM DEMINT and MIKE NEEDHAM
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Housing finance represents another area in which fealty to special interests has prevented right-leaning politicians from taking the high ground. In the wake of the financial crisis of 2008, few Americans are sympathetic to the government-sponsored entities whose conduct triggered the collapse. Yet Fannie Mae and Freddie Mac remain, and the hedge funds that bet big on their taxpayer-backed recovery are emboldened. They are running advertisements opposing reform in the New York Times and the Wall Street Journal and threatening behind the scenes to withhold campaign contributions from noncompliant members of Congress. National realtor lobbies have been no less active on the issue, and lawmakers who should know better have shielded Fannie and Freddie from the extinction they deserve. A conservative House leadership would advance to a floor vote House Financial Services Committee chairman Jeb Hensarling’s PATH (Protecting American Taxpayers and Homeowners) Act, which would wind down Fannie and Freddie in five years. It would send a powerful message that the Republican party will not be intimidated from reforming the system that brought about the greatest economic downturn since the Great Depression.

Obamacare, of course, remains the centerpiece issue of 2014, and conservatives cannot afford to ignore it. Even here, joined with the effort to repeal the law and enact reforms that empower patients and doctors, conservatives have an opportunity to draw a contrast with the left’s favoritism for big business: They can work to eliminate the “risk corridor” insurance company bailout program designed to insulate insurers from the market dysfunction introduced by the law’s other provisions.

Candidates of any stripe looking toward November would be remiss in ignoring such a rare overlap in partisan interests. Most rank-and-file liberals despise the perceived soullessness and impunity of “big business,” and most conservatives despise government handouts in any form—to say nothing of the constitutional issues involved. The only people remaining to oppose reform are the leadership of both parties, who rarely enjoy rocking a boat full of campaign contributions. But even they can be shamed into action if inaction is made too politically expensive an option.

Whether it’s ending Ex-Im, killing subsidies, or preventing further bailouts, conservatives have a sterling opportunity at this moment of uncertainty to reintroduce themselves to their countrymen as their legitimate advocates in Washington. They can hold the feet of faux-populist progressives to the fire, exposing them as the real shills for corporate interests.

We know that the conservative movement is for real capitalism and against the Crony Capital. Now is the time to prove it.

Jim DeMint, a former Republican senator from South Carolina, is president of the Heritage Foundation. Mike Needham is president of Heritage Action for America, a grassroots advocacy organization.

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