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Right Turn
Posted at 01:55 PM ET, 12/05/2011

Gingrich, Ron Paul and the crony capitalism meme

Rep. Ron Paul (R-Tex.) may be Newt Gingrich’s biggest problem. Gingrich wants the anti-establishment, anti-Washington Herman Cain voters. Gingrich has to win Iowa or it’s a blow to his momentum. (That’s the downside of raising expectations and declaring yourself the nominee before any votes are cast.) Paul has argued for radical downsizing of government. Lately he has been rising in the Iowa polls, and thanks to his devoted followers, he will likely be able to turn out a higher percentage of his voters than some of his rivals will be able to do with theirs. In sum, Paul might scoop up a share of the Cain voters and lure some of Gingrich’s away by sharpening the contrast in their views about government.

Can Paul win the nomination? Even in an election as wild as this, I find that entirely improbable, but Iowa is a different matter. Part of the key to Cain’s pre-meltdown success was talking in dramatic, bold strokes on fiscal issues. Paul does that as well and has used punchy ads very effectively. Here’s the latest ad that will be running in Iowa and New Hampshire.

Gingrich should be wary not only because Paul is well-organized but also because he poses the starkest contrast with Gingrich, who has made his career and wealth in expanding the scope of government.

As with Rep. Michele Bachmann (R-Minn.) and Rick Santorum, Paul can refine this argument further, making the case against Gingrich’s involvement in everything from Freddie Mac to energy subsidies. And frankly, to the extent that Romney can expand upon his private-sector experience (in which government handouts didn’t cushion the blow and/or prevent failure), he can make the case as well.

In fact, it’s not just the size and scope of government that remain a potent issue but also the creepy, crawly crud of “crony capitalism.” It’s an argument against President Obama that appeals to independents, conservatives and Democrats. It is also a weak point for Gingrich and Texas Gov. Rick Perry (R), who prefers his cronyism on the state level. Moreover, the crony capitalism issue is one that has absorbed the attention and imagination of the conservative media, which no doubt would pick up the ball and run with it.

Rep. Paul Ryan (R- Wis.) has emphasized the importance of the issue. In an op-ed for Fox News, Ryan explained why crony capitalism is so objectionable:

Since the passage of the stimulus bill in 2009, the Department of Energy has issued $40 billion in new loan guarantees for renewable energy projects that might not otherwise have been commercially viable. In addition to Solyndra, Beacon Power and First Wind Holdings offer examples of other instances in which the federal government backed risky and financially unstable firms, using taxpayer money to fund an ideologically driven pursuit of unproven energy sources.
The federal government’s job is not to play favorites among firms — it is to make and enforce clear rules of the road, so that markets are fair, transparent, and competitive. In other words, government’s job is to foster an environment that is conducive to private-sector job creation.
By picking winners and losers in the energy sector, the government-as-investor model distorts markets, weakens the rule of law, and fails to spur sustainable job creation. Instead of helping the economy, the story ends with taxpayers losing billions of dollars, successful companies losing their competitive advantage, and workers losing their jobs — in Solyndra’s case, 1,100 of them.

As an electability issue, Republicans should want a candidate who can maintain a contrast with the Obama team on the issue. As an ideological matter, it is a way of distinguishing actual from faux fiscal conservatives.

Tea Partyers are the antithesis of crony capitalists. Tea Partyers want government as small as possible, abhor favoritism, resent the government’s assistance to the governing (and former governing) class and understand that crony capitalism is bad both for business and for our politics. Crony capitalism turns businessmen and businesswomen into pleaders, instead of risk takers and turns government into the piggy bank for the rich and politically adept.

Sarah Palin (remember her?) gave one of her better talks in recent years on just this subject in September, warning about “corporate crony capitalism.” She argued: “This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk. No, this is the capitalism of connections and government bailouts and handouts, of waste and influence peddling and corporate welfare. This is the crony capitalism that destroyed Europe’s economies. It’s the collusion of big government and big business and big finance to the detriment of all the rest — to the little guys. It’s a slap in the face to our small business owners — the true entrepreneurs, the job creators accounting for 70% of the jobs in America, it’s you who own these small businesses, you’re the economic engine, but you don’t grease the wheels of government power.” She made the connection between cronyism and expanded government, asking “Do you want to know why the permanent political class doesn’t really want to cut any spending? Do you want to know why nothing ever really gets done? It’s because there’s nothing in it for them. They’ve got a lot of mouths to feed — a lot of corporate lobbyists and a lot of special interests that are counting on them to keep the good times and the money rolling along.”

And in a speech in Korea she expanded on the theme that “[c]rony capitalism won’t produce growth, and it won’t produce prosperity. “ She made the case convincingly: “When cronyism thrives in any country, innovation, prosperity and freedom suffers because small innovative firms get shoved to the outside.” The ability to pick winners and losers, she noted, is all about centralizing power in their hands.

Palin’s not a candidate, but that message is doubly effective for many of the not-Newt candidates in the race. It previews the general-election fight against Obama, poses a knotty problem for the front-runner Gingrich and has a populist appeal that will work everywhere from Iowa to New Hampshire to South Carolina (to pick three states at random, you see). Because it is too good to pass up, watch Paul and the other Iowa hopefuls to take up the cronyism message. At least the ones who want to win.

By  |  01:55 PM ET, 12/05/2011

Categories:  2012 campaign, Economy

 
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