Boehner’s “a disaster,” Cruz an “intelligent fool,” and heroin should be legal: Barney Frank talks to Salon

Former congressman Barney Frank slams ex-colleagues, questions banks' clout, and predicts how the shutdown will end

Topics: U.S. Economy, Washington, D.C., Republican Party, LGBT, George W. Bush, Democratic Party, Editor's Picks, 2012 Elections, Barack Obama, Barney Frank, John Boehner, Ted Cruz, Henry Paulson, Too Big to Fail, Banks, economy, financial crash, enda, Tammy Baldwin

Boehner's "a disaster," Cruz an "intelligent fool," and heroin should be legal: Barney Frank talks to SalonBarney Frank (Credit: AP/J. Scott Applewhite)

Barney Frank spent 32 years in the U.S. House before retiring in January. In recent years, he helmed the House Financial Services Committee during the 2008 financial crisis, became the first member of Congress to marry a same-sex partner while in office and helped lead the charge for a ban on anti-gay firings (so far stymied) and post-crash financial reform (that law now bears his name). He’s currently writing a book.

In a Monday afternoon interview, Frank predicted the endgame of the debt-ceiling showdown and defended his push in Congress for an Employment Non-Discrimination Act that would have left out transgender workers. He also told Salon that big banks “have very little political power,” called the president’s support for Social Security cuts “appalling” and urged America to legalize heroin and cocaine. What follows is a condensed and edited version of our conversation.

So we’re about to hit two weeks of a government shutdown, and we’re days from the debt-ceiling deadline without a final deal. Are you surprised?

No. One of the lies people tell is, “I don’t like to say I told you so.” It is in fact one of the few pleasures that improve with age. I don’t have to take a pill before, during or after I do it.

So no, I’m not surprised. The control the right wing has over the Republican Party, and the ideology of those people, and the political framework that has dominated the Republican Party where all Republican politicians have been terrified of losing a primary to an extremist — that was predictable.

The system of government we have now — can it work with the tactics that we’ve seen Republicans take up?

No. But it has a potential self-correcting mechanism.

This is a very recent phenomenon. In January 2008, George Bush approached [Nancy Pelosi and Harry Reid] and said, “We need a stimulus.” If they were Mitch McConnell and John Boehner, they would have said, “Hey, great. Let the economy tank — we’ll do better in the coming election.” Instead, they worked with him. Then I spent all year cooperating with [Treasury Secretary] Hank Paulson.

[Then] most fraught period in the American political calendar, two months before a presidential election, Bush sends Bernanke and Paulson out to tell us, “Terrible things are happening, and unless you agree to do some very unpopular things and give us a lot of power, the economy is going to collapse.” Well again, if we were McConnell and Boehner, we would have said, “Hey, we’ll really win big in another two months when the economy goes in the toilet.” Instead, perfect political cooperation. We fought them over some issues, but we worked with them.



Bipartisanship was alive and well until Barack Obama was elected, and they went on strike. 2010, this crazed group finds itself with a chokehold over the Republican Party, and things break down. What’s currently at issue is people saying, “We lost a legislative battle in 2009, 2010. We tried to undo it in the 2012 election and we lost. We will sabotage other unrelated aspects of government until you agree to give us the victory that we couldn’t win at the polls.” That is totally untenable.

It’s self-correcting. The public does appear now to have recognized who the villains are in this. We’ve gotten beyond this “pox on both your houses” intellectual and moral laziness, and the Republicans are feeling the heat.

So I think two things are going to happen. First, the government is going to reopen and we are going to expand the debt limit. And second, even with that, Republicans will do much less well in the next election.

Tea Party people are somewhat immune from defeat — they have these very right-wing districts. But if 40 seats are in play, that changes the majority. The dynamic here is for Boehner essentially to have to get to the point where he says to the Tea Party, “You won’t lose, but you’ll be in the minority — and therefore I have to go ahead and back down.”

Yes, we’re at a point where we can’t function, but I do think we’re seeing a self-correcting mechanism — namely the fear of being punished for this.

What’s your view of how Boehner’s approached the speakership?

It is a disaster. I have to honestly say I don’t understand why he so desperately clings to the office when he’s been humiliated by it. He’s not Newt Gingrich — he’s not a man with strong ideological convictions. Has no anchor, he gets buffeted. I think  he felt that he had to cave in to these people, let these people take over, to keep the speakership.  At some point if he’s rational he’s going to go to them and say, “What good is it for you to keep your 40 seats and we lose the House?”

If I were Boehner, I would defy them to challenge me for the speakership next time, because they clearly can’t put in one of their own. He does seem to me to have successfully brought Eric Cantor along. So I think it’s just a kind of lack of moral courage to say, “I’ve got to do the right thing, and I’ll survive it.”

Many Americans believe that the financial industry is just too big, is too powerful, keeps fomenting bubbles and fraudulent investments, and takes the things of value in our economy for short-term gain. Does the Dodd-Frank law address those concerns?

It addresses many of them. It makes bubbles much less likely. The bill outlaws the kind of subprime loans that were made to people who couldn’t repay them. It empowers regulators to say that even loans that can be offered might be subject to a risk retention. It also means that derivatives cannot be traded back and forth the way they — people made loans that shouldn’t have been made, then they sold them to people who shouldn’t have bought them.

As to the institutions being too big, the question I guess is: What are the dangers people see in that? One thing we have clearly resolved is we no longer have a situation where institutions are so big that if they can’t pay their debts, the taxpayers will have to step in and pay their debts for them because the consequences of them going out of business would be bad. The law now says if a large institution can’t pay its debts, the government steps in, puts it out of business, puts it into conservatorship. The shareholders will lose everything; all of its assets are then available to pay its debts. To the extent that there are debts left over that can’t be paid, the Secretary of the Treasury can then pay some of the debts — only as much as he thinks he needs to prevent contagion. And he is then required by law to recover every penny that he advanced by an assessment on large financial institutions. So you will not have that repeated. By the way, the specific power the Federal Reserve used to give $85 billion to AIG has been repealed.

Derivatives — thanks in part to Gary Gensler’s good use of the law we gave him – they’re much more regulated.

In terms of “too big,” they’re not too big for people to have competition. I guess some people think they have too much political power. In fact if you look at the last few years, the big banks have very little political power. In the legislating we did, we did run into political power [of] the small banks and the credit unions. Any time in our legislation there was a differentiation in the way institutions were treated according to size, the small ones won.

There’s a lot more competition between financial institutions in America than in most parts of the world. There are enough financial institutions I don’t think there’s an anti-competitive situation. No financial institution would come close to meeting the definition that would trigger antitrust. When you say they’re too big, too, the question is how small do they have to be? Lehman Brothers failed and that caused a great problem. Well, Lehman Brothers was at a pretty low level. If you had to reduce every institution to Lehman Brothers, I don’t know how you would do that.

I think we in fact took care of the problems that existed in the past. I don’t know what new problems might come up. But one thing we did was to change the regulatory system so that we now have regulators who have the power to act in advance. For example they are making hedge funds register and are monitoring hedge funds. And if there would appear to be some imbalance caused by the hedge funds, they can go in and rebalance it.

Some Democrats have been joining with Republicans in the House to push legislation that would repeal some [Dodd-Frank] restrictions on tax support for derivatives, and to delay rules proposed by the SEC on the advice given by fund managers. What’s your view of those efforts?

They are mistaken. Some of my colleagues are luxuriating in irrelevance. They know the Senate’s not going to adopt it and they know the president would veto it if they did.

In the normal situation, where there’s not a crisis, the large institutions and the small financial institutions have a lot of influence because no one else is able to control them. When people were paying attention, we were able to control them. We’re back to a situation where the public isn’t following this very closely so some of my former colleagues are voting with the big institutions.

The Commodity Futures Trading Commission generally has done great things. The court to which any appeals from the regulatory proceedings go is the D.C. Circuit, and that’s the one that’s got a Republican imbalance and where Obama has been trying to appoint some Democrats and Republicans have been filibustering. By reducing funds to the CFTC and by keeping Obama from getting a balanced court, they’ve given us a little bit of grief. But it’s more of a slowdown than a stoppage.

What happens to Dodd-Frank when we have a Republican president again? What stops them from using their appointment power to effectively make it defunct?

Well, they can’t make it defunct. In a democracy, if people vote to put somebody in power doing that, that could happen. But there are two factors that make me somewhat relaxed about it. First of all, the time to stop those things was to kill them in the cradle. By 2016, so much of these rules will be in place that even the business community will not want to see major changes because it will be disruptive to them. Some of the powers that are given to regulators may not be used very vigorously but you will not see the powers repealed.

You want to listen to complaints that regulation is strangling the financial sector, go read the debates in the New Deal. Republicans screamed and yelled, but by the time Eisenhower became president they were baked into the cake, and the enforcement wasn’t as rigorous, but the basic structure stayed in place.

You’ve joked recently that being a man who’s attracted to men has gotten way more accepted since your childhood, but being a man that’s attracted to big government hasn’t. The sweeping change we’ve seen — policy and polling on gay rights over the past couple decades — why haven’t liberals seen such success on other issues?

We have overturned the prejudice, and I think we were close to breaking its back. If you live in much of the country now and you are gay or lesbian, you really are not under any great disadvantage. Unfortunately, there are still places where that’s not true, and we have to keep up the fight. The single biggest reason we have been able to overcome this is we stopped hiding who we are, and we came out, and the reality beat the prejudice. It’s no longer controversial, because tens of millions of people live in states that allow same-sex marriage, and no one has been able to find the slightest problem for straight people.

For government, people don’t connect the dots: government is less and less popular and the economic situation in America has become less and less fair. We’re in a vicious cycle now where government is restrained from doing what it could do to diminish inequality and improve the quality of life; people then get angry at government, and the result is that they deny government the resources, and they put people in power who don’t want to do anything. I think what we need to do is to break out of that cycle. And the way to do that, in my judgment, is to free up resources whereby the government can do things that are popular. The right wing has exploited the fact that government in general is much less popular than government in specific.

What we need to do as liberals is to free up some resources in the public sector, not by tax increases – I’m for tax increases, but as long as the government’s unpopular we’re not going to be able to get that much more revenue — free up money so the government can then improve its services and make people happier about it. And there are, in my view, two ways to do that.

At the federal level, the time has come — and I’m optimistic that it’s coming — for a substantial reduction in military at the federal level. I believe that we can cut military spending by $150 billion a year for a few years, and have more than enough security.

At the state and local level, and a little at the federal level, one of the biggest expenses is the prosecution of people for swallowing things that we don’t think they should take. It’s very hard to keep people from doing things that they want to do, that nobody else objects that they’re doing in the immediate cases.

In all of the states, prison costs are a major factor. And I’ve had people say we should just make the prisons run more efficiently. “Why does it cost more to send someone to prison than to send him to Harvard?” The answer is that people don’t try to escape from Harvard. I propose that we legalize people taking substances as long as they don’t make them likelier to harm other people. Angel dust, PCP, that’s one thing. But people want to ingest heroin, cocaine, smoke marijuana. We should give them ways to break it if it’s a habit, but not throw them in prison.

We should only prohibit people from ingesting substances that make them more likely to hurt other people — but I have to make an exception to that: alcohol is a substance that people ingest that makes them dangerous to other people. The problem with heroin addicts is not that having ingested heroin they become abusive — it’s that they do abusive things to get the heroin.

Given what we’ve seen happen in a couple states, is there going to be a sea change on drug legalization?

Absolutely. With regard to marijuana, the politicians are clearly behind the public, which understands the stupidity of this. And it’s going to be in some ways like same-sex marriage. One or two years from now, when its clear that Colorado and Washington have suffered no ill effects, the states with medical marijuana have suffered no ill effects, I think that you’re going to see the virtual end of criminal prosecution for smoking marijuana. And I think then the logic is to go beyond that. And heroin and cocaine, essentially we say: You’re in charge of yourself. We will try to help you, but we’re not going to lock you up for self-abuse.

A couple other things that I would urge liberals: Mike Bloomberg is the antithesis of what we should be doing. We’ve got to stop harassing people, making them think that we don’t approve of what they do, we’re going to correct them and improve them. Liberal opposition to gambling is a very great mistake — poker players, they tend to be the younger white guys who have been alienated from us. I also think my environmentalist friends should show a little more sensitivity to the concerns from working people, and also put in some hierarchies. Clean air and clean water, absolutely, you don’t compromise. When it comes to a major improvement that’s going to be economically helpful versus a particular species that’s endangered, I think the absolutism is hurting us.

You played a big role in Congress in the push for an Employment Non-Discrimination Act. What do you make of the fight over whether to include protections for transgender people in the bill?

The problem is to some extent a misreading of the civil rights movement. I had people telling me, “the black people didn’t compromise. They wanted it all.” Nonsense. The first cases the civil rights movement brought were not to end “separate but equal,” but to say that particular institutions weren’t equal, and therefore they couldn’t be separate. They passed the Civil Rights Act in 1964 for public accommodations. Voting rights came in ’65. Housing came in ’68. You never get it all at once.

In my view it was clearly better to pass a large part of the anti-discrimination, then have the experience that these anti-discrimination laws do no harm, and that would make it easier to get the last piece. The notion that you don’t do anything until you can do everything means you’ll probably do nothing. And in fact doing a large piece of something makes it easier to go the further way.

I think it was a case of emotion overcoming judgment. Also what I found — and I was particularly disappointed in a lot of the people in the transgender community and elsewhere — instead of helping us win over people, their view appeared to be that Nancy Pelosi and I and a few others could do this, and we weren’t into it. A vast miscalculation of where we were politically. They could ignore the fact that at that point, the laws on the books in a lot of very liberal states protected gay and lesbian and bisexual people and not transgender people. And what happened [at the state level] was what I assume would have happened federally: we were able to make that adjustment later on.

Tammy Baldwin told me she’s very optimistic about passing ENDA in this session through the Senate. Do you think at this point the Democrats should remove transgender protections?

Oh no, no. I think we have now made the case for including people who are transgender. We didn’t have the votes for including it in 2007, but that was six years ago. I believe we have the votes for it now.

What’s your view of Ted Cruz and the role he’s played in the budget fight?

He appears to be a very intelligent fool. That he, I’m told, is intellectually very able. But he has no judgment, and certainly no political judgment. He also appears to be someone who does not play well with others, which is not a good thing to be in a legislature. He has marginalized himself apparently in the Senate in ways he can’t have wanted to, but he didn’t have the judgment not to.

What do you expect to be the endgame this week in terms of this fight?

I think you’ll see the government restored, the debt ceiling extended, and Republicans will get in turn some form of negotiations that probably won’t go anywhere.

The Social Security chained CPI and Medicare changes that the president has expressed support for — do you think those will happen in this presidency?

No. The chained CPI is a terrible idea — the worst thing about a president who I generally admire. The notion that old ladies living on $1500 a month in downtown Boston should be penalized is just bizarre. If we’d got the hell out of Afghanistan this year instead of waiting a year, there’d be no need to do the chained CPI.

Putting off Medicare or Social Security [retirement age] is a terrible idea. If you are a woman who started waiting on tables at the age of 18, and 47 years after carrying those hot dishes around, you’re ready to retire, I think it’s an outrage to say we’re going to make you have to schlep those dishes around another three years.

Chained CPI is an outrage. I don’t understand how anybody who wants to talk about diminishing inequality can be for exacerbating it, which is what the chained CPI does.

Making Medicare more income-tested at the right level and reducing third-party payments to insurers — those I support. But to get the chained CPI, the president has said he wants a big tax increase. I don’t see enough Republicans voting for a tax increase, and I think he will have a hard time getting a lot of  Democratic votes for cutting back on the cost of living for old people.

The concerns that have been raised that means-testing a program like Medicare chips away at the universality of it and hurts its political support – do you share them?

No, not at all. Are people not paying attention to what we’ve done? The support for Medicare comes from the fact that most people get it, and by the way, at the level of means-testing that we’re talking about, it will still be a very good deal. We’ve been means-testing Social Security by taxing Social Security benefits. And we’ve been means-testing Medicare in effect by raising the tax base on which you pay it for years.

Why do you think the president keeps talking about chained CPI?

Because of this mistaken view that “I have to be responsible.” I don’t know. I’m appalled by it. So I’m not good at explaining why people do things that are appalling.

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