Bet Against America
Peter Schiff predicted the 2008 collapse. He says it was just the beginning.
“When Ben Bernanke says we’re only going to give the economy more stimulus if it needs it,” says Schiff, “it’s like telling a heroin addict, ‘We’ll only give you more heroin if you need it.’ The economy is going to need it, because without it, it’s going to collapse. But it’s not right to give a heroin addict more heroin just because it’ll keep him high. It’s better to send him to rehab. That’s what we need to do, instead of injecting more monetary heroin into the system.”
Four very confused tourists exit onto the fourth floor; we continue to Schiff’s room on the sixth. His point, which he can make with any number of metaphors, is that it’d be best if policymakers let banks fail, so we could grit our teeth for a while and start over in a stable system. This has been Ron Paul’s argument, too, and it’s implicit in the populist arguments against the Dodd-Frank consumer protection act or other financial sector regulation. And you don’t build majority support for Americans for Prosperity’s goals without some gut-appeal populism. Tell people they should be worried about the Consumer Finance Protection Bureau, and you stoke some confusion. Tell them that it’s funded and protected by the profits of the secretive Federal Reserve, and you get apoplexy. The most successful legislation of Paul’s recent career, after all, was his bill to audit the Fed.
But when these ideas are popular, they get co-opted. In 2010, Schiff ran for the seat vacated by the scandal-plagued co-author of financial reform, Sen. Chris Dodd. “I thought I had a great story,” says Schiff. “There was plenty of video of me predicting the crisis.” But after spending $4 million on the race—$637,000 of it from his checkbook—Schiff got only 23 percent of the Republican primary vote, losing to former World Wrestling Entertainment executive Linda McMahon, who’d spent $50 million. This year Schiff watched “the only politician who was right about the crisis,” Rep. Ron Paul, lose to Mitt Romney in the GOP presidential primary.
“[Romney’s] economic plan is more about re-arranging the deck chairs on the Titanic,” says Schiff with a shrug, packing away his pinstriped suit to change into some plane-ready jeans. “Romney, I don’t believe, understands the severity of the problem. Just like in 2008. He didn’t understand. Romney was campaigning on the eve of the financial crisis and he had no idea what was going on.”
Schiff clicks on the TV to find the hotel’s automated check-out system. AFP has already paid the bill for the room. This is the second Koch-affiliated conference Schiff has spoken at, after a closed-press 2010 conference in Colorado, where Glenn Beck was the main speaker. “That was the 1 percent, or the 1 percent of the 1 percent,” he says. “I met billionaires at that conference. This crowd is the 99 percent. You hear a lot of the same things, though—they’re all good people.”
We head out of the room so Schiff can catch some of the conference’s closing ceremony, a speech by radio host/lawyer/author Mark Levin. Democrats, I tell Schiff, are convinced that they can turn voters against Mitt Romney by campaigning against his investments and his hiring practices, habits that Schiff considers laudable, what he’d recommend to anybody.
Democrats “want to play on people’s envy and greed,” he says. “Here’s a rich guy—he’s got money in Switzerland. Oooooh! He doesn’t have some patriotic obligation to send money to Washington, so they can waste it. I applaud people for trying to limit their tax bills. Is [Romney] betting against the dollar? Well, it’s a smart bet. If I were him I’d say, ‘Of course I’m betting against the dollar. I want to change the policy, so I don’t have to bet against it.’ ”
David Weigel is a Slate political reporter. You can reach him at email@example.com, or tweet at him @daveweigel.