Federal Reserve Sounds Alarms On The Economy

The economy seems to be humming along despite the topsy-turvy stock market, but the Federal Reserve released a report yesterday that sounds cautionary alarms on a number of financial indicators. The report warns that adverse shocks could lead to a decline in asset prices that could be “particularly large.”

The 46-page Financial Stability Report focuses on four particular vulnerabilities to the economy as well as geopolitical risks. The Fed says that asset values are elevated compared with historical norms in several markets and business debt is above historical levels. On the other hand, debt in the financial sector is low and banks have sufficient liquidity to prevent runs.

With respect to asset values, the report points out that both financial instruments, such as stocks and bonds, and real estate are at elevated levels. Even after November’s market declines, “equity price-to-earnings ratios have been trending up since 2012 and are generally above their median values over the past 30 years,” the report notes. Both commercial and residential price-to-rent ratios have been increasing since the end of the recession. Farmland prices have decreased slightly but remain high compared to historical values.

“House prices have risen substantially since 2012,” the Fed says, “although the rate of price appreciation appears to have slowed significantly in recent months.” The tax reform law’s limit on property tax deductions may play a role in the slowdown in rising home values.

More alarming is that business debt levels are high and the Fed notes “signs of deteriorating credit standards.” Of particular note, the report points out that “debt has been growing fastest at firms with weaker earnings and higher leverage.” In other words, companies who are doing the most borrowing are those with the least ability to repay their debt.

The Fed cites three current geopolitical risks to the economy. First, European instability and the effects of Brexit could affect US exporters and financial institutions that participate in European markets. Second, the Fed points out increasing debt in China and other emerging markets “that could be difficult to service in the event of an economic downturn.” In China, where the economy is slowing, “private credit has almost doubled since 2008, to more than 200 percent of GDP.”

The Fed also waves a caution flag at trade tensions and uncertainty that stems from the trade war. It is this trade uncertainty that could cause some investors to become more risk-averse. “The resulting drop in asset prices might be particularly large, given that valuations appear elevated relative to historical levels,” the Fed warns. A collapse in asset prices could lead to difficulties in finding business funding since commercial debt levels are already high.

A final note of caution regards rising interest rates. Interest rates have been kept low since the 2008 financial crisis, but the Fed has recently started bring rates back to normal levels. “Markets and institutions that may have become accustomed to the very low interest rate environment of the post-crisis period will also need to continue to adjust to monetary policy normalization by the Federal Reserve and other central banks,” the Fed warns. “Even if central bank policies are fully anticipated by the public, some adjustments could occur abruptly, contributing to volatility in domestic and international financial markets and strains in institutions.”

The impact of interest rate policy can be seen in yesterday’s stock market rally after Federal Reserve Chairman Jerome Powell said that rates were near the neutral point, “neither speeding up nor slowing down growth,” and that “we may go past neutral, but we’re a long way from neutral at this point, probably.” Powell’s hint that rate increases were nearing an end sparked a 600-point surge in the Dow.

While the Fed report does not warn of unavoidable financial problems, it does list valid concerns about continued economic growth. Over the past few months, several financial outlets have noted that early indicators point toward a possible looming economic slowdown. In August, Forbes noted that commodity prices and asset values usually peak before a recession and interest rates “act oddly.” Earlier this week, the Wall Street Journal said that “economic indicators are flashing yellow” with a slowing housing sector, a collapse of domestic energy prices after a strong first half of 2018, and a “global economy [that] has lost momentum.” Morgan Stanley analysts say that a correction is due and put the chance of recession in 2019 at 15 percent, rising to 30 percent in 2020 as the business cycle enters the “stall/overheating phase.”

On the other hand, Stephen Moore, a former economic advisor for the Trump campaign, argues that fears of slowing growth “should be greeted with a collective yawn.” Moore acknowledges the risk of the trade war but says, “if/when Trump prevails and gets the concessions from China, the market upside is gigantic.”

The bottom line is that the business cycle will eventually come to close and growth will stop as the economy enters a correction. This will happen no matter which party is in office or who occupies the White House. What goes up, must come down.

Originally published on the Resurgent

How September 11 gave us Obama, Clinton and Trump

(Michael Foran/Wikimedia)

The memory of September 11, 2001 is burned indelibly into the minds of anyone who was old enough to remember it. In the space of a few hours, the course of American history changed and the country was set on a new course that diverted drastically from where we saw ourselves going as a nation. Everyone knows that the September 11 attacks started the War on Terror, a conflict that is still going on today, but they did much more than that.

The fall of 2001 saw America at peace and prosperous. Both soon changed. An often forgotten result of the attacks was the crash of the stock market on September 17 after markets reopened. At the time, this was the largest single-day stock market crash in U.S. history. The response of the Federal Reserve to the impending recession was to lower interest rates to stimulate the economy. Prosperity soon returned amid the fighting in Afghanistan and, two years later, Iraq.

One segment of the economy that was aided by the low interest rates was real estate. Together with government policies that encouraged subprime mortgage lending, the low interest rates fed a housing bubble. The bubble burst in 2008 and led to the Great Recession. Almost seven years to the day, two more stock market crashes displaced the 2001 crash as the largest in American history.

As the economy sputtered to a halt, a relatively unknown senator surged forward in the polls. Barack Obama emerged from the stock market crash as a beacon of hope for the country. Although he started as an antiwar candidate, without the economic crisis and John McCain’s missteps in responding to it, it seems unlikely that the radical and inexperienced Obama would have been elected president.

Obama’s presidency fundamentally transformed America. His Supreme Court nominees redefined marriage and overturned thousands of years of tradition. His government takeover of the health insurance industry caused healthcare prices to skyrocket. His regulation of business strangled the economic recovery and left millions without jobs. Obama added more to the national debt than all other presidents combined.

His foreign policy was felt around the world. His withdrawal from Iraq allowed ISIS to flourish. His failure to intervene in Syria allowed that civil war to fester and become a humanitarian and security crisis. Under Obama’s watch, Vladimir Putin set out to recapture the Soviet sphere of influence from the Cold War and invaded Ukraine, an American and NATO ally. Likewise, China expanded into the South China Sea with manmade islands to serve as military bases. Iran continued on the course to become a nuclear power.

In the middle of Obama’s first-term foreign policy was Hillary Clinton, the new secretary of state, who he had bested for the Democratic nomination in 2008. The truce between the two rivals established Hillary as the almost certain successor to Obama as the Democratic standard bearer in 2016.

If Obama’s administration led to problems around the world, it also caused the crackup of the Republican Party at home. Without a majority in Congress that could override the presidential veto or overcome a Democratic filibuster, Republicans were powerless to stop the president’s abuse of executive power. Republicans were able to block new legislation, but unable to roll back laws that the Democratic Congress had passed early in Obama’s first term.

The impotence of the Republican opposition led to anger from the conservative grassroots. First, Ted Cruz rose to prominence as a first-term senator who made a name for himself by dividing the party against the “establishment” that he claimed was in a league with the Democrats. When Cruz’s strategy of a shutdown failed in 2013, he only became more popular by using the Republican leadership as a scapegoat. As the 2016 presidential race formed, Cruz was an early favorite. He was trumped by another outsider candidate, however.

Businessman Donald J. Trump emerged from nowhere to seize the mantle of the anti-establishment candidate. To many Republicans, it didn’t matter that Trump was a New York liberal who had supported Hillary Clinton up until he decided to become a Republican candidate. Trump capitalized on voter anger at both Obama and the Republicans.

Without Osama bin Laden and the September 11 attacks, U.S. history would be very different. Obama would not have risen to prominence without the war. Without the attacks, the housing correction might never have become the Great Recession. John McCain might have been elected in 2008. Without eight years of Obama, America would not be faced with the choice of Hillary Clinton or Donald Trump, the two most unpopular and unqualified candidates in history.

In 2001, we could scarcely see how destructive the legacy of attacks would be or how long their consequences would impact the country. War, recession, bad leadership and national division all stemmed from the actions of 19 hijackers.

The country has not been the same since September 11 and never will be.

Read it on Conservative Firing Line

Questions for Ron Paul

Last year, the Atlanta Conservative Examiner published an article that asked several questions of supporters of Barack Obama. While well-intentioned and honestly seeking the liberal perspective on a number of issues, the response was underwhelming. Perhaps this was because there are no good answers to the questions asked.

In a similar vein, here are several questions for Republican presidential candidate Rep. Ron Paul and his supporters. Judging from the large response that typically comes from any article mentioning Ron Paul (especially when it mentions him critically), the Paul supporters are likely to have more to say in his defense than the Obama supporters did.

First, Ron Paul makes a point of saying that the Federal Reserve is unconstitutional on the grounds that the Constitution gives only Congress the power to “coin Money, [and] regulate the Value thereof….” (Article I Section 8). If this interpretation is correct, then why is it that Congress established the first private central bank, the Bank of the United States, within a few years of the ratification of the Constitution? At that point, many of the framers of the Constitution were still in Congress.

The Bank of the United States was a private company. The bill establishing it was signed into law in 1791 by none other than George Washington. After the bank’s charter expired in 1811, Congress created the Second Bank of the United States in 1816. This bank existed until 1841. At 99 years old, the Federal Reserve is the longest lasting central bank in U.S. history, but it was far from the first.

Also along economic lines, Ron Paul advocates a gold standard, which leads to another question. Paul blames fiat money and the Federal Reserve for the current economic unpleasantness, but even when the U.S. was on a gold standard the business cycle led to periods of economic depression. In fact the Federal Reserve and the gold standard coexisted for decades. The gold standard did not prevent the Great Depression, the worst economic crisis in U.S. history.

The Federal Reserve was created in 1913 and the United States stayed on the gold standard until 1973. In 1933, President Roosevelt made it illegal for Americans to own gold and required them to sell their gold to the Federal Reserve at a price set by the government, but technically the dollar was still linked to gold. Roosevelt’s executive order remained in effect until the 1960s and 1970s when it was repealed piecemeal.

In the past, linking the value of the dollar to the value of gold did not prevent the boom and bust cycle. A federal gold standard did not prevent the government from manipulating the value of the dollar. Why does Paul believe that a new gold standard would be any different? Further, U.S. production of gold is declining. Would a gold standard remove the influence of unelected bureaucrats at the Federal Reserve only to replace it with a dependency on gold miners, bankers, and bureaucrats in countries like China and Russia for economic growth?

A third question involves Paul’s assertions that the wars in Afghanistan and Iraq were illegal. The Constitution gives Congress the power to declare war (Article I Section 8), but stops short of requiring a declaration of war. The same section gives Congress the power to “define and punish… offences against the law of nations,” arguably the power to intervene on behalf of victims of crimes against humanity, and to “provide for the common defense,” a general term that could be construed to include pre-emptive war against a hostile nation believed to be developing WMDs.

As Max Boot notes in his book, “The Savage Wars of Peace,” declared wars have been the exception rather than the rule in American history. One of the first undeclared wars occurred during the administration of none other than Thomas Jefferson against the Barbary pirates. This conflict is memorialized in the line of the Marine hymn that references the “shores of Tripoli.”

In the 20^th century, U.S. forces, almost always the Marines, essentially invaded and governed several Central American and Caribbean nations. For almost 20 years prior to WWII, the Marines ruled Haiti. Long undeclared interventions also occurred in Mexico, the Dominican Republic, and Nicaragua, not to mention Panama. After the U.S.S Greer, an American destroyer, was fired upon by a German U-boat, President Roosevelt essentially launched an undeclared war against the Germans in the Atlantic more than a year before the attack on Pearl Harbor.

While the wars in Iraq and Afghanistan did not begin with a formal declaration of war, President Bush did seek and receive the approval of Congress (President Obama’s intervention in Libya is another matter). How can Paul really consider the wars in Iraq and Afghanistan illegal when both interventions were approved by Congress with Paul himself having voted to approve military action in Afghanistan?

Finally, why does Ron Paul oppose the National Defense Authorization Act (NDAA)? Did Paul not read Section 1021 paragraph (e) which reads “Nothing in this section shall be construed to affect existing law or authorities relating to the detention of United States citizens, lawful resident aliens of the United States, or any other persons who are captured or arrested in the United States?” Similarly, Section 1022 paragraph (b) (1) says, “The requirement to detain a person in military custody under this section does not extend to citizens of the United States.”

Since the law plainly does not allow the indefinite detention of Americans but Paul opposes it anyway, does this mean that Paul opposes indefinite detention of foreign terrorists captured abroad? These are the people who the law allows the military to detain indefinitely. There are Americans who believe that these foreign-born, foreign-captured, non-U.S. citizens should be entitled to a day in American courts. Is Paul among this group?

If Paul thinks that foreign terrorists should have habeas corpus rights and access to U.S. courts, it would be the first time that prisoners of war (actually unlawful combatants under the Geneva Conventions) captured in combat outside the country have been granted access to the judicial system. Even German POWs housed in prison camps within the United States itself during WWII were not accorded constitutional rights due to American citizens. No one would have dreamed of allowing captured Nazis to challenge their detention in American courts.

Hopefully, Rep. Paul or his supporters will answer these questions and help to clear up some of the apparent inconsistencies in Ron Paul’s political platform.

This article was originally published on Examiner.com:

http://www.examiner.com/conservative-in-atlanta/questions-for-ron-paul

Why Ron Paul can’t win

Ron Paul is a frequent winner of straw polls and has a loyal following among libertarians. In spite of winning these polls, Paul has no chance of winning the Republican nomination. This is not because of a Republican or media (or Bilderberger or Illuminati or any other) conspiracy. The reason lies in Paul’s political beliefs and the nature of the straw polls that he wins.

Paul, a Republican congressman representing a Texas house district, is not a normal Republican. Between terms in Congress as a Republican, he ran for president as a Libertarian Party candidate. Even today, his platform is starkly different than those of other Republicans.

One of the issues where this is most apparent is drug legalization. Ron Paul has supported the decriminalization of narcotics and an end to the drug war. While the American public is almost evenly split on the issue of marijuana legalization according to an October 2011 Gallup poll, only 35 percent of Republicans are in favor. The fact that Paul is out of step with Republican voters hurts him as a candidate in a Republican primary.

While Paul opposes attempts to redefine traditional marriage, he opposes a federal marriage amendment, which is the only way to prevent the courts from imposing same-sex marriage. As with drug legalization, this is an issue on which the American public is divided according to a recent Associated Press poll, but support for traditional marriage is stronger among Republicans and conservatives. When voters have had a chance to vote on definition of marriage laws or amendments, they often pass by a large margin. Georgia voters approved a marriage amendment with 76 percent in favor in 2004.

On other issues Paul is similarly out of step. After U.S. Navy SEALs killed Osama bin Laden in Pakistan, Paul said in an interview on Iowa’s WHO radio that he would not have ordered the raid. As reported by ABC News, Paul said that the raid was “absolutely not necessary” and did not reflect “respect for the rule of law and world law, international law.” Paul said that he would have favored cooperation with Pakistan to arrest bin Laden.

Paul’s position again conflicted with the beliefs of most Americans. According to a Washington Post/Pew poll, by a margin of 34-8 percent most Americans believed that Pakistan had done more to hurt U.S. efforts to find bin Laden than to help. Seventy-two percent of Americans felt relieved that bin Laden was dead. Bin Laden’s death made 60 percent of Americans feel proud and 58 percent felt happy. These percentages are probably even higher among Republicans.

Even more current and troubling to most Americans is Paul’s position on Iran. CNS News reports that Paul said, “For them [Iran] to be a threat to us or to anybody in the region, I think it’s just blown out of proportion.” Paul opposes sanctions or military action against Iran and says that the U.S. should offer friendship instead, a position closer to that of Barack Obama than his fellow Republicans.

In contrast, a UPI poll released on November 12 shows that 50 percent of Americans support U.S. military action against Iran and 57 percent support an Israeli attack on Iran. According to a CBS/Global Research poll, only 17 percent of Americans do not believe that Iran poses a threat.

As the polls were released, the International Atomic Energy Agency released a report that confirms that the Iranian nuclear program is focused on developing weapons rather than nuclear power for peaceful purposes. Coming on the heels of the FBI’s disruption of an Iranian assassination plot in Washington, D.C. in October, it is likely that many more Americans are coming to see Iran as a dangerous threat that will not respond to anything short of military action.

On the other hand, Paul’s long-time advocacy of government spending cuts is now being supported by a majority of Americans according to Gallup and there are signs that his desire to bring back the gold standard is gaining support as well. A Rasmussen poll from October surprisingly showed that 44 percent of Americans favored the gold standard compared to 28 percent opposed. When the question was phrased to say that the gold standard would reduce the powers of “bankers and the political class,” support increased to 57 percent and opposition dropped to 19 percent.

Rep. Paul’s call to “end the Fed” may be gaining support, but is still a minority position. A Bloomberg poll from December 2010 showed that only 16 percent wanted to abolish the Federal Reserve. That number was twice the eight percent who favored abolishing the Fed in October of that year. Even if most Americans don’t favor shutting down the Federal Reserve, 39 percent did want to make it more accountable and only 37 percent favored the current model with an independent Fed.

Ron Paul’s economic policies are finding favor in the current climate of massive government spending and deficits. On domestic issues and foreign policy, however, he is out of step with most Americans and even more out-of-step with Republicans, whom he must win over to reach the general election. Consequently, he stays below ten percent according to the Real Clear Politics average of polls, even as he wins unscientific straw polls where his supporters turn out in droves. In Georgia polls, Paul remains similarly in the single digits, near his under-three percent finish in Georgia’s 2008 primary election.

Read this article on Examiner.com:

http://www.examiner.com/elections-2012-in-atlanta/why-ron-paul-can-t-win

Meet the candidates: Herman Cain

Last month in Atlanta’s Centennial Park, Herman Cain announced his candidacy for president.  Cain is one of a growing number of minority Republicans who are disillusioned with the policies of President Obama and the Democrats.

Cain is a native Georgian who grew up in Atlanta.  He was born on December 13, 1945 and graduated from Morehouse College with a B.A. in mathematics and physics in 1967.  He earned a Master’s degree in computer science from Purdue University in 1971.

Cain began his career as a civilian employee of the U.S. Navy where he helped to design fire control systems for ships and aircraft.  He also worked in computers for the Coca Cola, Co. after returning to Atlanta.  Next, he was hired by Pillsbury, where he became vice president.

In search of a challenge, Cain decided to learn the restaurant business from the bottom.  He transferred to Pillsbury’s Burger King division where he became the regional vice president.  In that capacity, he was responsible for transforming a low performing region into the company’s top performer. 

Next, he was hired as the president and CEO of Godfather’s Pizza, another Pillsbury company.  When he started the job, the company was on the brink of bankruptcy, but Cain was able to return the company to profitability in only fourteen months.  In 1988, Cain led a group of investors that purchased Godfather’s from Pillsbury.  He continued as CEO until 1996. 

In 1994, Cain was elected president of the National Restaurant Association, a lobbying and trade group.  In this capacity, Cain had the opportunity to confront President Clinton about Clinton’s attempt to enact a national health care plan.  Newsweek credited Cain with being instrumental in the defeat of Clinton’s plan:

“An articulate black entrepreneur, Cain transformed the debate when he challenged Clinton at a town meeting in Kansas City, Mo., last April. Cain asked the president what he was supposed to say to the workers he would have to lay off because of the cost of the ‘employer mandate.’ Clinton responded that there would be plenty of subsidies for small businessmen, but Cain persisted. ‘Quite honestly, your calculation is inaccurate,’ he told the president. ‘In the competitive marketplace it simply doesn't work that way.’”

Cain also became a member of the board of directors of the Federal Reserve Bank of Kansas City in 1992.  From 1995 to 1996, he served as chairman of the board.  He resigned in 1996 to serve as an economic advisor to the presidential campaign of Bob Dole.

Cain has never held a publically elected office.  His only previous foray into a political race was in 2004 when he competed in the Georgia Republican primary for the nomination to succeed Senator Zell Miller.  Cain lost the primary to Johnny Isakson who went on to win the general election as well.  Cain placed a distant second with twenty-six percent of the vote compared to Isakson’s 53 percent according to the Washington Post.

More recently, Cain has worked in the media as a syndicated columnist, analyst on the Fox Business network, and host of the “Herman Cain Show” on Atlanta’s WSB AM-750.  Cain also started the Intelligent Thinker’s Movement (HITM), a conservative group with the goal of organizing activists in every congressional district.  He has also written several books about business and politics.  In 2010, Cain was the emcee at a regional Tea Party in Douglas County, Ga.

Cain places his highest priority on national security.  His campaign website says that the “primary duty” of the president and the “principal duty of a limited federal government” is to “protect our people.” 

Cain is also a long-time supporter of the Fair Tax.  The Fair Tax, which would replace all federal income and payroll taxes with a national consumption tax, was championed by Mike Huckabee in 2008.  Supporters say the Fair Tax would promote economic growth and make the U.S. more competitive in world markets.

On his radio show, Cain has been very critical of President Obama and the Democratic health care reform bill, which Cain refers to as “deform.”  He has also opposed the expansion of federal power in the financial industry, although he did support TARP, he later told National Review that he “had trouble with its implementation, picking winners and losers.”

The Cain campaign has been hit by two scandals since he declared his candidacy.  First, he was reported by Think Progress to have made the statement that he would not appoint any Muslims in his administration.  Cain’s statement was due to his belief that many Muslims are trying to bring Sharia law to the United States and that they may have divided loyalties.  In fact, Islam does permit Muslims to conceal their true beliefs under a doctrine known as taqiyah.  In a statement on Fox News, Cain has since clarified that he would consider appointing Muslims who were “totally committed to the Declaration of Independence and the Constitution.”  The Constitution prohibits a religious test for any public office.

Second, there have been allegations that Cain, as a member of the board of directors of energy company Aquila, was complicit in the loss of $200 million from the employee retirement fund in 2002.  An article in Mother Jones alleges that the board converted the company from an operator of power plants to an “Enron-esque” energy trader.  According to a class action lawsuit cited in the article, the board was irresponsible in encouraging employees to invest their retirement money in Aquila, which was itself engaging in risky energy trades.  In the end, many employees lost much of their retirement money. 

When he first emerged as a candidate, few considered Cain to be a serious contender for the White House.  The first GOP presidential debate changed that perception.  Cain was widely recognized as the winner of the May 2011 debate in Greenville, S.C.

Nevertheless, Cain still has much ground to make up.  In a late May Gallup poll Cain was in fifth place in the Republican field at eight percent.  He trailed frontrunner Mitt Romney as well as Sarah Palin, Ron Paul, and Newt Gingrich.  The margin between Paul, Gingrich and Cain is small enough to be considered a statistical tie for third place.

In more recent polls, after the second Republican debate in June, Cain moved into double digits in several national polls.  Nationally, his best showing was in a Public Policy poll on June 12 where he garnered 17 percent.  In an Insider Advantage poll of Georgia voters, he won twenty-six percent.

Cain is widely considered a Tea Party candidate.  His success may ultimately depend on whether voters sympathetic to the Tea Party align with him or Rep. Michelle Bachmann.  

http://www.examiner.com/elections-2012-in-atlanta/meet-the-candidates-herman-cain">
Photo credit:  Gage Skidmore/Wikimedia

Meet the candidates: Ron Paul

Rep. Ron Paul (US Congress)

Judging by the number of “Ron Paul for President” signs in the Atlanta area in 2008, Congressman Ron Paul had some of the most loyal and motivated supporters of any candidate in the 2008 presidential primaries.  Sadly for Rep. Paul and his supporters, that devotion did not translate into widespread appeal.  Rep. Paul finished fourth in the Georgia primary with only 2.9 percent of the vote.  It wasn’t much better in other states.  Paul failed to win a single primary, although he did finish second a number of times. 

Now Ron Paul is running for president again.  After four years of Barack Obama’s record-setting spending, Paul’s message of fiscal restraint may be more attractive to recession-weary Americans.  Nevertheless, a RealClearPolitics average of polls from April and May 2011 shows Paul in sixth place with 7.9 percent.  He trails Mitt Romney, Mike Huckabee, Donald Trump, Sarah Palin, and Newt Gingrich respectively.  He leads Herman Cain, Michelle Bachmann, Tim Pawlenty, and Mitch Daniels.  Paul might get a slight bump from the recent withdrawals of Huckabee, Trump, and Daniels.

Ronald Ernest Paul was born in Pittsburgh on August 20, 1935.  On Election Day 2012, he will be 77 years old.  He is one year older than John McCain who was 72 when he ran against Barack Obama in 2008. 

Biography.com details Paul’s early life in Pennsylvania as the third among five boys.  He grew up working on the family dairy farm.  He also worked as a paper boy and at a local drugstore.  In high school, he served as president of the student council and was a member of the track and wrestling teams.  He met his future wife, Carol, in high school and married her as a senior. 

Paul attended medical school at Duke University and specialized in obstetrics and gynecology.  He interned at Henry Ford Hospital in Detroit and then joined the Air Force where he was on active duty from 1963 to 1965 and in the Air National Guard from 1965 to 1968.  He later opened a private practice in Texas where delivered more than 4,000 babies over the course of his career. 

Paul was elected to the House of Representatives from Texas for the first time in 1976 during a special election.  He lost an earlier attempt in 1974.  He served only a few months and lost the general election, but in 1978 was re-elected and served three terms.  He ran unsuccessfully against Phil Gramm for senator in 1984 and passed his house seat to Tom DeLay.

In 1988, Paul once again left private practice to run for president as a Libertarian.  Paul differs from most Libertarians on the issue of abortion.  While most Libertarians are pro-choice, Paul is quoted on RonPaul.com as saying, “As an O.B. doctor of thirty years, and having delivered 4,000 babies, I can assure you life begins at conception…  there’s a legal life there…  if there’s an injury or a killing, there is a legal entity. There is no doubt about it.”

Paul returned to the house as a Republican in 1996 and has served continuously since then.  He currently serves on the House Financial Services Committee and the House Foreign Affairs Committee.  He is chairman of the Subcommittee on Domestic and Monetary Policy.  During his long career, Paul has also authored a number of books.

Paul has a strong reputation as a critic of government spending and the expansion of government power.  He voted against the PATRIOT Act and the Iraq War, but did vote to authorize the Afghanistan War. He has been very critical of President Obama’s decision to go to war in Libya without congressional authorization.  A deficit hawk, he returns the unused portion of his congressional office funds to be used toward paying down the deficit.  In 2011, he returned $141,580, almost ten percent of his office budget, according to his press release. 

Ron Paul is well known for his criticism of the Federal Reserve. He is the sponsor of H.R. 459, a bill that would require an audit of the Fed.  At his speeches, supporters often interrupt him with chants of “End the Fed!”  He is author of a book by the same name.  Paul supports a return to the gold standard to prevent the Fed’s manipulation of the currency by printing fiat money that can cause inflation.

Paul also has a number of other controversial positions that often put him at odds with the Republican establishment.  He supports an end to the War on Drugs and would legalize some illicit drugs.  On foreign policy, Paul seems to be almost isolationist and favors eliminating foreign aid to almost all countries.  In 2008, Paul endorsed the Constitution Party candidate over the Republican nominee, John McCain, and Libertarian Bob Barr.

A few weeks ago, Paul made headlines when he told Fox News that the SEAL raid that killed Osama bin Laden was “absolutely not necessary.”  Paul said that he would not have ordered the raid if he had been president.

In spite of Paul’s intensely loyal supporters, many of his positions are too far outside the mainstream to appeal to the moderate and independent voters who decide elections.  Even though Paul has an established base of support on which to draw during the campaign, it will likely be an uphill battle for him to win the Republican nomination.  The odds would be even more against him if he decided to run as a third party candidate.

http://www.examiner.com/elections-2012-in-atlanta/meet-the-candidates-ron-paul#ixzz1NZarxD21">