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Clay assails witness at House hearing led by Rep. Paul

This article first appeared in the St. Louis Beacon, Feb. 10, 2011 - WASHINGTON - Accusing a prime witness at a House hearing of being affiliated with a "neo-Confederate" secessionist group, U.S. Rep. William Lacy Clay, D-St. Louis, focused national attention Wednesday on the choice of witnesses by Republican subcommittee chairs.

"After reviewing your work and the so-called methods you employ, I still do not understand you being invited to testify today on the unemployment crisis," Clay lectured the witness, economics professor Thomas J. DiLorenzo of Loyola University Maryland.

At the hearing of the House Financial Services Committee's Domestic Monetary Policy and Trade subcommittee, Clay -- the panel's ranking Democrat -- questioned DiLorenzo's previous affiliation with a group called the League of the South's Institute for the Study of Southern Culture and History, which had identified him on its website as being among 30 "affiliated scholars and artists."

Clearly outraged, Clay said the League of the South "has been identified as a hate group by the Southern Poverty Law Center. The Law Center is an organization that I deeply respect, and so naturally this concerns me."

DiLorenzo, who merely shook his head at Clay's accusations and did not respond directly, had been selected as a witness by the subcommittee's new chairman, Rep. Ron Paul, R-Texas, an economic maverick and critic of the U.S. Federal Reserve who has twice run for president. Afterward, Paul dismissed Clay's comments as character attacks. "That's typical of people who can't compete on ideas, they have to try to discredit the individual," Paul told Reuters as he signed copies of his book, "End the Fed."

Clay's outburst drew national media attention. A blogger for the Wall Street Journal described the hearing as "particularly shambolic" and devoted much of the article to quoting Clay. Washington Post columnist Dana Milbank wrote that the choice of witnesses "raises doubts about Ron Paul and his causes if this is the best he can come up with." A columnist for Salon included the hearing's witnesses in a list of "a Republican parade of kooks and shills" called to testify to House panels this week.

The hearing, on the topic of monetary policy and unemployment, served partly as a platform for Paul and the witnesses to bash the Fed. Paul said, "The point I wanted to get across" was that "I believe in free markets and sound money and I'm a critic of Federal Reserve policy." For his part, DiLorenzo accused the Fed of generating "boom-and-bust cycles" since its formation. He is a faculty member of the Ludwig von Mises Institute, which promotes the Austrian School of economics, which Paul has praised.

Jumping into the debate, Clay criticized the Austrian School's economic approach for its "lack of scientific rigor and rejection of empirical data." And he rejected the GOP criticism that the Fed's actions have weakened the dollar and upset China and other key trading partners.

"I never thought that I would see the day when allegedly conservative members of the Republican Party would side with the People's Republic of China over the best advice of the chairman of the Federal Reserve System," Clay said. His position was supported by the committee's top Democrat, the outspoken Rep. Barney Frank, D-Mass., who quipped: "Being accused of currency manipulation by the People's Republic of China is like getting a lecture on family planning from the OctoMom."

On Thursday, Clay told the Beacon that his "intention was to point out that not only did the lead witness have zero credentials to inform the committee about the role of the Federal Reserve in our economy, but he also represented an extreme revisionist view of American history that stressed racial separation and Southern secession as a positive idea."

The St. Louis member of Congress said "I'm still at a loss to understand why the [Republican] majority, instead of focusing on jobs and the Federal Reserve's critical role in supporting our economic recovery, chose to lead with this divisive individual."

(Click here for an archived webcast of the subcommittee hearing.)

Rob Koenig is an award-winning journalist and author. He worked at the STL Beacon until 2013.