This article first appeared in the St. Louis Beacon, May 8, 2012 - WASHINGTON – Back in the days when he was raising hogs on his grandpa’s farm, or selling insurance in St. Elizabeth or examining banks in Missouri, U.S. Rep. Blaine Luetkemeyer learned to mix Show-Me pragmatism with Main Street conservatism.
And Luetkemeyer, R-St. Elizabeth – Missouri’s most conservative member of Congress, by one recent ranking – is making use of that combination to carve out a higher-profile role on finance issues that have divided the GOP’s right wing on Capitol Hill.
This week, Luetkemeyer’s brand of pragmatic conservatism may get some attention. On Tuesday, he’ll take part in a House Financial Services subcommittee hearing on the future of the Federal Reserve system. The panel’s chair, GOP presidential hopeful Rep. Ron Paul, R-Texas, wants to dissolve the Fed; the ranking Democrat, Rep. Lacy Clay, D-St. Louis, defends it; and Luetkemeyer seeks more transparency without scuttling the Fed.
On another finance issue, Luetkemeyer’s efforts to corral conservative support for reauthorizing the Export-Import Bank are expected to pay off when the House votes this week. While some critics argue that the nation’s export credit agency should be abolished because it interferes with the free market, Luetkemeyer led a group of 30 conservatives who wrote a recent letter defending the bank and calling for its reauthorization.
In the midst of those controversies, Luetkemeyer – whose bill authorizing a new Mark Twain commemorative coin recently passed the House – plans to keep plugging away on his plan to solve an accounting issue that he fears could scuttle dozens of Missouri’s technical training schools. And he is pushing for a committee vote on a bill he is sponsoring to help the nation’s troubled community banks.
Known as a work horse
If you divide lawmakers into the “show horse” and “work horse” categories – as former U.S. Sen. Christopher “Kit” Bond used to do – Luetkemeyer seems to fall into the latter category, as a soft-spoken, thoughtful conservative who often works on difficult issues that are important but don’t command much public attention.
“He listens and he’s effective,” said Rep. Jo Ann Emerson, R-Cape Girardeau, the dean of Missouri’s congressional delegation. "Blaine has a great background and he uses it well. He’s a go-to person; I’ll ask him technical questions on financial services issues.”
If most people in St. Louis don’t know much about Luetkemeyer, that is changing along with the state’s congressional map. His current 9th District – a mainly rural area stretching from Jefferson City to northeast Missouri – is being replaced by a dramatically redrawn 3rd District, which keeps about two-thirds of his old territory but extends into the St. Louis region – including most of St. Charles County, parts of Jefferson County and all of Franklin, Warren and Lincoln counties.
“It’s difficult to lose a lot of constituents that you’ve become friends with, but it’s an opportunity to get to know some new folks,” Luetkemeyer told the Beacon.
His home town is St. Elizabeth, 30 miles south of Jefferson City, where he “grew up raising hogs and cattle on my grandpa’s farm.” After working as a state bank examiner and in the insurance business, he served in the Legislature from 1999-2005; directed the Missouri Tourism Commission from 2006-08 after losing the GOP nomination for state treasurer to Sarah Steelman; and – after former U.S. Rep. Kenny Hulshof opted to run for governor – he won that congressional seat in 2009.
Luetkemeyer says he enjoys the work and does not think that changing the congressional district’s boundaries of his district will alter his focus on Capitol Hill. “Most of these issues affect everybody in the state, and quite often everyone in the country.”
Debating the Fed with Paul and Clay
One issue involving Luetkemeyer that impacts all Americans is the role of the Federal Reserve, the nation’s central banking system, which implements monetary policy.
Paul, the libertarian Republican who chairs the House subcommittee on domestic monetary policy, based much of his presidential campaign on bashing the Fed’s policies. He is the author of several books, including “End the Fed,” and legislation that calls for dissolving or fundamentally revamping the Fed.
On Tuesday, Paul will chair a subcommittee hearing on “Improving the Federal Reserve System.” Witnesses include Peter G. Klein, a Fed critic who directs the University of Missouri’s McQuinn Center for Entrepreneurial Leadership.
The panel will discuss the pros and cons of bills, including Paul’s, that aim to “either reform or abolish” the Fed. In a statement, Paul said: “The Fed continues to reward Wall Street banks while destroying the dollar’s purchasing power and driving up the cost of living for average Americans. This reckless behavior must come to an end.”
Clay, who clashed with Paul last year over a subcommittee witness with prior ties to a “neo-Confederate” group, is the panel’s ranking Democrat, and a defender of the Fed.
Luetkemeyer, also on the subcommittee, says he likes Paul and respects his views but “I don’t necessarily agree with” his positions on monetary policy. “There’s a place for the Fed, but we need to make sure they do things in the proper order and the proper process, with transparency to make sure they are accountable,” the Missourian says.
Noting that the Fed evolved out of a severe monetary crisis in the early 1900s, Luetkemeyer says “there has to be some sort of a fallback entity that can stabilize our monetary system. I think the Fed, as long as it is able to maintain its independence as much as possible, is that entity."
While he questions some of the Fed’s actions to stave off financial collapse in 2008, Luetkemeyer says: “Many people who criticize the Fed for what they did in 2008 are looking at it only from the standpoint of what was going on in our country. But really, you have to look at what was going on in the world, and the international economy was going over a cliff.”
Asked about his approach to monetary policy, Luetkemeyer said in an interview that he is not a Keynesian, backing active policy responses by the public sector. But he also stops short of Paul’s endorsement of the Austrian-school economists, who don’t think government action can stabilize macroeconomic fluctuations.
“I think you have to take a pragmatic approach,” Luetkemeyer told the Beacon in February. “The Keynesian philosophy of economics has been shown not to work.” But the Austrian-school approach also has flaws.
“You have to see a bigger picture and be willing to do the practical thing and take small victories,” he said. “If you do that, you’ll get to where you want to go.”
Trying to help community banks
As a former state bank examiner in Missouri, Luetkemeyer says one of his priorities is to help restore the financial health of the 338 independent community banks in small towns across the state – many of which are troubled.
He contends that the controversial 2010 Dodd-Frank regulatory reform law, designed to prevent abuses exposed in 2008, has been “a disaster” for independent bankers – “not only to community banks but to credit unions, insurance companies – folks who were not part of the 2008 debacle.”
Burdened by the red-tape requirements of Dodd-Frank, “a lot of small banks are going to go out of business, consolidate or be purchased by bigger banks because they can’t afford the compliance costs,” Luetkemeyer says.
His proposed solution, part of which is outlined in a bill he is sponsoring called the Communities First Act, is to target "regulatory relief” from various Dodd-Frank and other rules for independent banks and credit unions. The bill has 88 cosponsors, including most members of Missouri’s congressional delegation.
“This legislation provides for many common-sense changes that are long overdue,” he said, arguing that it would help independent banks and credit unions “continue to operate in the smallest of communities.”
Among other provisions, the bill would allow small banks to amortize losses on commercial real estate loans and other real estate owned more than 10 years for regulatory capital purposes. It would require the SEC to conduct a cost-benefit analysis before approving any proposed accounting change. And it would defer until maturity interest income earned on CDs, taxing the interest earned at the same rate as long-term capital gains.
At a hearing last fall, the bill got an endorsement from independent bankers. “Without quick and bold action to relieve regulatory burdens, we will witness an appalling contraction of the banking industry,” warned John A. Klebba, president of a bank in Linn, Mo., who represented the Missouri Bankers Association. He said Luetkemeyer’s bill would provide regulatory and tax relief to such banks.
But critics say the bill would undo key banking reforms. The AFL-CIO’s policy director, Damon A. Silbers, suggested that a more appropriate title for it would be the “Help the 1% and Hurt the 99% Act.”
In testimony, Silbers argued that Luetkemeyer’s bill “weakens consumer privacy protections for all banking customers, undermines the integrity of real estate appraisals ... seeks to suborn the protection of the American public to the interests of the banks by broadly weakening the authority of the Consumer Financial Protection Bureau.”
Georgetown University law professor Adam Levitin -- a former special counsel to the Congressional Oversight Panel supervising the Troubled Asset Relief Program (TARP) – also opposed Luetkemeyer’s bill. He said it would encourage mortgage foreclosures, allow “spurious accounting practices” and enable banks to “game the regulatory system by picking their regulator.
“Fundamentally, the Communities First Act is a regulatory subsidy for big and small banks, with some extra morsels tossed in for the small banks,” Levitin told the panel.
Defending Export-Import Bank
While Luetkemeyer says he shares some tea party goals to limit government regulation and taxation, he often takes a more pragmatic approach to issues involving the government’s role in finance.
One example is the debate over the Export-Import Bank, which needs to be reauthorized this month if it is to continue its traditional role of providing export credits to U.S. firms such as Boeing Corp., a major beneficiary.
Critics of the Ex-Im bank, including Delta Air Lines, say it helps foreign airlines at the expense of U.S. carriers. And the arch-conservative Club for Growth and some tea party Republicans want it abolished because, they say, it interferes with the free market.
But Luetkemeyer helped organize a letter in late April to House GOP leaders, signed by himself and 30 other conservative Republicans, that gave Speaker John Boehner, R-Ohio, and others the leverage needed to negotiate a compromise – expected to come to a House vote this week – that would renew the Bank’s charter through 2014.
In the letter organized by Luetkemeyer and Rep. John Campbell, R-Calif., the 30 Republicans wrote that, “as conservatives, we believe it is imperative that Congress move forward with a multiyear reauthorization of Ex-Im that provides certainty and stability for U.S. manufacturers and exporters as soon as possible.”
Luetkemeyer said “a lot of folks don’t really understand what the Ex-Im Bank really does … [and] the impact that it can have on our economy.” He and others noted that the bank has consistently returned money to the U.S. Treasury.
The Chamber of Commerce strongly backs the Ex-Im bank because it helps small business as well as big corporations. Last year, supporters say, about 87 percent of the Ex-Im transactions directly benefited small business, providing about $6 billion in support for export financing. The bank – which some critics deride as “Boeing’s bank” – also helped finance about $11 billion worth of Boeing’s commercial sales, helping support about 85,000 aerospace jobs.
While the House leadership agreed to a deal that would reauthorize the Ex-Im bank and raised its lending limit to $140 billion, it also calls for new reporting requirements for the bank as well as negotiations between the Treasury Department and this country’s global trading partners to eventually end export subsidies.
To preserve state career centers
On an issue with direct impact in Missouri, Luetkemeyer has taken the lead in organizing the congressional delegation’s efforts to convince the federal Education Department to exempt the state’s career and technical schools from an accounting requirement.
In 2004, the department required post-secondary schools that take part in Title IV programs to submit annual financial statements prepared on an accrual basis. Because Missouri doesn’t have such an accounting requirement, and most of the 32 vocational technical schools in the state use the cash basis method of accounting. (Cost accounting is simpler in deducting expenses; accrual accounting is more complex and costly.)
“It might not sound like a big deal, but most of the training centers and tech schools in Missouri are part of a public school system, which means the whole school system is going to have to shift to accrual accounting – which will cost a ton of money,” Luetkemeyer says.
While the Education Department has granted the state’s schools extensions for years, it wants compliance by this summer – and the congressional delegation is pushing for a permanent exemption.
“We have 40 schools that probably are going to have to make a decision on whether to spend thousands of dollars shifting to a different accounting system, or to do away with their technical school or to just not take Title 4 money,” Luetkemeyer says. “This is a bipartisan issue because all of us have such schools in our districts.”
While the Education Department considers the appeal, two of the state’s career schools have decided to no longer offer adult programs and one school district has decided not to apply for Title IV funds, which means students could not get federal financial aid.
“I believe we need to be providing states and school districts more flexibility in the use of federal funds, not severely limiting career centers’ ability to apply federal funds by mandating that they take on a whole new accounting system,” Luetkemeyer says. (He further explained his position in a recent op-ed in The Hill newspaper. http://thehill.com/blogs/congress-blog/education/212985-rep-blaine-luetkemeyer-r-mo )
Reliably conservative voting record
How conservative is Luetkemeyer? Reliably so, but his ranking among Missouri’s GOP House members depends on which votes are analyzed.
The National Journal’s rating of 2011 congressional votes gave Luetkemeyer a “conservative” score of 84.5, ranking him as the 45th most conservative House member.
His “liberal score” was 15.5. His closest competitor in the delegation was Rep. Billy Long, R-Springfield, who ranked 52nd most conservative of the 435 House members.
On the other hand, the American Conservative Union, assessing a different set of 2011 votes, ranked Luetkemeyer (76 points out of 100) behind Rep. Vicky Hartzler, R-Harrisonville (88), Todd Akin, R-Wildwood (91.7) and Long (92) on the conservative scale.
Liberal groups rate Luetkemeyer correspondingly low. The left-leaning “That’s My Congress” site includes Luetkemeyer in the “extremely conservative” category — ranking him as the sixth most conservative of the 435 House members, slightly behind Rep. Vicky Hartzler, who is ranked fourth.
As a member of the Republican Study Committee, the main caucus of House conservatives, Luetkemeyer is usually a reliable conservative vote on most fiscal and social issues. He also opposes many environmental regulations and has gotten consistently low rankings from environment-oriented groups.
Last year, for example, Luetkmeyer irked environmental groups by helping lead a House effort – in the wake of severe flooding – to shift funding away from Missouri River ecosystem restoration and into flood-control accounts.
And, while he says he wants to protect personal privacy, Luetkemeyer voted for a cybersecurity bill this month that many liberals and some conservatives, including Akin, described as intrusive.
Defending his vote in a message to his constituents, Luetkemeyer argued that the House-passed cybersecurity legislation “would strengthen our cybersecurity defenses in the financial and military sectors while providing strong protections for your privacy and civil liberties under the Fourth Amendment.”