Sachs of Manure

The progressive establishment media and establishment Republicans have joined forces, and obtained odd allies, in a massive assault against Ted Cruz.

I will be so bold as to predict that Ted Cruz will win in November in a landslide reminiscent of Ronald Reagan. He’s on a path that follows closely that of Ronald Reagan in 1980. It would be refreshing to have a conservative presidential nominee, as we have not had one since 1984. The Bush family is Republican, but hardly conservative.

One of the current attacks on Cruz is summed up by the new trendy phrase “Ted Cruz is owned by Goldman Sachs.” He hid the fact that his campaign was financed by Goldman Sachs and he owes them as a result.

What is the reality? It’s actually rather mundane. He and his wife, who works there (but is on leave currently to help with the campaign) had an investment account at Goldman Sachs. Such investment accounts have most of the value tied up in stocks and funds and similar investments. But it is quite common to allow the account owners to borrow up to 50% of the value of the assets as a “margin loan” — this is analogous to buying stocks on 50% margin, which is quite ordinary. I’ve done it myself.

That’s what the Cruz family did. They borrowed on the value of their own assets in the investment account, resulting in a loan in an amount somewhere between $250k and $500k. They also took out a line of credit on other assets in a similar amount from Citibank. These were in Ted’s name, and he then loaned the money to his campaign. It was less than $1 million in total.

He disclosed the loans to the election commission and disclosed his own loan to the campaign. And both were real loans, made on ordinary terms for such loans, and have been almost completely paid back as of January.

So what’s the problem?

First, the media breathlessly alleges that this arrangement will necessarily result in Cruz being “beholden” to Goldman Sachs and will seek to protect them from litigation and will participate in crony capitalism arrangements in their favor. Does this make sense?

No. First, Cruz has been adamantly and consistently against crony capitalism deals, in words and actions. The most that a media outlet could raise against this was that, when Cruz opposed a bloated budget bill, it contained within its thousand-plus pages a rider that would have helped Goldman Sachs and other Wall Street firms, a rider put in by Senate Wall Street cronies.

Cruz opposed the entire bill, rider and all, but now it’s being alleged that his opposition distracted attention from the rider — so that when it was passed, the rider had not been independently scrutinized. I have to ask: Who would have “scrutinized” it — the senators who put it in to begin with? Of course, this rider was a small thing in a porkfest of favors adorning the bill, and Cruz spoke eloquently against such practices. The one rider was, of course, hardly the major feature of the thing, it is merely a “gotcha” item raised now. His own offered legislation has been far more pointed in the damage it would do to the cronyism of Wall Street, including of course Goldman Sachs.

Loaning Credibility

Now we know: Ted Cruz was not “financed by Goldman Sachs” — he borrowed money against his own assets, and in a relatively minor amount. In fact, this total loan was about the amount Goldman Sachs paid Hillary Clinton for a single speech.

It will be amusing to see Hillary Clinton attack Ted Cruz for this Wall Street business. That Clinton one-time speaking fee of $355k did not include her transportation and rather exotic accommodation requirements, which add tens of thousands of dollars to her speech costs. And she and Bill Clinton made multiple such speeches — tens of them in total — for Goldman Sachs and several other Wall Street finance firms, raking in many millions of dollars quite separate from Wall Street’s outright donations to the Clinton campaign (which the Cruz campaign evidently did not receive).

Hedge fund giant and political puppeteer George Soros recently gave an additional $6 million to Hillary’s direct campaign, and has given millions more to her SuperPAC. Hillary’s defense is that such contributions never influence her.

Hiding in Plain Sight

Back to Ted Cruz: He did not “hide” or “fail to report” the loan and credit line. He disclosed both. As NPR noted:

There are two disclosure requirements. He complied with one, reporting both the Goldman Sachs and Citibank deals in his personal financial reports as a candidate and newly elected senator. The campaign paid zero interest, the documents say.

The issue is one of semantics on the alleged second disclosure requirement. Neither the loan nor line of credit were loans directly to the campaign; both were to him, who then made a loan to the campaign using those and other assets. Various observers have noted the somewhat confusing requirements of the Federal Election Commission in this regard, and the extent to which they require that the sources of funds to personal loans be explicitly linked is an area where many make mistakes.

As Ted Cruz put it, he’s happy to refile the forms resolving any discrepancies, and has released documents to “supplement the public record” — but apparently has not been asked to do anything by the SEC. In fact, the reason the news media knows of these two loans, and their approximate amounts, is precisely because he did disclose them.

We can see that these amounts were small, they were loans on Cruz assets, they were quite ordinary, and they were paid back. Trivial stuff, and who made the loans would naturally be inconsequential since they were so very ordinary.

But look how the media and establishment Republicans are treating this issue. This group even includes Ron Paul, former candidate Rand Paul’s father, who is savvy in financial matters and should certainly have known better:

Nightmare on Wall Street

It’s a “problem”: Ted Cruz’s Goldman Sachs Problem

It’s a “scandal”: How Ted Cruz fixes the Goldman Sachs loan scandal

It’s a “nightmare”: 10 reasons that Goldman Sachs loan is a nightmare for Ted Cruz

And Ron Paul weighs in: Paul attacks Cruz over the Fed and Goldman Sachs

These are such ridiculous distortions that you’d think that the media and establishment Republicans didn’t like Mr. Cruz.

Incidentally, at about this same point in the 1980 election cycle, Ronald Reagan was projected to lose badly against Jimmy Carter, and the Republican establishment was mounting a campaign to draft Jerry Ford to run against him. Media reports for that cycle ran 96% negative articles about Ronald Reagan. And he won in a landslide, winning 44 out of 50 states then 49 out of 50 the next time.

===|==============/ Keith DeHavelle