Incrementalism is the word for Jeb Hensarling.
Since becoming chairman in 2013 of the House Financial Services Committee, a powerful position at the crossroads of Wall Street and Washington, Hensarling has learned that “things move slowly” for a fiscal conservative struggling to balance his ideological priorities with the demands of the office.
Assessing the first year of his tenure while sitting in Capitol Hill office, the six-term Republican congressman from Dallas muses that "on the battlefeld of ideas, you have to take the battlefield as you find it, and not as you wish it would be."
Hensarling was an economics major who learned about money and banking from former Texas Rep. Phil Gramm, both in his classroom at Texas A&M in the 1970s and then later on his congressional staff. Hensarling says he worries that the U.S. is bifurcating into separate and unequal markets: "a kind of Main Street competitive economy, and then we have a Washington insider economy" based on "bailouts and earmarks and tax preferences and barriers to entry for trade.”
Hensarling, 56, began his tenure last year training his sights on the bailed-out, government-sponsored mortgage businesses Fannie Mae and Freddie Mac, aiming to eliminate them and permanently remove any government backstop for private mortgage insurance.
It’s a goal on a scale worthy of past Financial Services chairmen who have left their imprint on the nation’s financial architecture, such as Barney Frank and Mike Oxley. Fifteen committee staffers worked for months to develop the nearly 300-page PATH Act, a bill that would replace Fannie and Freddie with a system that had no government guarantee for mortgages and that would also reform the Federal Housing Administration, which insures home loans for low- and middle-income borrowers.
After the committee approved it on a party-line vote last June, the bill earned moderate praise from unexpected quarters, including the Washington Post editorial page. But then it went nowhere. Almost a year later, a bipartisan group on the Senate Banking Committee is now working on its own measure, which would include a government guarantee for mortgages. With the end of the 113th Congress approaching, the PATH Act is, for now, little more than a statement of principles.
That's where incrementalism comes in: Hensarling has seen long-shot efforts gain critical traction over time. He was in the vanguard of the ultimately successful GOP effort to ban earmarks, as well as one of the original eight House Republicans to sign on to Rep. Paul Ryan's then-obscure original budget reform.
Just passing the bill at the committee level was an achievement, says Ed Pinto, a housing expert at the American Enterprise Institute whose work the committee leaned on in formulating the measure. “I didn’t think it was a foregone conclusion” that it would go that far, Pinto explains.
But six years after the bailouts, the lack of further progress is frustrating, Hensarling acknowledges.
In March, Hensarling suffered another setback, when his attempts to reform the National Flood Insurance Program, an indebted program he criticized as needing a taxpayer bailout, were cut short by Republican leadership.
It won't be the last time tensions rise between Hensarling's ideological commitments and the demands of his position. He's laid a marker on the reauthorization of the Export-Import Bank, a government-chartered entity that guarantees loans to U.S. private exporting companies. It needs reauthorization by Sept. 30 and has requested a raise in its portfolio cap from $140 billion to $160 billion.
It’s a major showdown in the eyes of Mike Needham of Heritage Action, one of the hardline conservative outside groups most vocally opposed to the Export-Import Bank. “It’s a pretty indefensible, as a conservative, to support the Export-Import Bank.” Needham says, describing Heritage Action as “big admirers” of Hensarling and describes the GOP leadership’s maneuver around Hensarling with the flood insurance bill as “a shame.”
While Hensarling acknowledges his disagreement with the leadership over flood insurance, he insists they moving in the same direction now. “I feel I have the green light to proceed as I’m proceeding,” he says.
Nevertheless, Hensarling says that the path forward will involve delicate negotiations — with Ex-Im and his other priorities.
Paraphrasing Ronald Reagan, he quips that you must “always be prepared to compromise your policies as long as they advance your principles.”
Compromise might be necessary, because both Fannie and Freddie and the Export-Import Bank have powerful friends in Congress.
Hensarling says he understands that “there are people here who are more susceptible than I to the communications of K Street” and that it’s Constitutionally legitimate for businesses to petition Congress to redress grievances. But that doesn’t include the “right to petition for corporate welfare,” he warns.
That rhetoric, along with his fiscal record, is why Hensarling has drawn the attention from restless House conservatives who are looking for someone to challenge House Speaker John Boehner and Majority Leader Eric Cantor, regardless of whether there is a vacancy or not.
And Hensarling is not only a stalwart conservative, he also is a prodigious fundraiser who gained a grasp of the broader political environment by serving in campaign and leadership roles.
Hensarling, though, dismisses that possibility just as he denies tensions between him and leadership.
He stops short of being Shermanesque, but says “I can look you in the eye,” looking into this reporter’s eye through a zero made with his thumb and index finger, “and say I’m distributing zero time contemplating leadership races for anybody, and the least of them is me."