On July 27, 2000, a first-term Congressman from Wisconsin signed his name to the Housing Finance Regulatory Improvement Act. The 30-year-old legislator didn’t have much company. Of 435 Members of the House, only 12 were willing to join Paul Ryan in sponsoring a bill to reduce the taxpayer risks at Fannie Mae and Freddie Mac.

Eight years later to the day, a federal bailout of the two mortgage giants was on its way to the desk of President George W. Bush. Almost $190 billion in taxpayer financing later, the toxic twins of the housing crisis maintain their massive role in mortgage finance.

On Friday, the U.S. Treasury said it is relieving the two government-sponsored enterprises of the requirement to pay regular dividends to taxpayers. Instead, the toxic twins will simply pass to the feds any profits they make. Fan and Fred’s investment portfolios will also have to shrink more quickly, which is very good. But the deal suggests that they will continue to slap taxpayer-backed guarantees on mortgage bonds forever, or until there’s a reformer in the White House.

If only there had been a few more reformers on Capitol Hill in 2000. Fan and Fred and their army of “affordable housing” lobbyists saw to it that the plan backed by Mr. Ryan never made the House floor. The bill would have limited the assets the toxic twins could hold, increased their capital, added new federal oversight, and removed their credit lines at Treasury.

“In order to maintain double-digit growth,” noted Mr. Ryan at a 2000 Congressional hearing, “Fannie Mae will have to take on more and more risk” in order to “increase profitability to shareholders.” He added, “This is not a mission of public policy.”

As the government-fueled housing party heated up, Mr. Ryan continued to warn that many of Fan and Fred’s profit-making activities carried little benefit for homeowners. In 2002, he sponsored a bill to remove the exemptions Fan and Fred enjoyed from the disclosure requirements in federal securities laws.

Mr. Ryan continued his sometimes lonely effort to reform the mortgage giants, for which he endured their usual political wrath. In 2008 he told us that Fannie once called every mortgage holder in his district, claiming falsely that Mr. Ryan wanted to raise the cost of their mortgage and asking if Fannie could tell the Congressman to stop on their behalf. He received some 6,000 telegrams. (See “The Fannie Mae Gang,” July 23, 2008.)

Mr. Ryan’s embrace of reform in his first term in Congress compares favorably to the efforts of a freshman Senator from Illinois in 2005. President Obama likes to pretend he was a warning voice in the wilderness because he later issued vague statements of displeasure once the housing market was already cracking.

What Mr. Obama doesn’t say is that he failed to support any of the serious reform efforts to reduce the role of Fannie and Freddie in the mortgage market. The same is true of old Senate hand Joe Biden. Mitt Romney was never a Washington politician, so he can’t be blamed for the legislative failures of the 2000s.

This history bears further study, as Mr. Obama repeatedly attempts to tie the GOP candidates to Washington’s policy mistakes leading up to the financial crisis. In Iowa this week, the President said that Messrs. Romney and Ryan are proposing the same economic policies “that got us into this mess in the first place.”

The truth is that the President who loves to talk about the “mess” he “inherited” did nothing to prevent it when he had the chance. In contrast, his opponent’s new running mate was an early voice for reforms that might have helped America avoid it.

Last summer, the chairman of the House Budget Committee made a foray into foreign-policy land with a speech to the Alexander Hamilton Society in Washington, D.C. About 100 people showed up, and it got next to no coverage. That should now change—and not just because Paul Ryan’s views on America’s role in the world are no longer a matter of one Wisconsin congressman talking.

Here, in CliffsNotes form, is what the speech tells us about Mr. Ryan. First, that he’s an internationalist of the old school; in another day, he would have sat comfortably in the cabinets of Harry Truman, Jack Kennedy or Ronald Reagan. Also, that he believes in free trade, a strong defense, engagement with our allies—and expectations of them. Also, that he wants America to stay and win in Afghanistan. Furthermore, that he supports the “arduous task of building free societies,” even as he harbored early doubts the Arab Spring was the vehicle for building free societies. 

It tells us also that Mr. Ryan has an astute understanding of the fundamental challenge of China. “The key question for American policy makers,” he said, “is whether we are competing with China for leadership of the international system or against them over the fundamental nature of that system.”

What Mr. Ryan’s speech really tells us, however, is that he knows how to think.

Most foreign-policy speeches by American politicians take the form of untidy piles of verities and clichés. Here, for example, is Barack Obama on China: “As we look to the future, what’s needed, I believe, is a spirit of cooperation that is also friendly competition.” Here he is on the U.N.: “The United Nations can either be a place where we bicker about outdated differences or forge common ground.” Here he is to the British Parliament: “The time for our leadership is now.”

Mr. Ryan doesn’t have the president’s reputation for eloquence. Nor do his speeches ride on the windy drafts of “Yes We Can.” But unlike Mr. Obama, his speeches communicate ideas and arguments, not pieties and emotions.

Thus this speech begins not with a cliché but with a contention: “Our fiscal policy and our foreign policy are on a collision course.” It proceeds, briefly, to demonstrate the point quantitatively: Defense spending in 1970 consumed 39% of the federal budget but takes only 16% today. In the proverbial guns-to-butter ratio, our veins are already clogged.

Next there is history. Why can’t the U.S. simply cede the cumbersome role of world policeman to somebody else? Didn’t Britain do as much in the 1940s? It did. Yet, “unlike Britain, which handed leadership to a power that shared its fundamental values, today’s most dynamic and growing powers do not embrace basic principles that should be at the core of the international system.” (more…)

By Stephen Moore

President Obama’s campaign is exulting that Mitt Romney’s choice of Paul Ryan as his running mate highlights the contrast of campaign visions about America’s economic direction. They’re right. Mr. Ryan, who I have known for more than 20 years, has made his recent reputation as a budget wonk. But his policy roots lie in the growth and opportunity wing of the GOP.

Mr. Ryan broke into politics in the 1990s at Empower America, where he became a protégé of former Buffalo Congressman Jack Kemp, the pro-growth, pro-trade, pro-immigration leader of the GOP during the Reagan revolution and into the 1990s. Kemp understood, as Mr. Ryan also does, that while spending restraint is important, faster economic growth is a precondition to averting a fiscal impasse. More than anyone else in Washington in recent years, Mr. Ryan has adopted the Reagan-Kemp message.

At Empower America, Mr. Ryan worked with Kemp on issues ranging from enterprise zones for inner cities to school choice. Like Kemp, Mr. Ryan has always made a case that free-market policies benefit minorities and poor people generally who are “capital deprived.” That message has special resonance now given the reversal of minority progress on income growth, and the high black and Hispanic unemployment rates, during the Obama years.

In his first campaign in 1998, a tough year for Republicans, Mr. Ryan beat a liberal woman, Lydia Spottswood—in his southeastern district of Wisconsin that leaned Democratic—by talking to working-class voters about pocketbook issues from taxes to Social Security and trade in an understandable and compelling way.

Mr. Ryan has made clear in his budget and has educated his congressional colleagues that with a growth rate of less than 2% you can never cut government spending or raise taxes enough to balance the budget. At what is now the explicit Romney-Ryan target of 4% annual growth, deficit reduction and fiscal stability would be achievable, and with much less pain and suffering. When I recently asked Mr. Ryan whether 4% growth was reasonable, he responded: “It should be easy. Under Reagan we had growth rates of 7% and even 8%.”

Associated Press/Rick BowmerJack Kemp in 1996. (more…)