Washington lawmakers push to revamp state financial system

Spokane County Treasurer Rob Chase this week invited an unlikely duo to speak together on two pieces of legislation addressing the state’s financial system.

Chase said he endorsed both bills, one from Republican Rep. Matt Shea that would institute gold and silver as legal tender in Washington, and the other from Democratic Sen. Bob Hasegawa to develop a state bank.

“We’re sitting on kind of the razor’s edge right now,” Chase said. “Who knows what’s going to happen, even in the next few weeks.”

Chase was referring to the recent economic concerns in China, which holds the largest portion of American debt by a foreign country. That has prompted worries about the value of the U.S. dollar. Shea, a social and fiscal conservative who recently introduced Republican presidential candidate Rand Paul at a rally in Spokane, said his bill would institute a voluntary system that would allow merchants to accept gold and silver, in addition to regular currency.

“It is strictly a voluntary bill,” Shea told an assembled crowd of about 20 people in the Spokane County Commission chambers on Wednesday night. “In other words, if it was enacted, it would be strictly voluntary whether to accept gold and silver payment in tender of debt.”

Shea’s legislation, which was co-sponsored by his colleague in the 4th Legislative District, Bob McCaslin, R-Spokane Valley, was introduced in each session of the 2015 Legislature, and it never received a committee hearing.

Both Shea and Hasagewa said Wednesday that ranking members of the committees handling finance in the Washington Legislature were keeping their proposals from getting a fair shake.

Shea’s bill ties the value of gold and silver to the Chicago Mercantile Exchange, which he said was the most stable of pricing indexes.

He said he would ultimately like to see the dollar tied to many commodities beyond precious metals.

“Literally, what I think the answer is, is to have our currency backed not only by gold and silver, but all commodities across the board,” Shea said.

Opponents of plans to restore the United States to a currency standard based on precious metals say such a radical shift could crash the national and global economies. When Congress last studied whether to return to the gold standard in the early 1980s as inflation climbed over 10 percent, a U.S. Treasury report said claims that gold-backed money could help reduce inflation were dubious. Federal lawmakers are also wary of reducing the influence of the Federal Reserve, which can help the economy out of downturns.

Hasegawa told the audience he’d introduced different versions of his bill every session since 2010, varying its scope from a full-scale state-funded bank to one that only handled revenue from the marijuana industry.

“That entire marketplace is unbanked, so we’re talking about a billion-dollar industry – potentially – that is cash-based,” Hasegawa said.

The Seattle legislator, a former union leader and member of the Washington state Labor Council, AFL-CIO, holds up the state bank of North Dakota as an example of the system working well. He said a state-run bank would ward off the influence of corporate banks that aren’t as interested in the communities they serve as local residents and lawmakers. He also said investing capital in a state bank was better than selling bonds on the open market, because investing in a state bank avoids interest rates and allows for reinvestment of that capital into other projects.

Hasegawa’s bill has had varied success at the state level, with a task force convened to look into the possibility of a state bank. But the proposal, like Shea’s bill, has never received a floor vote. Hasegawa said opponents of the plan usually have the same argument: “It’s socialism,” he said.

Chase added that he’d like to see a Spokane County bank if the idea didn’t take off at the state level. Hasegawa said small government banks had only been tried successfully overseas.

In the audience for the presentation were Spokane City Councilman Jon Snyder and Spokane Valley City Councilman Ed Pace.