On Sunday the Dallas Morning News took a long look at Perry’s ties to PlainsCapital, the bank that manages his presidential campaign funds, and is headed by James R. Huffines, a close Perry friend:

Perry’s relationship with PlainsCapital shows the sort of intermingling of business and political interests that could add fuel to repeated allegations by some of his Republican presidential rivals that he has practiced “crony capitalism.” No one has accused Perry of steering significant state business to the bank, but his presidential campaign could deposit millions in political contributions there.

PlainsCapital just paid back its loan from the U.S. Treasury’s Troubled Asset Relief Program, a program Perry has long railed against, including in a series of passages in his book, “Fed Up!”

A PlainsCapital subsidiary loaned Perry nearly $200,000 for a home in College Station while his daughter attended Texas A&M, and loaned Perry’s son Griffin the money he’d need for a home in North Dallas.

While the connections aren’t don’t suggest the governor directed taxpayer funds to hand-picked banking industry players (the Associated Press had that story on Monday), they do speak to a glaring disconnect between Perry’s fiery language on the campaign trail, and his more pragmatic approach when it comes to his own friends and finances.

Andrew Wheat, research director of the liberal-leaning Texans For Public Justice, contended that Perry’s continued use of PlainsCapital was part of a pattern of duplicitous actions by the governor.

“There are countless examples of this kind of thing — railing against the federal government while whining about the need for more federal aid for forest fires or hurricanes or border security,” Wheat said.

Federal disaster relief, too, offers another look at how Perry and Texas officials’ actions tend to upend the narrative of that the state is lean and efficient, and the feds just get in the way.

As the Austin American-Statesman reported Tuesday, Texas’ has drawn criticism from the unusual decision to outsource management of federal disaster relief money after Hurricanes Dolly and Ike is drawing criticism from the U.S. Department of Housing and Urban Development.

Texas has received $3.1 billion so far in the federal disaster recovery money (of the $3.1 billion it’ll eventually get). While Kansas City-based HNTB has nearly maxed out its contractual allowance for administrative fees, at $45 million, the Statesman reports it’s only doled out 20 percent of the money it’s charged with disbursing:

The role played by HNTB in managing grants for nonhousing infrastructure — originally the responsibility of the now-defunct Texas Department of Rural Affairs — has largely escaped public attention, but not the federal government’s.

In a May letter to state officials obtained by the American-Statesman, Stanley Gimont , director of block grant assistance for the U.S. Housing and Urban Development, said that using HNTB “to administer virtually all aspects” of the state agency’s work on the community development block grants “presents significant cause for concern.” Gimont said that as an engineering firm, HNTB lacked experience with community development block grant programs — the funding vehicle for Ike and Dolly disaster relief.

In May, HUD warned Texas about the potential for “considerable cost increases” in its contract with HTNB, and that it lacked ways to measure how the company was doing its job.

HNTB was also a major consultant on the Trans-Texas Corridor, a widely opposed highway mega-project that would have cost the state $184 billion. HNTB pocketed $109 million in consulting fees along the way. The Statesman reports HNTB has profited mightily off its latest work with the state, as well:

Exactly how HNTB was chosen is not clear; because its contract was for professional services, it was not subject to a bid process. State records show the firm was paid $45 million under the contract before it was canceled.

The Statesman details the firm’s close ties to Perry associates — his presidential campaign’s communications director Ray Sullivan has lobbied on behalf of HNTB, and the comapny and its executives have given $500,000 to the Republican Governors Association, which, in turn, has been Perry’s largest campaign donor.

Due to careful stewardship of the emergency programs, their effect on the deficit was much smaller than previously estimated. The Troubled Asset Relief Program (TARP) had outlays of just $9.0 billion in FY 2010, which was $25.9 billion or 74 percent below previous estimates from July 2010. Aid to Fannie Mae and Freddie Mac was $52.6 billion in FY 2010 — $16.4 billion or 24 percent less than the most recent forecast.

This played a large part in reducing the deficit, which as a percentage of gross domestic product (GDP) fell to 8.9 percent, down from 10.0 percent of GDP in FY 2009. This improvement — 1.1 percent of GDP — was the most rapid one-year improvement since FY 1987.

The takeaway: TARP worked and Fannie and Freddie did not need as much as the Treasury thought. Therefore, the deficit came in smaller than expected, at $1.294 trillion. That’s nine percent smaller and $122 billion less than last year.

But a smaller deficit is not necessarily a good thing — not during times of sustained, 9.6 percent unemployment. Democrats and most economists actually wanted a much bigger deficit, indicating massive government spending to juice the economy in the face of low aggregate demand. (Keynes, in simplified English: Because regular consumers aren’t buying things, employers are cutting payrolls. If the government buys things, employers will start hiring, meaning more consumers can buy more things, putting the economy back on track.)

The report shows that the government spent billions less on stimulus programs than it intended to, for a variety of reasons. Here are a few examples, comparing what the government actually spent with what it thought it would spend mid-year. (MSR stands for the Mid-Session Review of the FY 2011 Budget, which came out in July.)

• The MSR included an allowance for jobs initiatives, which reduced expected receipts by $1 billion. Delay in enactment of a job creation package increased FY 2010 receipts $1 billion relative to the MSR.
• Actual outlays for the Supplemental Nutrition Assistance Program were $2.1 billion lower than MSR estimates. Outlays for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) were also lower by roughly $1.2 billion, as actual WIC participation and food costs were lower than expected.
• Outlays for the Department of Commerce were $13.2 billion, $2.7 billion less than the MSR estimate. Three-fifths of the difference is due to favorable performance of the 2010 Decennial Census, including higher-than-expected workforce productivity and a higher-than-expected Census questionnaire mail-back response rate that reduced the need for costly non-response follow-up operations, resulting in no need to tap contingency funds set aside for disasters or major operational failures.
• Outlays for the Department of Labor were $172.9 billion in FY 2010, $7.8 billion less than the MSR estimate. Most of the difference was due to lower-than-expected spending on unemployment compensation benefits, including Emergency Unemployment Compensation.
• Outlays for the Department of Transportation were $77.8 billion, $7.7 billion lower than projected in the MSR. The surface transportation programs, which were $6.0 billion below MSR projections, were affected by uncertainty due to numerous short-term program authorization extensions. The largest difference was in the Federal Highway Administration, where Federal Aid Highway program outlays were $4.4 billion below the MSR projection. In addition, Federal Transit Administration program outlays were $1.4 billion below expected levels. For these two programs, short-term authorizations limited States’ ability to obligate funds in a timely manner.
• Outlays for the Child Tax Credit and Making Work Pay Credit were below MSR estimates by $1.8 billion and $2.4 billion, respectively, as the state of the economy generally reduced taxpayers’ eligibility for these credits. These below-MSR outlays were partially offset by COBRA program outlays nearly $3.1 billion above the MSR estimate.

With common-sense exceptions for seniors, veterans, and our troops, we will roll back government spending to pre-stimulus, pre-bailout levels, saving us at least $100 billion in the first year alone and putting us on a path to balance the budget and pay down the debt. We will also establish strict budget caps to limit federal spending from this point forward. We will launch a sustained effort to stem the relentless growth in government that has occurred over the past decade. By cutting Congress’ budget, imposing a net hiring freeze on non-security federal employees, and reviewing every current government program to eliminate wasteful and duplicative programs, we can curb Washington’s irresponsible spending habits and reduce the size of government, while still fulfilling our necessary obligations.

We will also prevent Washington from forcing responsible taxpayers to subsidize irresponsible behavior by ending bailouts permanently, canceling the Troubled Asset Relief Program (TARP), and reforming Fannie Mae and Freddie Mac.

That is not actually a plan, of course. It is a plan to make a plan.

First, Democrats put into their own Dodd-Frank law an amendment precisely “prohibit[ing] taxpayers from ever having to bail out the financial sector.” There are no bailouts.

Second, ending TARP is not a serious policy idea, either. The program sunsets on October 3 — about 10 days from now. And it ended up costing less than a tenth of its initial budget.

Third, there are no cuts in this proposal. There are caps on federal hiring, for instance, but nothing that would represent more than tens of billions of dollars in savings — though the United States is trillions of dollars in debt. Republicans say there are duplicative programs that should be eliminated, but do not name one.

Later, the Republicans do elaborate on these ideas, somewhat:

• Act Immediately to Reduce Spending: There is no reason to wait to reduce wasteful and unnecessary spending. Congress should move immediately to cancel unspent “stimulus” funds, and block any attempts to extend the timeline for spending “stimulus” funds. Throwing more money at a stimulus plan that is not working only wastes taxpayer money and puts us further in debt.
• Cut Government Spending to Pre-Stimulus, Pre-Bailout Levels: With common-sense exceptions for seniors, veterans, and our troops, we will roll back government spending to pre-stimulus, pre-bailout levels, saving us at least $100 billion in the first year alone and putting us on a path to begin paying down the debt, balancing the budget, and ending the spending spree in Washington that threatens our children’s future.
• Establish a Hard Cap on New Discretionary Spending: We must put common-sense limits on the growth of government and stop the endless increases. Only in Washington is there an expectation that whatever your budget was last year, it will be more this year and even more the next. We will set strict budget caps to limit federal spending on an annual basis. Budget caps were used in the 1990s, when a Republican Congress was able to bring the budget into balance and eventual surplus. By cutting discretionary spending from current levels and imposing a hard cap on future growth, we will save taxpayers hundreds of billions of dollars.
• Cut Congress’ Budget: This year, Congress increased its own budget by 5.8 percent at a time when families and small businesses across the country are cutting back. We will make Congress do more with less by significantly reducing its budget.
• Hold Weekly Votes on Spending Cuts: Earlier this year, House Republicans launched the YouCut initiative to combat the permissive culture of runaway spending in Congress. Over the course of nine weeks, YouCut produced proposals to save taxpayers more than $120 billion. We will continue to hold weekly votes on spending cuts.
• End TARP Once And For All: Americans are rightly outraged at the bailouts of businesses and entities that force responsible taxpayers to subsidize irresponsible behavior. We will cancel the Troubled Asset Relief Program (TARP), a move that would save taxpayers roughly $16 billion.
• End Government Control of Fannie Mae and Freddie Mac: Since taking over Fannie Mae and Freddie Mac, the mortgage companies that triggered the financial meltdown by giving too many high risk loans to people who couldn’t afford them, taxpayers were billed more than $145 billion to save the two companies. We will reform Fannie Mae and Freddie Mac by ending their government takeover, shrinking their portfolios, and establishing minimum capital standards. This will save taxpayers as much as $30 billion.
• Impose a Net Federal Hiring Freeze of Non-Security Employees: Small businesses and entrepreneurs are the engine of our economy and should not be crowded out by unchecked government growth. We will impose a net hiring freeze on non-security federal employees and ensure that the public sector no longer grows at the expense of the private sector.
• Root Out Government Waste and Duplication: Once created, federal programs almost never go away, even if the problem they were created to address is no longer relevant. More than 20 states have addressed this problem by requiring that programs end – or “sunset” – by a date certain. We will adopt this requirement at the federal level to force Congress to determine if a program is worthy of continued taxpayer support. necessary to protect our entitlement programs for today’s seniors and future generations.
• Reform the Budget Process to Focus on Long-Term Challenges: We will make the decisions that are requiring a full accounting of Social Security, Medicare, and Medicaid, setting benchmarks for these programs and reviewing them regularly, and preventing the expansion of unfunded liabilities.

But, again, there are no actual suggestions for cuts here. It is all well and good to say you’ll cut the federal budget. It is quite another to start taking away seniors’ Social Security, or families’ school-lunch funding, or farmers’ subsidies, or workers’ unemployment insurance, or bridge-builders’ contracts.

Regarding your post, I guess I take your point that the poll questions weren’t uniformly positive in terms of supporting our ideology. I thought that was evident, not something we were hiding or “spinning.”

Nonetheless, a couple points:

(1) Our observation that DISCLOSE doesn’t enjoy the support many reform groups claim is not based mainly on the disclosure questions; it’s based on question 8 (and 5 to a lesser extent) showing that 56 percent of likely voters think interest groups should be free to spend money on politics. This contrasts with the WaPo poll and others showing large majorities opposed to CU when using wording about corporations or corruption. The post doesn’t even address that issue, which is still a huge part of DISCLOSE. Despite The Hill report that Schumer is considering stripping the non-disclosure provisions, they still remain and we’ve heard of no outreach whatsoever on these issues to moderate Republicans.

(2) Our assertion isn’t that people oppose disclosure, it’s that they’re more skeptical than commonly believed. We freely acknowledge that the disclosure threshold provision question (9) is mixed, but this goes to the point that there’s not overwhelming support for the DISCLOSE provisions, not that the public is uniformly opposed to them. As you note, if we were trying to skew the results, we wouldn’t have even released question 10, which shows that Americans support some level of informational disclosure.

I accept Jeff’s point that CCP wasn’t blatantly skewing the data. The poll released today did include questions/responses that didn’t back up the organization’s ideological beliefs (though I’d argue it would have been unethical to remove them). The part I continue to take issue with, however, is whether Jeff’s nugget of wisdom — “56 percent of likely voters think interest groups should be free to spend money on politics” — proves anything about support for the DISCLOSE Act.

The DISCLOSE Act, as it stands, does restrict political spending for certain corporations — those with foreign investment totaling more than 20 percent, those holding government contracts in excess of $10 million, and those still benefiting from the government’s Troubled Asset Relief Program (TARP). I’d argue that if you asked whether corporations with these characteristics should be spending money to influence campaigns and lobby government, the majority of Americans would say no. The larger point, however, is that the poll didn’t ask that question, and it’s a specious example of reasoning to take question five to indicate anything about popular support for the DISCLOSE Act.

Nearly half of Americans say the Troubled Asset Relief Program — the bank bailout — passed under President Obama. A further 19 percent say they do not know whether Obama or his predecessor signed the bill. Of course, TARP passed through a Democratic Congress and President George W. Bush signed it into law.

In a bill that was supposed to be about disclosure, there was no need to prohibit independent expenditures by some government contractors, or recipients of Troubled Asset Relief Program funds, or oil drillers. The House inserted an especially distasteful provision that exempted the National Rifle Association from disclosure requirements.

There may very well be good reasons why some government contractors or recipients of TARP funds should be prohibited from making independent political expenditures — recipients of government money might be encouraged to spend it in political ways to influence the continuation of that gravy train. (When it comes to exempting large organizations like the NRA from disclosure, I can’t think of any good reasons.)

The Times is right, however, in pointing out that these measures gave Republicans additional excuses to vote against cloture. It will be interesting to see whether Sens. Harry Reid (D-Nev.) and Charles Schumer (D-N.Y.) take the Times’ advice and introduce a paired down version of the bill in September, or whether they introduce the same measure and dare Republicans to keep opposing it.

The most obvious candidate is Elizabeth Warren, a professor at Harvard Law School and the head of the Congressional Oversight Panel over the Troubled Asset Relief Program, the Treasury Department’s signature effort to stem the financial crisis. She devoted her career to studying how the modern financial system ends up giving families and workers bum deals. The idea for the CFPB is hers. She is, bar none, considered the foremost mind on the topic. As the head of the CFPB, many in Washington hoped, she would act not just as a strong leader, but as a draw for smart minds — a kind of J. Edgar Hoover, sexing up the bureau rather than letting it become just another wan regulatory agency. This might sound a bit strong. But I am serious in saying that most everyone I speak with about this issue — on the Hill, in consumer groups, in think tanks — considers Elizabeth Warren just that good.

Except, Shahien Nasiripour reports at the Huffington Post, Treasury Secretary Timothy Geithner. Why? Because she has been hard on Treasury’s reform efforts. I would not be surprised to hear push-back from Treasury on the story, but it has been in the air for some time that the department opposes her. The question, of course, is how much Treasury’s opinion will influence the White House.

But she hits even harder at AIG’s regulators and the government’s extraordinary intervention. “[AIG's] complexity, its systemic significance, and the fragile state of the economy may all arguably have been reasons for unique treatment. But no matter the justification, the fact remains that AIG’s rescue broke all the rules, and each rule that was broken poses a question that must be answered,” she argues.

AIG’s regulators and regulations failed the American taxpayer, Warren says. And thankfully, the House and Senate reform bills create a much better process for monitoring systemically important firms and winding them down if they falter — a process designed precisely as a response to the wildly expensive and unruly bailouts of companies like AIG.

Now, firms like AIG need to author their own “funeral plans,” telling the government how to unwind them. Additionally, the reforms clarify the government’s process for deciding a firm needs to be shut down and then doing it, wiping out shareholders, firing management and giving counterparties haircuts. (There are differences between the House and Senate bills on the resolution authority front, differences that will be worked out in conference committee. The biggest difference is that the House bill has a $150 billion liquidation pool, funded by big financial firms. The Senate bill instructs the government to recoup its costs after the fact.)

Here is a fuller clip of the remarks from Warren, a bankruptcy professor at Harvard Law School:

When a company digs itself so deeply into debt that it cannot escape, our legal system provides a set of strict and simple rules to force the business to bear as much of the cost of its mistakes as possible and to minimize the impact on others. Of these rules, two are paramount. First, the business’s owners — its shareholders — lose everything. Second, the business’s creditors — including its bondholders and counterparties — lose money, and depending on how deep the hole, they could lose a great deal.

The rules may seem harsh, but they are fundamental to the functioning of a free market. After all, the parties that gain the most when a business succeeds should also lose the most when a business fails.

I open today’s hearing by listing the rules of bankruptcy because we are about to examine a bankruptcy that broke all the rules. In fact, the rescue of the American International Group was so extraordinary that it bypassed the entire legal process of bankruptcy. In saving AIG, the government invented a new process out of whole cloth, a parallel set of rules devised and executed for the benefit of only one company.

By the time the federal government intervened in late 2008, AIG was a poster child for the need for a well-functioning bankruptcy system. Its stock price had plummeted 79 percent in only two weeks. The sharp decline in mortgage-linked asset prices and the failure of Lehman Brothers had led to staggering collateral calls from AIG’s counterparties, and AIG simply did not have enough cash on hand to keep its doors open.

The next steps would ordinarily have been straightforward. Under the rules that applied to everyone else in America, AIG’s shareholders should have lost everything, and its creditors should have taken substantial losses. Yet even today AIG continues to trade on the New York Stock Exchange, and no creditor has lost a penny on its dealings with the company.

Put another way, under the rules that applied to everyone else in America, the costs of AIG’s mistakes should have been borne by AIG and its partners. But under this new, ad hoc set of rules, the costs of AIG’s mistakes were borne by the rest of us – the American taxpayers.

The report notes, however, that any programs to encourage banks to lend to small businesses will fail unless those small businesses are benefiting from an improved economic climate in general — a loan will do little good to help a business if the business has no customers — and that Treasury and the government need more data on small-business lending:

A small business loan is, at its heart, a contract between two parties: a bank that is willing and able to lend, and a business that is creditworthy and in need of a loan. Due to the recession, relatively few small businesses now fit that description. To the extent that contraction in small business lending reflects a shortfall of demand rather than of supply, any supply-side solution will fail to gain traction. Treasury should be mindful of this concern and should consider creative solutions that engage banks, state-based lending consortia, and other market participants.

The debate over whether small business lending is constrained by supply or demand is a reminder of the absence of high-quality data about current lending practices. Such poor data have made it far more difficult to pinpoint the causes of today’s problems and, as a result, to find effective solutions. Treasury should take active steps to gather more detailed and dependable data about small business lending, and put data-reporting requirements in place so that in the future policymakers will not be forced to make decisions with too little information about what is actually happening.

That said, it remains extraordinarily difficult for even worthy small businesses to access the credit markets — a phenomenon I previously examined. The report also includes a plethora of charts and tables showing reduced confidence in and reduced lending to small businesses. This chart demonstrates the continued tightening of credit to these “engines” of economic growth.

But unless you’re well-versed in the modern minutiae of the financial market, it probably didn’t help explain anything about why Treasury Secretary Tim Geithner is facing an investigation into his role in the affair.To recap Morgenson and Story:

• The people at Goldman Sachs invested in mortgage-backed securities they expected to decline in value in order to make money off the insurance claims.
• Due to a long-standing relationship, they went to AIG for a kind of insurance — credit default swaps — which were not regulated.
• They then used other companies, including Société Générale, to purchase more of the unregulated insurance that AIG might not have otherwise underwritten in order to manage its own risk.
• When Goldman’s investments declined, they submitted insurance claims for the losses, but insisted on determining the amount of their damages on their own, without any input from AIG, any auditor or the market.
• After Goldman got as much money out of AIG as they thought they could, their stock analysts issued a report about how AIG was bleeding cash and their creditors wouldn’t negotiate, without mentioning that AIG was bleeding cash because of them and that Goldman was the creditor that wouldn’t negotiate. AIG’s stock tanked.
• The government stepped in, took an 80 percent share in AIG and then paid Goldman and the other creditors all the money they’d asked AIG for at the start of the negotiations in 2007, without using their power to force AIG’s creditors to negotiate.

When the federal government, including then-Treasury Secretary Hank Paulson (who once served as chairman and CEO of Goldman Sachs), directed AIG to pay Goldman exactly what it wanted, it overrode significant and long-standing misgivings by AIG’s lawyers and accountants that Goldman’s estimates of its losses were correct. Morgenson and Story note that the prices on the very securities for which Goldman demanded insurance payments have since rebounded — but under the terms of the deal struck by the federal government, Goldman doesn’t have to pay a cent of its insurance settlement back to either AIG or the taxpayers. That’s quite the sweetheart deal for Goldman Sachs, if not taxpayers.

Now-Treasury Secretary Tim Geithner’s role in the November payouts is under investigation; his spokesperson said last month that then-New York Fed Chair Geithner officially recused himself from participating in the AIG bailout after Nov. 24, 2008 — the date of his nomination to Treasury — and had begun to insulate himself from such decisions “weeks earlier in anticipation of his nomination.” The Presidential election was held Nov. 4, 2008, and the plan to give Goldman everything it wanted was made official 6 days later, on Nov. 10. Either Geithner was insulating himself from his own job weeks before the election, or he was as involved in the negotiations as his detractors have charged.

Documents have recently emerged showing that the N.Y. Fed, starting as early as Geithner’s Treasury nomination announcement, worked with AIG to prevent full disclosure of how the bailout money it received in November went straight to companies like Goldman Sachs, Société Générale and Deutsche Bank, among others. The order to AIG from the government not to negotiate with its creditors may have cost U.S. taxpayers $13 billion; it was only under pressure from the SEC that AIG made public in March 2009 (after Geithner’s confirmation) the banks to which it had transferred its bailout funds.

As the N.Y. Fed staffers — who, despite his recusal, still worked for Geithner — were pressuring AIG to refrain from disclosing the government’s demands on behalf of Goldman and the secondhand amount Goldman received from the bailout, Geithner was amending his tax returns and paying back taxes in order to survive his confirmation process. Revelations that he’d also used his position at the N.Y. Fed to preserve the financial interests of Goldman Sachs over taxpayers or the company in which the government had taken a majority stake might have scuttled his nomination entirely. These days, many Democrats seemingly think that perhaps it should have.