Something critically important and telling happened in last night’s GOP debate, something that probably flew beneath the radar of most of those watching. It came in response to a question from a Tea Party member regarding the Federal Reserve.
Rick Santorum took the question first, telling the Tea Party crowd that “what we should do with the Fed is to make it a single charter instead of a dual charter.”
“They should be a sound-money Federal Reserve. That should be their single charter, and that is it.”
Herman Cain, Michele Bachmann, Rick Perry and Mitt Romney jumped in to agree, arguing that the primary and in most cases sole responsibility of the Federal Reserve is to protect the dollar.
So what was all that about? Hidden in that seemingly technical, arcane discussion is an issue of profound importance. A lot of Tea Party activists heard the message, but a lot of other Americans probably did not.
Since 1977, the Federal Reserve Board has had a dual mission. It is supposed to protect the integrity of the dollar by fighting inflation, and it is supposed to try to maximize economic output and employment. Put simply, its job is to keep inflation as low as possible to protect the value of accumulated wealth, and also to keep unemployment as low as possible to keep people working.
Modern conservative economic theory completely rejects that second role, to the degree that Perry has even accused Fed Chairman Ben Bernanke of committing treason because he has dared to try to stimulate growth and jobs, as he is required to do by law. In Perry’s mind, Bernanke — a longtime Republican — was guilty of trying to boost the economy and thus boost Barack Obama’s chances of re-election.
This seemingly technical discussion, in other words, says an awful lot about GOP economic priorities. Set aside the fact that a weak dollar is sometimes good for the economy, because what we’re talking about here is less a debate about economic policy than a question of values and priorities.
If you were paying attention, what you heard last night is the expression of GOP doctrine that the interests of capital must be protected at all costs, and the interests of working people are of lesser importance and don’t deserve equal consideration.
(Meanwhile, to fend off inevitable claims that Bernanke and Obama are in the midst of defiling the holy dollar, the chart below documents the status of the dollar against the euro (in red) and the Canadian dollar (in blue) over the last eight years. As it demonstrates, the dollar today is about where it was for much of 2007 and 2008, after years of gradual decline under previous management.)
– Jay Bookman