In their most recent debate, the Republican presidential field strongly supported stripping the Federal Reserve of its legal authority to try to boost employment and the economy.
As Rick Santorum put it, Fed efforts to try to increase “employment and dealing with that leads to a fundamental distrust among the American people that they are taking their eye off the ball, which is sound money. They should be a sound money Federal Reserve. That should be their single charter, and that is it.”
Rick Perry went even further, suggesting that Fed Chairman Ben Bernanke was abusing his power by trying to boost the economy and thus re-elect President Obama. (That’s curious because Bernanke is a Republican who served as chairman of President Bush’s Council of Economic Advisers and was appointed Fed chair by Bush in 2006.)
“If you are allowing the Federal Reserve to be used for political purposes, that it would be almost treasonous. I think that is a very clear statement of fact,” Perry said. “I am not a fan of the current chairman allowing that Federal Reserve to be used to cover up bad fiscal policy by this administration. And that, I will suggest to you, is what we have seen.”
Now we see that same mindset play out in Congress, with top Republicans insisting that Bernanke halt all Fed efforts to boost the economy. As the Wall Street Journal reports:
“Top Republican congressional leaders, in a rare effort to directly influence Federal Reserve policy, expressed reservations about the central bank taking additional steps to spur the recovery, saying further action could harm the economy.
House Speaker John Boehner (R., Ohio), Senate Minority Leader Mitch McConnell (R., Ky.), and two other GOP leaders, in a letter Monday to Fed Chairman Ben Bernanke, urged Fed officials to “resist further extraordinary intervention in the U.S. economy.”
….. They said Fed officials should avoid further action, “particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people.”
With odds of a double-dip recession rising, the Fed Board is meeting today to decide its next step. A decision will be announced at 2:15.
– Jay Bookman