The headline above is not what GOP congressional leaders actually said today to Federal Reserve Board Chairman Ben Bernanke, but they might just as well have used that precise language in the letter CNBC reports they sent to the Fed. According to CNBC, the letter instructed the Fed “to refrain from further ‘intervention’ in the economy.
In other words, now that the GOP has made it all but impossible for fiscal policy to be used to improve they economy, they want to make sure that the only other tool the government has at its disposal — monetary policy — isn’t used either.
Why take on the Fed? The Republicans have some direct control over fiscal policy because they can either refuse to consider a proposal in the House where they are in the majority or can filibuster legislation in the Senate where they are in the minority. Because the Fed is an independent agency, the GOP can only do what they did today in the letter by threatening to bring down the wrath of god if it dares take any action to get the economy moving.
If you’re surprised by this you haven’t been reading CG&G. I first posted back in August 2010 that Bernanke had “painted a big bulls eye on the Federal Reserve” when he spoke at the annual conference in Jackson, Wyoming, about the Fed providing additional stimulus if the economy needs it. My exact words were:
It’s not at all clear, however, whether Bernanke realizes that the same political pressure that has brought fiscal policy to a standstill in Washington is very likely to be applied to the Fed if it decides to move forward. With Republican policymakers seeing economic hardship as the path to election glory this November, there is every reason to expect that the GOP will be equally as opposed to any actions taken by the Federal Reserve that would make the economy better, and that Republicans will openly and virulently criticize the Fed for even thinking about it. The criticism is likely to come both before any action is taken to try to stop it from happening and afterwards to make the Fed think twice about doing more.
Three months later, I referred back to that exact post when a number of GOP economists and political strategists began to criticize the Fed exactly as predicted.
Today’s letter is far worse than anything that happened last November. This warning is directly from the Republican congressional leadership instead of just outside economists and strategists, and the letter is almost sinister and ominous in its tone. The treat that terrible things will come to those who help the economy when the GOP is not in charge of the White House sounds very real.
My question: If Rick Perry — one of the wanna-be GOP candidates for president — says that Bernanke’s actions to date have been treasonous, what do you call today’s Republican demand that the federal agency with the legal responsibility and the potential power to help GDP grow and unemployment to fall not do anything to help the American economy?
BS is the mildest term I can think of for this situation.