Last week, top Republicans in the House and the Senate called for ending the Federal Reserve’s mandate to ensure full employment. “It is time that we work to clarify the mandate of the Federal Reserve. Providing our central bank with a clear and explicit focus on keeping inflation low will serve America better than the broader mandate approach we have today,” said Sen. Bob Corker (R-TN).
Since then, a slew of Republicans have hopped on board, criticizing the Fed’s recent policy actions, even though they represent the last option for boosting job-creation (because the GOP won’t move forward with further fiscal stimulus). “Basically the Fed is driving a car with two feet, one on the brakes and one on the gas pedal, and it’s a real jerky ride,” said incoming House Budget Chairman Paul Ryan (R-WI). Sen. Richard Burr (R-NC) agreed, saying “I think the Fed should be focused on monetary policy and clearly monetary policy has an impact on unemployment, but I don’t think that should be a driving issue in their decision-making.”
On CNBC today, Corker went so far as to predict that the Fed’s employment mandate will get whittled away “in the near future“:
CORKER: I agree that we need to do some things that we haven’t been doing, but that doesn’t mean if we don’t there ought to be another body out there that acts independently if we don’t. That’s inappropriate. I think, again, I think you’re going to see a narrowing of the mandate in the near future. I think people realize it’s inappropriate. I think that’s what’s going to happen.
Q: Before 2012?
CORKER: Well, we’ll see.
As economist Mark Thoma summed up, “Republicans oppose fiscal policy — including things such as extending unemployment compensation and job creation initiatives to help to overcome severe conditions (though tax cuts for the wealthy are okay) — and they oppose monetary policy that tries to lower the unemployment rate. So, in essence, they oppose doing anything to help the unemployed during a recession.” And their wild concerns about inflation clash with the fact that there is currently exceedingly little inflation.
Not only does the GOP’s criticism of recent Fed actions to boost employment evince a severe lack of concern for the country’s sluggish rate of job creation, but as Rep. Barney Frank (D-MA) pointed out, it also aligns Republicans with foreign central banks against American interests. “Debating American economic policy is one thing; joining in a broad attack by foreign central banks, who insist that America somehow must subordinate our own legitimate economic needs to their currency requirements, is quite another,” he said.