In a move without precedent in the modern era, Republican congressional leaders including House Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.), Senate Minority Leader Mitch McConnell (R-Ky.) and Senate Minority Whip Jon Kyl (R-Ariz) have penned a letter to Federal Reserve Chairman Ben Bernanke urging him not to take any steps to help the economy.
The context for the letter is a special two-day meeting of the Federal Reserve’s Open Market Committee being held precisely in order that FOMC members can inform themselves about the options available. For those of us who are frustrated with the prospect of endless mass unemployment, it was an exciting sign that the federal agency with primary responsibility for managing the short-term fluctuations in the economy is prepared to stop debating whether to end the recession and start debating how. Conservatives, meanwhile, have been increasingly outspoken about their desire to continue or even intensify the hard-money policies that are strangling the economy. When Rick Perry suggested he would treat Bernanke “pretty ugly” if he dared take steps to boost economic growth, his language and tone met with considerable criticism from other conservatives but at a subsequent debate GOP Presidential contenders uniformly agreed agreed that Bernanke should be fired for pursuing unduly stimulative policies.
The truth is the reverse. The Federal Reserve has a dual mandate to focus on employment and price stability. On prices, the Bernanke Fed has presided over unusually low inflation while unemployment is unusually high. The question facing FOMC members today is whether they’ll face up to that reality and take the additional steps they need to fulfill their mandate, or will they back down in the face of extraordinary efforts to politicize their work.