When Federal Reserve Chairman Ben Bernanke delivered testimony to the Joint Economic Committee yesterday, most of the focus was on potential steps the Fed may consider to boost the domestic economy. And to be sure, Bernanke’s willingness to act is critically important.
But there was something else the Fed chairman told lawmakers that stood out for me. msnbc’s “The Ed Show” aired this Bernanke quote last night.
For those who can’t watch clips online, the Fed chairman told Congress:
“Monetary policy is not a panacea. It would be much better to have a broad-based policy effort addressing a whole variety of issues. I leave the details to Congress, who have considered many of these issues. I’d feel much more comfortable if Congress would take some of this burden from us and address these issues.”
Bernanke, of course, has to maintain a level composure, and isn’t in a position to start barking orders on Capitol Hill, but this is about as close as a Fed chairman can get to telling Congress, “For the love of God, do something.”
When Bernanke talks about Congress relieving the burden and working in concert with the Fed on a “broad-based policy effort,” he’s not talking about cutting spending — which as he’d already testified takes capital out of the economy and slows growth. Rather, the Fed chairman wants lawmakers to approve new investments that, like the 2009 stimulus, would generate demand.
Bernanke, in other words, wants what congressional Republicans refuse to consider. Indeed, it’s worth pausing to appreciate the fact that Bernanke, despite being a Republican first appointed by George W. Bush, has been increasingly audacious on this front, telling GOP lawmakers what they don’t want to hear.
Here, for example, was Bernanke talking to Congress in November.
“With respect to the current economy we are currently continuing our accommodative monetary policy. We are trying to do our best to support economic growth and job creation. It would be helpful if we could get assistance from some other parts of the government to work with us to help create more jobs.” [emphasis added]
In October, the Fed chairman urged Congress to focus on job creation, embracing government spending policies that “support growth.” In September, Bernanke pleaded with Republicans not to cut spending in ways that that would hurt economic growth
In August, Bernanke not-so-subtly urged Congress to adopt a short-term stimulus to give the economy a boost. In July, the Fed chairman told Congress that “sharp and excessive cuts in the very short term would be potentially damaging to that recovery.” And yesterday, in a not-so-subtle appeal, Bernanke asked Congress yesterday to share “some of this burden” of economic policymaking. Republicans, of course, not only choose to ignore Bernanke’s advice, they’ve come to perceive his suggestions in the same light as advice from the CBO, economists, the financial industry, the bond market, business leaders, and economic textbooks — pesky reality that stands in conflict with far-right ideology, and must therefore be rejected. Maybe GOP policymakers don’t understand economics; maybe they don’t want the economy to improve before President Obama’s re-election campaign. Either way, there are two basic approaches to Washington efforts to improve the economy — fiscal stimulus and monetary policy — and congressional Republicans are fiercely opposed to both.
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