The Republicans' latest ploy to keep the economy lousy through election day
Whatever shred of doubt you may have harbored about the determination of congressional Republicans to keep the economy in the dumps through Election Day should now be gone.
Yesterday, in advance of a key meeting of the Federal Reserve Board鈥檚 Open Market Committee to decide what to do about the continuing awful economy and high unemployment, top Republicans wrote a letter to Fed Chief Ben Bernanke.
They stated in no uncertain terms the Fed should take no further action to lower long-term interest rates and juice the economy. 鈥淲e have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy.鈥�
They didn鈥檛 threaten to 鈥渢reat him pretty ugly鈥� 鈥� as Texas Governor Rick Perry told his supporters last month he鈥檇 deal with Bernanke if he 鈥減rinted more money鈥� between now and the election.
But the threat was there. 鈥淚t is not clear that the recent round of quantitative easing undertaken by the Federal Reserve has facilitiated economic growth or reduced the unemployment rate.鈥�
Translated: You try this, and we rake you over the coals publicly, and make the Fed into an even bigger scapegoat than we鈥檝e already made it.
Top Republicans believe they can block all or most of Obama鈥檚 jobs bill. That leaves only the Fed as the last potential player to boost the economy. So the GOP will do what it can to stop the Fed.
After all, as Republican Senate head Mitch McConnell stated, their 鈥渘umber one鈥� goal is to get Obama out of the White House. And that鈥檚 more likely to happen if the economy sucks on Election Day.
To say it鈥檚 unusual for a political party to try to influence the Fed is an understatement.
When I was Secretary of Labor in the Clinton Administration, it was considered a serious breach of etiquette 鈥� not to say potentially economically disastrous 鈥� even to comment publicly about the Fed. Everyone understood how important it is to shield the nation鈥檚 central bank from politics.
If global investors suspect the Fed is responding to political pressure of any kind, investors will lose confidence in the independence of the Fed and its monetary policies. Even if the pressure is to tighten the money supply and keep interest rates high, it鈥檚 still politics. And once politics intrudes, lenders of all stripes worry that it will continue to intrude in all sorts of ways. Lending to the United States becomes a tad riskier. As a result, lenders charge us more.
The Republican letter puts Bernanke and his colleagues in a bind. If they decide against another round of so-called 鈥渜uantitative easing鈥� to lower long-term rates and boost the economy, they may look like they鈥檙e caving to congressional Republicans. If they decide to go ahead notwithstanding, they鈥檙e bucking the Republicans and siding with Democrats. Either way, they鈥檙e open to the charge they鈥檙e playing politics.
Congressional Republicans evidently don鈥檛 care. They want Obama out, whatever the cost. Besides, they鈥檝e never met a government institution they don鈥檛 mind trashing.
