House and Senate GOP leadership are taking fire from all sides for publicly pressuring Federal Reserve chairman Ben Bernanke not to further loosen monetary policy, even if he thinks it will help the economy.
In a Tuesday letter to Bernanke, leaked to the press, Sens. Mitch McConnell (R-KY) and Jon Kyl (R-AZ), and House Speaker John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA), ostentatiously cautioned Bernanke against providing the economy any further monetary stimulus.
“[W]e submit that the board should resist further extraordinary intervention in the U.S. economy, particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people,” the Republicans write.Because the Fed’s monetary policy decisions are expressly intended to be immune to political pressures the letter has generated backlash from Democrats and Republicans alike.
“Even if I agreed with GOP letter (I don’t) I’d still disagree with the effort to put public political pressure on Bernanke,” wrote former George W. Bush spokesman and Treasury Department official Tony Fratto on Twitter. “Twist, shout…whatever…Ben Bernanke should do exactly what he thinks is right to even marginally impact the U.S. economy.”
“This is a heavyhanded attempt to meddle in the Fed’s independent stewardship of monetary policy,” said Sen. Chuck Schumer (D-NY). “It should be ignored by Chairman Bernanke and the Fed’s policymakers.”
And indeed the Fed is meant to shrug away this sort of political intervention. For months, though, the Fed has been reluctant to address the full employment side of its dual mandate to maintain price stability and keep unemployment low. The intent of the letter is to maintain that reluctance. The message, both to Bernanke and every member of the Federal Open Market Committee — watch your step. The GOP primary contenders have already taken blood oaths against Bernanke and the goal here is to make it clear the GOP will make sure there are political and/or professional repercussions if Bernanke doesn’t desist.
The Fed is expected to announce its policy on Wednesday afternoon.
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