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September 21, 2011 8:00 AM GOP leaders to Fed: Let America suffer

By Steve Benen

There are widespread expectations that Federal Reserve Chairman Ben Bernanke will today unveil the latest initiative intended to give the economy a boost. Action is likely to come in the form of shifting funds into longer-term holdings, with the intention of lowering Treasury yields and reducing rates on mortgages and other loans. Industry insiders apparently call it “Operation Twist.”

But while we wait for word from the Fed, congressional Republicans aren’t just sitting around — they’re actively lobbying Bernanke, pressing him to let the economy stay on its downward trajectory and to not even try to help.

Even though the financial markets have been counting on the Federal Reserve to take action, Republican Congressional leadership sent a letter to the Federal Reserve chairman on Tuesday evening urging it not to engage in further stimulus.

The letter was sent in the midst of a two-day meeting in which Fed officials are widely expected to undertake policies to lower long-term interest rates. That move would be intended to loosen up credit in hopes of promoting growth. The meeting ends Wednesday, and the Fed is expected to release a statement Wednesday at 2:15 p.m.

“We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy,” said the letter, signed by four of the top Republicans in Congress: Mitch McConnell of Kentucky, the Senate Republican leader; Jon Kyl of Arizona, the Senate Republican whip; House Speaker John Boehner of Ohio and House Majority Leader Eric Cantor of Virginia.

If this seems at all familiar, it’s because Republican leaders also wrote a letter to Bernanke last November, expressing “concerns” about the Fed’s efforts to boost economic growth.

There’s no shortage of problems with this. For one thing, the Federal Reserve is supposed to be an independent agency. This kind of partisan lobbying from congressional leaders is unseemly.

But given the larger circumstances, Republicans’ disregard for political norms is the least of the nation’s troubles. More pressing is the fact that the leaders of a major political party appear eager, if not desperate, to prevent steps that may improve the economy. The top four GOP members of Congress, including the Speaker of the House, practically demanded yesterday that no steps be taken at all as our anemic growth stalls and the job crisis intensifies.

The “sabotage” question comes up from time to time, and this certainly won’t help. As things stand, Republican leaders, some of whom have admitted that defeating President Obama is their single highest priority, now want the Fed to sit on its hands, want to strip the American Jobs Act of its most effective measures, and want to raise middle-class taxes. Oh, and they’re threatening to shut down the government, too. These are just the positions they’ve talked up over the last week.

Voters backed Republicans in last year’s elections because they wanted to see a healthier economy. The irony is rich.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

Comments

  • c u n d gulag on September 21, 2011 8:11 AM:

    Here, let me fix it for you boys:

    "We have serious concerns that further intervention by the Federal Reserve WILL NOT exacerbate current problems or further harm the U.S. economy,” said the letter, signed by four of the top Republicans in Congress: Mitch McConnell of Kentucky, the Senate Republican leader; Jon Kyl of Arizona, the Senate Republican whip; House Speaker John Boehner of Ohio and House Majority Leader Eric Cantor of Virginia.

    By the way, do these 4 clowns have a spiffy nickname?

    How about "The Four Horsemen of the Dumbcopalypse!"

  • DAY on September 21, 2011 8:17 AM:

    There are requirements to seeking office: Age, citizenship, and a boatload of money.
    Expertise in economics is evidently a handicap.

    -would you let any of these politicians wire/plumb your house? Replace a hip? Teach your children? I thought not!

  • jprichva on September 21, 2011 8:21 AM:

    At what point would it be reasonable to have these four arrested for treason?

  • stevio on September 21, 2011 8:33 AM:

    And where is our fearless leader on all this? Here's an opportunity to call a quick press conference (right-wing media will have to show up) and express his disgust in the meddling of these crazies. While he's at it he can use the bully pulpit to take down their class warfare nonsense and to point out , once again, that they appear to be caring more about getting rid of him via hurting the economy , than they are of fixing it.

    It's time he sets the political agenda. Fore the GOP to explain why they are hampering the recovery.

    Not a chance...What's he afraid of? Losing an election?

  • KurtRex1453 on September 21, 2011 8:43 AM:

    Now we know why Lamar Alexander quit the GOP leadership, it made him physically ill to be in the same rook with these people. Someone needs to ask them if they think Bernanke is guilty of "Treason" if he helps the economy.

  • Ron Byers on September 21, 2011 8:44 AM:

    Stevio, where are our other fearless leaders on this. Where is Harry Reid's Op-Ed in the NYTs, the Nancy Pelosi Op-Ed in the Washington Post or maybe Barney Frank commenting on CNN. Obama isn't the only professional Democrat and of all of them lately he is the only one who isn't sitting on his hands.

  • sick-n-effn-tired. on September 21, 2011 9:15 AM:

    @ Ron Byers Which is why I am even more pissed at Anthony Weiner. He was a firebrand who would at least point out REpub Hipocracy and get a lot of vid clips on the NOOZE. We need some one with a pair fighting on the Dem side

  • redapple on September 21, 2011 9:35 AM:

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  • CDW on September 21, 2011 9:36 AM:

    Voters backed Republicans in last year’s elections because they wanted to see a healthier economy.

    They did? That's news to me.

  • Jim Pharo on September 21, 2011 9:42 AM:

    The irony will go from rich to tragic when the voters elect Rick Perry and his GOP brothers in November next year.

    Only liberals seem to think that the voter have attention spans of more than about two days. No "persuadable" voters is going to care that the GOP has spend the last previous years trying to destroy the social fabric. All they'll care about is that the 2102 version of Rev. Wright is very, very scary...

  • Racer X on September 21, 2011 10:18 AM:

    @sick-n-etc Unfortunately Weiner felt the need to share his pair with the world...and not in a good way...

  • Dennis on September 21, 2011 10:34 AM:

    It's actually Operation Twist II, it's such an old idea that it was actually named after the dance. They tried it in the 1960's and it worked then. With much greater need for stability today, it should be effective. But you can't expect the GOP to accept that and miss out on a chance to spread some misinformation.

  • bubba on September 21, 2011 10:46 AM:

    All I know is that I would feel a whole lot better about the fed chair not being influenced by these traitorious requests, and the Feds' overall performance these last few years, if the head of the Fed were a dem.

  • jjm on September 21, 2011 10:56 AM:

    Here's my question:

    WHY is the GOP so scared of a second Obama term?

    They're throwing everything AND the kitchen sink at him.

    Is there any reason for them to have devastated their credibility, to have engaged in unprecedented, viciously partisan and other vindictive acts like this one, and to have shown the electorate such a brutally ugly face, BEYOND the desire to regain political power?

    What is the GOP REALLY AFRAID OF? The overkill they are showing should also be seen as symptomatic of something else that is on their minds.

    What is it? Fear he might pursue investigations once he is re-elected?

    This behavior on their part is highly abnormal even for politics. Why is the GOP SO SCARED?

  • Mimikatz on September 21, 2011 11:09 AM:

    Hey Stevio--Where's Obama? Speaking to the UN, that's where, in a 40 minute address during which he said among other things that the nations of the world have to act together and responsibly to try to address economic growth and avert a global slowdown. Barney Frank spoke about changing the voting members of the Fed so the bank-appointed governors have less power.

    The GOP blatantly wants to sabotage the economy to win an election, so much that they now talk about it openly on CNBC. Obama has said so on the campaign trail. The problem is with the GOP and it's selfish agenda.

  • bandit on September 21, 2011 12:46 PM:

    jjm on September 21, 2011 10:56 AM:

    Here's my question:

    WHY is the GOP so scared of a second Obama term?

    start here

    Poverty rate for white Americans in 2010: 13 percent

    Poverty rate for African-Americans in 2010: 27.4 percent

    Real median household income in 2010: $49,445

    Decline in median household income since 2009: 2.3 percent

    Decline in median household income since before the recession: 6.4 percent

    The last time median household incomes have been this low: 1996

    Real median household income in 1999, in 2010 dollars: $53,252

    Median income for full-time male workers in 2010: $47,715

    Median income for full-time male workers in 1973, in 2010 dollars: $49,065

    Official unemployment rate in August 2011: 9.1 percent

    Total unemployed people in August: 14 million

    People who were employed part-time for economic reasons in August 2011: 8.8 million

    People not counted in the labor force who wanted work: 2.6 million

    Net jobs created in August 2011: 0

  • jjm on September 21, 2011 1:22 PM:

    @bandit: Oh, any you are blaming Obama for these statistics?

    Who has been in charge in 2011 of government spending: the GOP House. How many pieces of legislation have they advanced to help the economy? None.

    Whose economic policies have held this administration hostage since the day they took over the House?

    Who left the country with trillions in unpaid for wars?

    Your comments are silly. The job creation rate was going along well under Obama until the GOP took over the House. Now they are trying to prevent even one job from being created so idiots like you can blame Obama.

    Well simple minded politics for simple minded people. I guess you love that poor GOP rep who complained he only had $400,000 left over after he fed his family on his $6.5 million dollar business that employed 500 people. People did the math: apparently he pays his average worker nor more than $11,400.00 a year. I wonder if they have $400,000 left after they feed their families.

  • bandit on September 21, 2011 3:50 PM:

    I forgot, with President downgrade the buck always stops somewhere else.

  • Tom on September 21, 2011 4:35 PM:

    QE1 and QE2 succeeded only in propping up the stock market and allowing the banks to make false profits. Is THAT really what liberals are for...supporting the "rich"?

    QE1 and QE2 also succeeded in driving up commodity prices for food and energy...hurting the poorest the most. Is THAT really what liberals are for...hurting the poor?

    Things that QE1 and QE2 did NOT do:
    - help unemployment
    - help the housing market
    - help small business

    Seems to me that any liberal supporting Bernanke has a LOT of explaining to do. And now liberals are supporting this latest "twist"?

    Unbelievable.

  • Sieg45 on September 21, 2011 4:43 PM:

    What happened late in the trading session this afternoon, after Helicopter Ben had ignored the Republican pleas and 30% of his co-directors, clearly proved that those with skin in the game have a strong distaste of the liberal theorists.

  • Anonymous on September 21, 2011 4:50 PM:

    iprichva on September 21, 2011 8:21 AM:

    "At what point would it be reasonable to have these four arrested for treason?"


    Ha ha. Who are you stupid miserable 20%'ers accusing of treason? You are the only traitors in this Country who don't know their place who cannot win elections on merit or honesty.
    Americans are sick of you hateful sore losers who fiend for power and tax payer dollars. You are not but crackheads and addicts who belong in prison, not in positions of power. That why you were rejected and kicked to the curb in 2010 and will continue to be in 2012.

    You idiots are the ones who caucus with the Communist Party USA.

  • Clawhammer Jake on September 21, 2011 5:06 PM:

    Having the Republican Party turning into a confederacy of clowns is bad enough. Seeing them lead Barack Obama around by the nose is an outrage.

  • Jack Davis on September 21, 2011 5:21 PM:

    Obama is inept. (Ref: His much-vaunted stimulus package that was supposed to keep unemployment from going above 8 percent--but didn't...as well as other failures.) Obama's incompetence is his own fault; you can't lay his ineptitude at the feet of the Republicans.

    Try again, Steve.

  • Wild Palms on September 21, 2011 5:45 PM:

    So, has baracks "bill" actually been presented on the floor yet? I'm really surprised nobody's stepped up, yet. Actually, didn't his last budget bill go down in flames with only 1 democrat voting 'yea'? Hmmm...

  • Jim Stagg on September 21, 2011 6:14 PM:

    Let's see, they've had three years (minus two months) to fix the problem, plus control of Congress the last two years of Bush's administration.

    What don't you guys get? Are you truly this ignorant, or has the Demo party paid your salary the past three years?

    Grom up, get a "real" job, if you can, and stop calling names. But then, that is the last resort of those who have LOST the argument.

    WELCOME, November, 2012!

  • Chris on September 21, 2011 6:14 PM:

    There is absolutely NO evidence that further stimulus will improve anything! We've spent over a trillion trying to "stimulate" this convulsing economy and all we have to show for it is more red ink!

    Instead of badmouthing Republicans for asking for a measure of fiscal sanity, maybe everyone should quit asking for cold medicine as a treatment for economic cancer...

  • john werneken on September 21, 2011 6:23 PM:

    I'm with the Republicans because I DO BELIEVE IN PUBLIC ACTION TO PROMOTE THE ECONOMY. This DOES NOT MEAN JOBS for the sake of growth! Let government do what it is supposed to do and the economy will take care of itself. When government does a poor to counter-productive job of what it is supposed to do and tries to do less necessary or useful or outright counter-productive stuff instead, which is what is happening, things get worse, not better; some may get hired on solar make-work but not for long.

    In case anybody has forgotten, the purpose of a Nation- State is to: 1. provide physical security; 2. provide a stable currency; 3. provide a predictable system of law; AND 4. Assist the private sector as to education, research, infrastructure, and exploration. When that's all being attended to, a wealthy society can afford #5 a safety net and it should. When all that's done I really don't think it matters what else the government does, as long as it neither interferes with the first 5 things nor diminishes social cohesion.

  • MWalters on September 21, 2011 6:27 PM:

    Suffer a little and survive, or feel good for about another 2 years and be destroyed.

    You chose, it is up to you Americans!

  • JpPhysics on September 21, 2011 7:27 PM:

    Hey, I think what the republicans mean is, the fed has tried to fix this and they can't. How about we let the economy fix itself. This new "Operation Twist" has no guarantees, and it could in fact make things worse.

    Yes, it can get much worse.

  • wncchester on September 21, 2011 7:36 PM:

    Sooo...in your innerlecshul librul mind, doing what has had no helpful impact just ONE MORE TIME will save us? Goodness fellow, doing the same thing over and over and expecting a different result someday is one of the best definitions of insanity.

  • lil Steve on September 21, 2011 8:33 PM:

    So, let me get this straight:

    We've had unprecedented monetary stimulus. The balance sheet of the Federal Reserve has ballooned. It hasn't helped very much. But food and energy prices are up significantly.

    The Constitution empowers Congress to regulate the nation's money.

    The Fed is about to embark upon Operation Twist, reprising on a larger scale a tactic which didn't work in the JFK administration.

    And the author is upset about this recent letter from Congresspersons?

    The author doesn't know the Constitution, history or a damn thing about economics.

  • Michael Peter on September 21, 2011 9:06 PM:

    All we need is a predictable economic environment that is taxed low enough for companies to turn a profit. If you believe otherwise, you are mistaken. There is overwhelming evidence that the people who create jobs (those greedy rich people you're all so excited to soak) are holding on to their capital because the economic environment is too unpredictable to form a solid business plan within. Given that almost all of you work for a private company, doesn't that make any sense to you?

    All the tax incentives from this administration expire in 2014. I have yet to see a business proposal wherein a business plans to reach its goals in less than 5 years. Add to that the mountain of new regulations that seem to come out of nowhere and the constant indicators of raised taxation and you end up with jobs being created in China, cause the rich can set-up shop wherever they want.

    We're heading into another recession, in case you all have not been paying attention to what's happening in Europe. So, we're already going to suffer and nothing in the Keynesian playbook will avert this coming crisis. The only question is whether or not we're going to spark massive inflation in the process.

    Go ahead and vote for team O' in '12. When they're done trying to print their way out of that recession and bread then costs 6 dollars instead of 2.50, perhaps you'll realize that you screwed the exact people you were trying to help; the poor. And you've got nothing to show for it.


  • Bill on September 21, 2011 9:41 PM:

    Funny how all the libs on here as soon as the piece came out are feasting on the talking points..those evil republicans!

    ...and then all the working folks come home and have time to read the piece and say please, please stop weakening these dollars I'm being paid in

  • Kevin on September 21, 2011 9:52 PM:

    Audit the federal reserve. Problem solved.

    Vote Ron Paul in 2012 and lets END THE FED.

  • jschmidt on September 21, 2011 10:00 PM:

    The last budget agreement cut 2.4 trillion over 10 years, 240 billion each year or 6.3% each year. No one talks percentages but that gives the true picture. This should be able to be done though cutting waste and duplication. Since some of the gas tax goes to protecting squirrels and museums, the cuts should be easy. Liberals never want to cut.

  • Doug on September 21, 2011 10:17 PM:

    Apparently Middle School let out early.
    bandit with his "figures" that conveniently stop at 2010. Nor is there any mention of the marginal tax rates that USED to be in place and greatly assisted in providing that 1973 median income.
    Tom failed to mention that what WOULD help the unemployed, the housing market and small businesses is increased demand. Something that won't occur until either wages increase or more government spending takes place. Whether that government spending is deficit or from increased taxes wouldn't much matter.
    Sieg45 (and, yes, I know what THAT nom de internet MEANS) displays his contempt for democratic voting procedures. Even HAD Chairman Bernanke voted with those "30%", that STILL wouldn't have been a majority.
    Anonymous @ 4:50 PM managed to get all the "talking points" in, but coherency was, obviously, beyond him.
    Jack Davis didn't even try.
    Wild Palms has obviously never read "Roberts' Rules of Order".
    Jim Stagg apparently failed at math AND also has no knowledge of the Constitution. Between 2006-08, Democrats couldn't pass anything President Bush was willing to veto. Since January 2011 the House has been controlled by radical ideologues, formerly known as the "Republican Party". Soon to be know simply as "mud".
    Chris @ 6:14 PM is anothe math illiterate. The Stimulus was approxiamtely $800 billion; HALF of THAT was tax cuts. Many Republican Governors used their share of Stimulus funding to, wait for it, balance their state budgets! And yes, I'm looking at Gov. Goodhair.
    john werneken, then you DO support infrastructure spending? How nice to see a sane(ish) post!
    I have no idea why MWalters is giving advice to Republican/Teabaggers on this blog, but hey...
    JpPhysics may wish to read about the LAST time we "let the economy fix itself", aka "The Great Depresssion".
    wncchester faux spelling provides proof of his second sentence.
    lil Steve, you failed to get it "straight". The Federal Reserve was set up as an independent entity to PREVENT exactly what the Republican leadership in Congress is attempting to do - politically influence the nation's monetary policy. If, however, "Congress", and not just the Republican/Teabaggers, wishes to alter the scope of action of the Federal Reserve, they can pass legislation to do so. Of course, that legislation must ALSO pass the Senate and be signed by the President. Oh, and "Operation Twist" DID work in the early 1960s, Fox reporting to the contrary.
    Michael Peter, you have shown great ability to cut-and-paste, but not a trace of original thinking. I would suggest you study the period of our greatest economic expansion (1946-1970) and note what the top marginal income tax rates were. Jobs are not being created because there's not enough demand to justify it; NOT because of "uncertainty" or "fear".
    Your entire second paragraph is nothing but tired, and false, Republican talking points. Your third is completely false, as there IS a Keynesian answer to preventing another recession. It's just that Republican/Teabbagers are doing their damnedest to prevent those measures from being implemented.
    As for your fourth paragraph, there's one thing I do know for a certainty: if President Obama ISN'T re-elected, bread WILL reach $6 a loaf, but inflation won't be the reason for the increase. It'll be good ol' corporate greed...

    That was enjoyable, y'all come back now, y'hear?

  • J Smoot on September 21, 2011 10:39 PM:

    nitwit

  • June on September 21, 2011 10:49 PM:

    There's a lot more right-wing dumbery on this thread than usual - wonder who turned over the rock? No need to confuse 'em with facts; studies show facts tend to make 'em twice as confused anyway.

  • David on September 21, 2011 11:05 PM:

    'Voters backed Republicans in last year’s elections because they wanted to see a healthier economy. The irony is rich.' - You should not underestimate the stupidity of the American voter. They may very well vote for the republicans again next year for the very same reason. Apparently the eight year disaster of the Bush administration did not educate the voter enough. The republicans have to completely ruin this country before the voting public wises up.

  • I'm Thinking on September 21, 2011 11:25 PM:

    So the Fed speaks and acts today, and the Dow tanks. But Republicans don't want them to do Anythimg, so the economy can continue to tank...OK, it's clear now, Thanks.

  • tom on September 21, 2011 11:44 PM:

    Quite the rant but I'll just address your response to me:

    "Tom failed to mention that what WOULD help the unemployed, the housing market and small businesses is increased demand. Something that won't occur until either wages increase or more government spending takes place. Whether that government spending is deficit or from increased taxes wouldn't much matter"

    What was the point of the $800B stimulus, QE1 and QE2 if not to stimulate (oops, bad word now!!) the economy? They didn't and the new twist won't. But, of course, that is irrelevent to you.

    Regarding wages increasing...that is part of the problem! They are too high in a deflationary environment. How on earth can struggling businesses INCREASE wages to spur demand? And not even their own demand...someone elses!!! (maybe).

    If government spending is done by increasing taxes, then the net effect to the economy is zero. You can argue that there might be some very minor multiplier effect but you are wishing rather than predicting.

    And finally, is borrowing more to increase the deficit is the answer, then why not just borrow enough to give everyone man, woman, and child $250,000? Think of the benefits!! Their "wages" have increased, demand increases, and now they are "rich" and can pay more taxes!! And the only thing we need to do is increase the deficit. Brilliant!!

    An economist or businessman you are not.

  • Twiga on September 21, 2011 11:47 PM:

    What reason would Republicans have to damage the economy? Overwhelmingly net receivers of government $ vote Democratic; that's where we need to look for politicians who are ruining the "recovery". Check NLRB vs. Boeing, forcing energy prices up, and excessive new regulations that scare business away from hiring, at least in this country. The reason Republicans are afraid of a second O term is that it promises to turn the second dip into a much deeper recession than the first. Also, don't forget who forced mortgage lenders to lend to unqualified borrowers.

  • Geoff on September 22, 2011 12:32 AM:

    The Fed and its artificially low interest rates were at the heart of the financial meltdown. They set rates low in order to prevent a recession after the tech bubble and 9/11. And we prevented a major recession and blew up an insane bubble. All because we didn't want any pain.

    You know what? I would rather have some pain upfront than a decade or more of pain.

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