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.
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.