One of the day’s biggest stories was also one of the day’s most pleasant surprises.
The Federal Reserve postponed any retreat from its long-running stimulus campaign Wednesday, saying that it would continue to buy $85 billion a month in bonds to encourage job creation and economic growth. […]
Stock markets jumped after the 2 p.m. announcement, with the Standard & Poor’s 500-stock index touching a record high and the Dow Jones industrial average ahead more than 150 points.
The Fed may yet scale back at the end of the year, but for now, the news was encouraging as it was unexpected.
But let’s not overlook why Bernanke came to this conclusion. There were, of course, multiple factors, but The Hill reported, “The Fed said one of the primary reasons for the decision was the fiscal fight in Washington, which it said is ‘restraining economic growth.’”
The political world tends to ignore this for reasons I find endlessly frustrating, but the chairman of the Federal Reserve has repeatedly told Congress, in fairly explicit terms, that Republicans are hurting the economy. Bernanke has drawn direct, unambiguous connections between weak economic growth and the specific policies pursued by Republican lawmakers.
GOP officials ignore Bernanke because he tells them what they don’t want to hear, and many in the media ignore his assessments because Americans aren’t supposed to hear about Republican responsibility for the struggling economy.
He has, over the last few years, occasionally abandoned subtlety and explicitly pleaded with Congress to consider fiscal stimulus – or at least less fiscal austerity – but Republicans have always refused. (Indeed, GOP lawmakers haven’t just been content to ignore the need for fiscal remedies, they’ve also demanded that Bernanke stop trying to improve the economy through monetary measures.)
Bernanke wants Congress to act as a partner, working alongside the Fed to strengthen the economy. Instead, Congress has acted as an opponent, pushing in the opposite direction.
And now that Republicans are threatening to impose economic chaos on Americans on purpose, the Fed chair apparently figures it’s a bad time to start scaling back. He’s right.