In the broadest possible sense, Washington has two main choices to spur economic growth during tough times. Policymakers can rely on Congress and the White House to approve fiscal stimulus that injects capital into the economy, or they can rely on the Federal Reserve’s monetary policy. Though actions can vary based on circumstances – not all recessions are the same – the left generally prefers the former, while the right prefers the latter.
In the Obama era, Republicans oppose both.
We know the GOP is willing to fight tooth and nail to reject any efforts at public investment to create jobs and spur economic growth. What’s less known is that Republicans are equally disgusted by the idea of Fed intervention to improve economic conditions.
This isn’t necessarily new. Last year, Senate Republicans killed Peter Diamond’s nomination to fill a Fed vacancy because he’s only the recipient a Nobel Prize in economics and an expert in unemployment. As Matt Yglesias explained this morning, GOP efforts to make expansionary monetary policy impossible are only getting worse.
The good news is that there are two open seats on the Federal Reserve Board of Governors and the Board members get automatic seats on the Open Market Committee. So in principle by filling those seats with two people who are equally committed to monetary expansion as Bernanke – or even better, people who are more committed – the White House and the Senate could provide a powerful boost to economic growth.
But Senator David Vitter (R-Louisiana) doesn’t want that to happen, and has placed a hold on Obama’s two nominees saying: “I refuse to provide Chairman Bernanke with two more rubber stamps who approve of the Fed’s activist policies.”
Vitter, in other words, like the jobless rates right where it is or perhaps wishes it were even lower.
For those who suspect congressional Republicans are deliberately trying to drag down the economy in the hopes of undermining the Obama presidency, the GOP’s actions with regard to monetary policy offer powerful evidence.
Over the last three years, congressional Republicans have gone to almost comical lengths to stop the Fed from even trying to improve the economy (while fighting equally hard to stop Congress from also trying to improve the economy). In November 2010, GOP lawmakers went so far as to say they wanted to change the Federal Reserve’s mandate so that it would stop taking steps to lower unemployment. As recently as a couple of weeks ago, National Journal reported that Republicans have effectively bullied the Fed into paralyzed inaction, and since Obama’s choices to fill vacancies are blocked by knee-jerk, incoherent opposition, nothing changes.
Remember, it’s within the Fed’s power to pursue policies that would boost the economy, but Republicans are actively opposed to any such efforts, almost acting as if they want a weaker economy on purpose.
This quote from Senate Minority Leader Mitch McConnell (R-Ky.) continues to resonate: “The single most important thing we want to achieve is for President Obama to be a one-term president…. Our single biggest political goal is to give [the Republican] nominee for president the maximum opportunity to be successful.”