A member of the Bush White House once told me that the two key influentials when it came to conservatives/Republicans and economics were the Wall Street Journal editorial board and CNBC’s Larry Kudlow. Well, I think you can add a third name to that list: Rep. Paul Ryan. In a newspaper chat, the GOP budget guru gives his two cents on the Fed:
Ryan is regarded by many as a rising star in the GOP and a Republican point man on economic issues. The controversy allows him to showcase his fascination with the arcane business of central banking. ”Monetary policy was always my first love,” he said.
Asked if the industries in his district have contacted him in favor of a cheaper dollar, Ryan said: “I’ve heard from manufacturers who want that. But it’s from people pursuing sort of a narrow view of interest. I had some manufacturers say it to me a couple of weeks ago in Kenosha, steel manufacturers.”
There’s no question that Ryan’s district is hurting. It includes three of the highest unemployment areas in the state, all with 10% unemployment or higher: Racine; Kenosha, where Chrysler shut an engine plant last month; and Ryan’s hometown of Janesville, where General Motors shuttered an assembly plant two years ago. The state’s only metro area with higher unemployment is Beloit, at 14.4%, which borders Ryan’s district. ”I won’t dispute that a cheaper dollar can help boost exports in the short term,” Ryan said. “But I don’t think it’s a good tradeoff to do so at the expense of inflation.”
To Ryan, the root of the problem is the Fed’s dual mandate, which calls on the central bank to promote employment as well as throttle inflation. Ryan said he has pushed for years to rewrite the Fed’s statutes in favor of a single mandate to control inflation and preserve the dollar as a store of value, making the Fed more like the European Central Bank.
Fighting inflation and boosting employment often are diametrical goals, he said. ”Basically the Fed is driving a car with two feet, one on the brakes and one on the gas pedal, and it’s a real jerky ride,” he said.
What’s fascinating about Ryan is that he keeps saying things that should get him into political trouble, but they don’t. He wants to rework Social Security. He wants to restructure Medicare. He thinks a cheaper dollar is a bad idea. And he won reelection with 68 percent of the vote in a district that Obama carried by four points. Good ideas expressed well and with conviction are powerful things.