James Pethokoukis

Politics and policy from inside Washington

Perry vs. Romney on Ben Bernanke

Aug 16, 2011 19:03 UTC

Gov. Rick Perry’s tough comments on Federal Reserve Chairman Ben Bernanke are another sign that the Fed and monetary policy will be big topics in the Republican primaries and the general election. There is certainly a stark difference between how Perry talks about the Fed, and how Mitt Romney does. First, here is Perry from yesterday:

If this guy prints more money= between now and the election, I don’t know what y’all would do to him in Iowa, but we — we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous — or treasonous in my opinion.

Now here is Romney from April on CNBC’s The Kudlow Report:

Kudlow: What kind of job is Ben Bernanke doing right now? The guy is depreciating the dollar, we’re seeing this huge inflation of energy prices, including gasoline prices at the pump. What do you think of Ben Bernanke?

Romney: I think Ben Bernanke is a student of monetary policy. He’s doing as good a job as he thinks he can do in the Federal Reserve. But look, I’m not going to spend my time going after Ben Bernanke. I’m not going to take my effort and focus on the Federal Reserve. I gotta focus on my effort on the administration.

Romney’s comments kind of reflect what many mainstream Republican-leaning economists believe, that overall Bernanke has been an effective central banker, particularly during the nadir of the financial crisis. Romney’s comments may also reflect a belief in the value of maintaining Fed independence. And I highly doubt Romney wants to “end the Fed” as Ron Paul does.

On substance, Perry is correct. A strong argument can be made that the Fed’s bond buying caused inflation to flare, squeezing consumers and slowing the economy. (Interestingly, the president of the Dallas Fed is also against more QE3 bond buying.) But on style, Perry didn’t need to go there. I think that sort of loose talk sets a bad tone for the political debate. Also, if Perry should become the 45th president, he’ll need a Fed comfortable with eventually withdrawing stimulus without looking over its shoulder at the politicians. So if Perry’s savvy, maybe he’ll offer Bernanke an apology – and maybe send over a big mess of Texas barbecue while he’s at it. But I doubt it. Here is Perry spokesman Mark Miner:

The Governor was expressing his frustration with the current economic situation and the out of control spending that persists in Washington. Most Americans would agree that spending more money is not the answer to the economic issues facing the country.

Let me also add that I don’t think Bernanke will serve another term as Fed chairman beyond the current one. First, I hear he doesn’t want another term. Second, he probably couldn’t make it out of a GOP-controlled Senate or even one where Republicans have enough votes to filibuster. Certainly among Tea Party activists, there is a strong belief that the Fed should be shuttered.

 

COMMENT

I disagree with the policies of Bernanke of just printing money with out capital that what Bernanke is doing is trecerous agreeing with Gov Rick Perry from Texas.

Posted by randallk | Report as abusive

Not a (Peter) Diamond in the rough

Jun 6, 2011 17:26 UTC

The problem with the Federal Reserve is not that an “activist Keynesian” — in the words of the Club for Growth — like Peter Diamond can be appointed to such a powerful economic policymaking body. His views are, unfortunately, well within the mainstream of economic policymaking. The problem is that Diamond and the other Fed members really don’t matter. As one former Fed member said to me, “If you see someone from the Fed talking on TV and he’s doesn’t have a beard, feel free to ignore him.”

In other words, the only guy that counts is The Ben Bernank.  And it should be of great worry to Americans that one man — or even group of men and woman — have so much control over the U.S. economy. It is the Federal Reserve that is the problem. It is an unaccountable central bank printing money to buy bonds to goose a dysfunctional economy that is the problem.

Bernanke probably agrees with the anti-QE2 letter

Nov 15, 2010 15:32 UTC

A bunch of right-of-center investors, economists and journalists (under the banner of the great e21 group) have signed an open letter to Ben Bernanke:

We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

We subscribe to your statement in The Washington Post on November 4 that “the Federal Reserve cannot solve all the economy’s problems on its own.” In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.

We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

The Fed’s purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.

A few thoughts here:

1. I have no doubt that Bernanke would prefer not to be doing QE2, either. I think his preference, like those who signed the letter, would be for more fiscal action accompanied by a long-range deficit reduction plan. But, seeing that is not likely to happen, he is using what tools he has.

2. In most countries where the central banks are politicized, the pressure is to running the printing presses. In America, it’s just the opposite — at least from conservatives.

3. Is there any chance that Bernanke gets a third-term? Almost certainly not if a Republican wins the presidency in 2012.

COMMENT

The American gov’t and the Obama administration above all need to provide CERTAINTY for American businesspeople. Even if its bad certainty, there must be certainty so businesspeople can start planning and investing again. No one knows how the healthcare bill will ultimately impact business or even if it will ever get implemented. No one knows if or when the gov’t will stop its regulatory binge. When will they finally make a decision on taxes? Other things are beyond the President’s control, like a bottoming of the housing market, but he can still send some signals. Obama seems too fixated on his long-term social(ist) agenda to realize that the country needs some fundamental leadership on a day-to-day basis. Pres. Bush would have by now established a few (decidedly simple) guiding principles, giving the American people something to hold onto, i.e. CERTAINTY. The economic equivalent of “you’re with us or your against us.”

Posted by mheld45 | Report as abusive

Bernanke wins confirmation 70-30

Jan 28, 2010 21:40 UTC

Almost twice as many no votes as Volcker who got 16 back in 1983. BB will have to tough it out against a Congress that wants to push the Fed around.  Barney Frank, for instance, wants to kick the regional bank president off the FOMC since they are not confirmed by Senate — and are often to hawkish for his tastes.

Hello, they must be going

Jan 27, 2010 19:30 UTC

David Goldman lays it all out:

Drastic steps are required to restore credibility and confidence.

1) Ben Bernanke should withdraw from consideration for a second term as Fed Chairman. President Obama should appoint former Fed Chairman Paul Volcker in his place. If Volcker, who is 82 years old, feels unable to accept the nomination for a full term, he should serve as Interim Chairman and head a search committee including bipartisan Congressional representation to find a permanent successor. If Bernanke insists on pursuing a second term, the Senate should vote him out.

2) Treasury Secretary Geithner should resign. Whether or not he engaged in wrongdoing, his capacity to execute his office is damaged beyond repair.

I took issue with Paul Volcker’s proposal to ban bank proprietary trading, but that is a minor issue. Volcker’s distinguished career and unimpeachable integrity make him the man of the hour. I’ll take Volcker’s worst moments over Bernanke’s best.

This is not a partisan issue. The alleged malfeasance occurred under the previous administration, and Volcker became Fed Chairman under the Carter Administration. America can’t afford to heap onto the present economic crisis yet another crisis – of integrity.

More on the Bernanke Meltdown

Jan 25, 2010 16:05 UTC

Intrade says Beranke is lock, but maybe not, according to the always insightful Dan Clifton of Strategas Research:

Contrary to this morning’s headlines, we believe Chairman Bernanke’s reappointment this week is still far from certain and may become eerily reminiscent of the first TARP vote. After last week’s confirmation vote for Fed Chairman Bernanke was called off due to insufficient votes, the Administration and Congressional leaders are in the headlines this morning claiming he has the votes now and will be confirmed. Intrade odds for Bernanke’s confirmation bumped higher on the news. But our review of the numbers suggests Bernanke still faces a tough road, virtually all of the undecided Senators must break for the Chairman in order for him to secure reappointment.

The case against Bernanke

Jan 25, 2010 15:33 UTC

From AEI’s Desmond Lachman:

Bernanke’s sole claim for a second term rests on the masterful and bold way in which he prevented the U.S. economy from falling into the abyss following the Lehman debacle in September 2008. However, this begs the question as to who led us to the abyss in the first place. Throughout 2006, when the worst of the sub-prime lending was taking place, Bernanke was conspicuously silent in sounding the alarm about the dangers of the U.S. housing bubble. Similarly, he was painfully slow in recognizing how severe the fallout from the bursting of the housing bubble would be and he displayed the poorest of judgments in allowing Lehman to fail in as disorderly manner as it did.

If there is one more item that should sink Bernanke’s bid for a second term it has to be his recent statement that the Federal Reserve’s extraordinarily low interest rate policy between 2001 and 2004 contributed little to the creation of the largest U.S. housing market bubble on record. The Senate would do well to ask itself whether the economy’s interests would be best served by again choosing a Fed chairman who seems to have learned so very little from the Federal Reserve’s past monumental mistakes.

COMMENT

Bernacke was singing the praises of the economy in June 2008, along with King Paulsen.

Three months later they were in Bush’s office declaring the world as we know it would end if Bush didn’t immediately grant them the power of gods.

Maybe Ben isn’t as brilliant as people would have you believe. Or at the very least, he either isn’t a very good forecaster or he’s an outright liar.

Posted by proreason | Report as abusive

Bernanke Confirmation Watch

Jan 22, 2010 19:38 UTC

I would not say his support is collapsing, but it is eroding. He is going to need some GOP help to make it. Keep an eye on the “yes” votes from the Banking Commitee to see if they start wavering and how much Obama supports him in the next few days. BB is on the wrong side of the populist wave.

Bernanke could be latest victim of Massachusetts Miracle

Jan 22, 2010 14:20 UTC

It seems that support for the renomination of Ben Bernanke is falling by the day, says ABC News. Liberals in Congress want him gone. Then again, they want pretty much the whole Obama economic team gone. But Geithner and Summers aren’t up for a Senate vote. Bernanke is. And if Dems start bailing, don’t expect Republicans to save him. No politician in America gains anything by voting for Bernanke. A “no” vote is a free vote. Wall Street still loves him, though. Geithner, too.

UPDATE: Count Russ Feingold of Wisconsin as a “no” vote.

UPDATE 2: Boxer of California , too

UPDATE 3:  Nevada’s Reid is non-committal

COMMENT

Unfortnately, you are wrong about no one liking Greenspan. The fools at Time magazine like him. All the bankers, other Fed officials and bankers who never saw the crash comming like him. Almost all the hacks on CNBC, and all the bankers and businessman that benefited from the bailouts whom they interview, like him.

Posted by Andrew | Report as abusive

The Fed’s new term-deposit tool is politically risky

Dec 29, 2009 15:02 UTC

OK, so Ben Bernanke has cooked up a new idea to remove liquidity from the financial system,  a term-deposit program that would allow banks to park cash at the Fed. It would be like a CD of various maturities for banks. But there are some political risks here for Bernanke & Co. given the current high level of anti-Fed sentiment in Washington and in the rest of the country. First, the Fed could be accused of contributing to the freeze in small-biz lending by giving banks something else to do with their money.

Second, as analyst Jaret Seiberg of Concept Capital’s Washington research group notes,  the Fed would pay banks an interest rate that’s higher than the rate paid for simply keeping reserves at the central bank. “This is cash that could have otherwise gone to the Treasury Department. We see how some could portray this as another bailout or taxpayer subsidy for the banking industry.”

In other words, this gives the anti-Fed folks a bit more ammo when BB’s nomination comes up for a full Senate vote next month. As it is,  the Fed chairman will probably get at least 50 percent more “no” votes than any of his predecessors.

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