James Pethokoukis

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.

Congratulations to Michele Bachmann, but the big political winner Saturday wasn’t in Ames, Iowa. That politician was half a country away in South Carolina, completely scrambling the Republican presidential race.

1) Online betting markets have already decided that Texas Gov. Rick Perry is no flash in the Panhandle — another Fred Thompson or Wesley Clark who sparks a flurry of interest but quickly fades. To bettors, it’s a two-horse race and a dead heat between Perry and Mitt Romney. But anyone listening to Perry’s well delivered, muscular, high-energy speech in Charleston, S.C., would probably draw the same political conclusion. He hit tea party-friendly themes and hit them well:

The change we seek will never emanate out of Washington…it must come from the windswept prairies of Middle America…the farms and factories across this great land…the hearts and minds of God-fearing Americans who will not accept a future that is less than our past…who will not be consigned a fate of less freedom in exchange for more government. … And I will work every day to make Washington, D.C. as inconsequential in your lives as I can.

2) Unlike the other candidates who were competing to win the Iowa Straw poll, Perry can easily make a persuasive case that he has the real-world solutions to what most Americans believe is the nation’s biggest problem: high unemployment. He could have probably spent his entire speech rattling off the Lone Star State’s impressive job-creation statistics. (On Perry’s official Texas government web site, they’re listed under the “Bragging Rights” section.) It’s that record of results that lends gravitas to his rhetoric and philosophy and makes him a leading contender for the GOP nod. As Perry noted, “Since June of 2009, Texas is responsible for more than 40 percent of all of the new jobs created in America. Now think about that. We’re home to less than 10 percent of the population in America, but forty percent of all the new jobs were created in that state.” That’s a helluva good story for a presidential candidate to tell.

3) The anti-Perry case is obvious, and liberals are already making it, such as blogger Kevin Drum of Mother Jones magazine: Everyone looks good before they get into the race. He’s too Texan and George W. Bush-like. He’s too mean. He’s too dumb. He’s too smarmy. He’s too overtly religious. Policywise, he’s too radical, even for Republicans. The strength of the tea party-wing is overrated. The Texas economic miracle is a mirage. Republicans want to beat Obama, and Perry isn’t electable.

4) The next six months of campaigning will start to show which, if any, of those charges has any merit or substance. Neither Romney nor Perry will likely hesitate in, shall we say, contrasting their records. Romney will play up his business career as a successful private equity investor and venture capitalist and slam Perry as a “career politician” and “crony capitalist.“ And Perry will counter with attacks on Romney’s Obamacare-esque healthcare plan in Massachusetts, as well as stressing his own inspirational life story (son of tenant farmers to presidential candidate). One big issue: Perry will need to explain just how far he takes his 10th Amendment embrace. He’s seemed to suggest in the past, for instance, that entitlements like Social Security and Medicare should be sent to the states based on his reading of the U.S. Constitution. Just how small does he want the federal government to be? What is the proper role for government? If Romney doesn’t ask about that, surely President Barack Obama will if Perry is the nominee.

Assuming no other heavy hitters join the race. Perry-Romney is shaping up to be an epic brawl between two aggressive candidates with impressive resumes, both able to raise boats loads of campaign cash. Let the Austin-Boston battle begin.