Tales from the Trail

Congress might not get much done in the next two years, but boring it won’t be. Certainly not with Ron Paul as likely head of the monetary policy (aka Fed oversight) subcommittee in the House.

Today, Paul the elder told Reuters correspondent Andy Sullivan that he was looking forward to his new “very, very important” role. The Fed, he said, was ”way too independent” and “totally out of control.” Quantitative easing – the Fed’s controversial program to purchase government securities – is not just lousy economics and lousy monetary policy, he said, it is “central economic planning at its worst.” More here.

Expect more fireworks from other conservative Republicans in the coming Congress, people who believe the Fed is enabling excessive government borrowing through its purchases of government debt, that it is printing money to finance the deficit. Then there is Darrell Issa, likely head of the oversight committee, with the subpoena power to be at least as much of a thorn in Ben Bernanke’s side than either of the Paul clan. It will be interesting to see if any of them can get under the skin of the normally unflappable Fed chairman.

Meanwhile, as first predicted in Washington Extra in early September, one possible compromise on extending the Bush-era tax cuts is already taking shape. That would revolve around a permanent extension of the cuts for the middle classes, and a temporary extension for the wealthiest. At least that is something President Barack Obama would be “open” to discussing, according to his spokesman Robert Gibbs. Taxes will be high on the menu when Congressional leaders come to the White House on November 18, for a meeting that Obama hopes will “spill over into dinner”. Let’s see if the Republicans bite.

Here are our top stories from Washington today…

White House signals tax compromise with Republicans

The White House signaled it could compromise with Republicans on tax cuts, the first possible policy shift by President Obama since his the midterms. The two parties need to agree on extending Bush-era tax cuts or they will run out at the end of the year.

Not even the head of the nation’s top bank is immune from identity theft.

Federal Reserve Board Chairman Ben Bernanke became a victim last summer after a thief stole his wife’s purse with the couple’s joint check book inside, Newsweek reported, citing recently filed court records.

Days after the purse was swiped at a Starbucks on Capitol Hill, someone started cashing checks on the Bernanke family bank account, Newsweek said.

The theft of  Bernanke’s check book became part of a wide-ranging identity-theft investigation the by the Secret Service and the U.S. Postal Inspection Service.

  Policy-makers, academics and analysts from around the world are gathered at a remote lodge in Wyoming's Jackson Hole this week to reflect on the financial crisis.

    One of the topics of conversation on the sidelines of the conference is whether President Barack Obama will reappoint the chairman of the U.S. central bank -- Ben Bernanke -- whose term ends early next year.

    Two veteran Fed-watchers weigh in: 

GLENN HUBBARD, DEAN OF COLUMBIA'S GRADUATE SCHOOL OF BUSINESS

     "I think the bar for replacing Bernanke would have to be very high, in the middle of the crisis he has shown determination to take very bold action and his own knowledge has been very specific and helpful in the crisis."