About Editorials/Debate
Opinions expressed in USA TODAY's editorials are decided by its Editorial Board, a demographically and ideologically diverse group that is separate from USA TODAY's news staff.
Most editorials are accompanied by an opposing view — a unique USA TODAY feature that allows readers to reach conclusions based on both sides of an argument rather than just the Editorial Board's point of view.
OPPOSING VIEW: Focus the Fed on price stability
Not surprisingly, Fed Chairman Ben Bernanke is one of the government leaders that famed investor Warren Buffett thanked last week for averting disaster when "all of corporate America's dominos were lined up, ready to topple at lightning speed."
The gratitude, however, does not extend to Capitol Hill, where lawmakers from the far left and the far right appear determined to let no good deed go unpunished, or at least to use the Fed as a scapegoat for the weak economy.
The scorn started when Bernanke, a George W. Bush appointee reappointed by President Obama, faced a disturbingly close confirmation vote in January. It continued with efforts during the financial reform debate to chip away at the Fed's powers and independence. The latest threat is an effort to strip the Fed of its three-decade-old "dual mandate" to balance concerns about both inflation and unemployment.
With joblessness pushing 10% and inflation dormant, you might think this effort would be directed at requiring the Fed to put more emphasis on jobs. But noooo, as the late John Belushi used to say. The effort is aimed at forcing the Fed to drop the part of its mandate about jobs and focus solely on price stability.
The primary movers behind this latest effort — Rep. Mike Pence, R-Ind., and Sen. Bob Corker, R-Tenn., as well as other conservative critics — are displeased by the Fed's recent "quantitative easing" to stimulate the economy and want to bar it from doing so again. The critics say that this action, which involves pumping some $600 billion into U.S. credit markets, debases the currency and invites inflation.
To be sure, some respected economists within and outside the Fed are also skeptical. Some foreign governments have expressed reservations as well because the Fed's move could boost U.S. exports at their expense. Loudest among them is China, which routinely manipulates its currency to boost its exports.
Regardless, with unemployment stubbornly high and the threat of deflation, it's hard to fault the Fed for trying to jump-start the economy. Someone has to.
In a speech Friday in Germany, Bernanke said he would love some help from Congress, in the form of modest short-term fiscal stimulus combined with measures to bring down long-term deficits. But many of the Fed's critics are dead-set against anything that could be labeled stimulus, while they simultaneously are trying to make Bush's tax cuts permanent, which would involve $3.9 trillion in extra borrowing over the next decade.
Criticizing the Fed — a semi-autonomous agency that refuses to get caught up in Congress' caustic and infantile partisanship — has become fashionable for lawmakers who want to portray themselves as economic champions while they borrow and spend the nation into oblivion. Liberals assert that Bernanke caters too much to Wall Street instead of ordinary Americans; conservatives accuse him of overreach.
Instead of bashing the Fed, lawmakers of both parties should instead be focused on their own house, which is the federal budget. In recent weeks, two major proposals have been floated for major spending reductions and tax reforms to bring the spiraling national debt under control.
Members of Congress who want to strengthen America's economic competitiveness should work to implement proposals like these — not try to impose their persistent irresponsibility on others.
Read Full Article »