Economist: Conservative strategery, or why the Republicans are surplus

Conservative strategery | Free exchange | Economist.com: THE New York Times is reporting that Republicans have decided to let Ben Bernanke have it as the decision over whether to reappointment him as Fed chair looms. Their specific line of attack? He's a tool of big government and of the Democratic administration:

Unhappy about the huge bank bailouts that the Fed arranged with the Treasury Department during the Bush administration, many Republicans are even more displeased that Mr. Bernanke is now working hand-in-glove with the Obama administration.

This is nonsensical on multiple levels. The Federal Reserve's biggest recent errors, I believe it is widely agreed, have been errors of inaction—standing by while a dangerous bubble inflated, in the first case, and allowing Lehman Brothers to go under in the second. There have been some errors of overaction, but these have been abetted by Republican officials as often as Democratic ones. Moreover, the Federal Reserve under Mr Bernanke has been the principle edifice standing between the global economy and outright depression.

And as Mark Thoma notes, were president Obama to let Mr Bernanke go, he would almost certainly replace the current chair with someone more inclined to intervene in the economy and more inclined to assist Mr Obama whenever possible—a Janet Yellen, for instance, or possibly even Larry Summers. Mr Bernanke is absolutely the most amenable candidate they're likely to get.

So why the fuss? Mr Thoma suggests that they're not actually hoping to derail the reappointment. Rather, they're simply trying to make a point—that the Fed has lost it independence and gained too much authority throughout the course of this crisis. It's not an argument without merits, but there is an irony to the stance. The Fed's role has increased so significantly in this crisis in no small part because it is able to act without the approval of the Congress. The intransigence of the legislature on critical financial and economic issues, due largely (though not entirely) to knee-jerk GOP obstructionism, pushed both the Bush and Obama administrations to do as much as possible via the executive and the Federal Reserve. It was that or nothing, and nothing was not acceptable.

In nearly every way, Republicans have no one to blame for this situation but themselves.

Comments

[Neil B ♪]

Good point! And note the irony of some conservatives complaining about "Bush-Obama economics (see e.g. http://www.washingtonmonthly.com/archives/individual/2009_07/018890.php.) Pitiful ironies there. I dig the crazy dissonancing caused by combining Bush and Obama. How can conservatives (the ones who still like Bush) get their grubby little conceptual fingers around that?

[Mickster]

Republicans: Able to hold two diametrically opposed positions without knowing it. Conservatives without conscience.