Reactions fell into two camps. One side focused on what they didn't hear: Promises to help the economy. The other side focused on what they did hear: Vague, ambiguous ("Fed-ish") promises to not rule out further assistance.So Barack Obama knows that he can't get what he needs out of Congress, and he knows that the Fed is his best hope for getting the economy moving and avoiding all sorts of misery (and, incidentally, improving his re-election chances), and he knows that the Fed is going to have extended discussion of it four weeks from now.
The key clue worth highlighting in your memory is this, from near the end of the address. "The Federal Reserve has a range of tools that could be used to provide additional monetary stimulus," Bernanke said. "We will continue to consider those and other pertinent issues, at our meeting in September, which has been scheduled for two days (the 20th and the 21st) instead of one to allow a fuller discussion." (Thompson's emphasis.)
And yet there are two empty seats at the table, and Obama has currently nominated absolutely no one for those seats, at least since his nominee for one of them withdrew after a filibuster.
There is no possibility of Obama getting two people confirmed by the Senate by September 20th. However, he still has time to grant two recess appointments, notwithstanding House attempts to block that presidential power.
Really, I can't think of any good reason for Obama to not act on this. Accounts of the internal functioning of the Fed are murky at best, and it's certainly possible that two new voices pushing for the Fed to do whatever is needed to boost the economy short-term wouldn't make any difference, but it's hard to see how it could hurt, and frankly I'm pressed to think of any downside in trying.
Recess appointments now -- beginning with two new appointments for the Fed Board of Governors.
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I totally agree, but he should take it one step further. He should recess appoint economists to the Fed who have a public record of supporting more monetary stimulus and a higher inflation target. Even if these 2 new members didn't change the outcome of votes, there presence on the Fed would likely have a real change on inflation expectations which could lead to less saving and more spending (just what we need).
ReplyDeleteThe downside? Inflation, or perhaps another bubble. The last time a Fed Chair goosed the economy right before a Presidential election, things didn't work out so well (for the economy, that is). If Wall Street really is waiting for the next wave of unsustainable consumer spending, then maybe Obama should tell them to change their expectations.
ReplyDeleteI agree with Ron E. but add that doing so will probably lead Rick Perry to accuse the president of treason also. I would think that a constitutional law scholar, as Obama is, would be more willing to seize legitimate power and use it than he has been to date.
ReplyDeleteI think it would lead to the filing of impeachment papers, to be entirely frank about it.
ReplyDeleteCurtis,
ReplyDeleteCould be. I don't see that as a negative for him. I think it's fairly unlikely they would actually impeach him, and zero chance that he'd lose in the Senate if it came to that, and at any rate it's an argument I'd think he'd be very happy to have.
I know this is one of JB's favorite topics, but anything the Prez does that gives the Rs an opportunity to distract, distort, and divert may be the wrong move, presuming that THIS TIME IT'S SERIOUS in terms of an all-guns-blazing jobs program and a determination to punish the Rs for obstructing it.
ReplyDeleteThough I think Carter comparisons are generally facile, it's often forgotten that his famous "Malaise Speech" (which everyone here probably know didn't use the word "malaise") was initially a success, and the culmination of a process of gathering opinion and input, but that Carter sabotaged himself with a staff shakeup and other moves impairing any follow-through.
Another Yglesias post, from August 12, seems to say that Obama has nominated Richard Clarida and Jeremy Stein for the two vacancies. The one you link to bemoaning the vacancies is from August 3. Were those nominations just a rumor?
ReplyDeleteErik,
ReplyDeleteI believe so. Neither are listed on the WH nominations page (although it hasn't been updated for a while, apparently). Looking around...there's one recent reference to both of them still being vetted. I thought I remembered one of them dropping out, but nothing like that came up right away.
I would've recommended against doing anything that could lead to impeachment proceedings, but it's beginning to look like Congress isn't going to accomplish anything in the next year and a half anyway, so what is there to lose? (Not that the Clinton impeachment helped the Democrats any.)
ReplyDeleteI have my doubts about the effectiveness of monetary policy right now, though. What happened with QE2? The Fed bought a bunch of Treasury bonds from big banks, which used the money to buy more Treasury bonds. The impact on the economy was zilch. But then, a lack of money really isn't the problem at the moment, is it? Banks and corporations are sitting on a ton of it. What's needed is the generation of demand. One problem is that Obama's policies to date (or the policies he has gotten through Congress) have been less FDR than Herbert Hoover. FDR generated demand by hiring people directly for government projects. If I'm not mistaken, Hoover handed out large amounts of cash to big banks and corporations in the hope that they would be inspired to make investments and hire people. Like now, they just kept it. Of course, initiating government projects on that scale not only requires the cooperation of Congress, it requires admitting that recovery really isn't just around the corner.
If Congress wants to try to impeach Obama for using his 100% Constitutional recess appointment power to try to stimulate the economy and create jobs, he should welcome that fight.
ReplyDeleteRather a surprising post title. Not "King of America" or "This House Is Empty Now"?
ReplyDeleteAs to the substance, the Republicans in Congress are behaving in a scorched-earth manner. Unprecedented filibusters, holds, and uniform opposition to ideas they supported a month earlier, like the individual health insurance mandate or a payroll tax cut.
Republicans don't care about policy, so they can't be won over with policy concessions.
So, why not do something good for the economy here. The GOP is already at 10 out of 10 on the outrage and obstruction meter. They could turn it up to 11, I guess, and try to impeach him. But as you say, I don't see why that's so bad, either.
Hey, that was yesterday. I was close to using "King of America", but I foolishly didn't even think of "This House is Empty Now", which obviously would have been usable. Damn. I do like that album, too.
ReplyDeleteErik / JB: Richard Clarida declined the Fed nomination.
ReplyDeletehttp://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/08/16/bloomberg1376-LPZMX50D9L3501-6G80A055COPQQI7318PSKMHFLN.DTL
You're really trying hard to get Obama to drop 45 states come reelection time, eh?
ReplyDeleteI don't know why you're pushing this, but you really should consider stopping.
There are hills I might recommend a president die on... but extra constitutional recess appointments to a board already handpicked solely to back up the guy you just appointed to head that board isn't the hill I'd choose.
There is no policy payoff whatsoever, and there is no political payoff whatsoever, not where it counts. It'll make the lefties swoon, no doubt... but they don't matter even a little bit, politically... but it'll bolster his opposition. It does nothing productive for Obama or the country or anybody at all, in other words.
Stop. Please.
acrossthestreet,
ReplyDeleteYes, that's what I remembered, but I also so a later article claiming that both were still being vetted. If it were a higher priority for Obama, we would know the answer to this one!
Anon,
Care to elaborate? Two things: I'm not certain that there is a policy payoff (as I said above), but if there is, it's a very big one for reelection. And..."bolster his opposition"? How?
Beyond the specifics of the Fed, IMO there are two very good reasons for a recess appointment. One is to push back against the idea among Washingtonians that the president is easily rolled (which I think is fairly recent, but picked up lots of steam in July); the other is that it's very much in his interest to get exec branch nominations confirmed, and recess appointments are a major card he has to play in that fight.
Mr. Bernstein,
ReplyDeleteIf Obama gets tagged as authoritarian, as he surely will, for making extra-constitutional appointments, then it bolsters his opposition. It reinforces what they'll already be saying about him, and with the worst possibly timing politically. It's a political loser. Every one of his opponents is praying that he does it.
It has no policy implications for him. None. It only hurts him. There is nothing to be gained whatsoever.
Yes, as you mention, it would make the Left swoon, that their guy is no pushover. But they don't count... not even a little bit. It's over for them now. Where are they gonna go? Nowhere. Obama's likely finished even with their support. To have a chance to win, he has to win back Independents, and he won't do that with extra-constitutional appointments, because his opposition will be waving the authoritarian arguments in front of their face. Perry's "treason" comments may lay dormant. Or, they may come alive. He's got options, some of them helpfully provided by the political neophyte Obama, when he elevated Perry over those comments.
And now you want Obama to go back to that well with the Fed? You want to walk through the valley of political IED's?
Obama's extremely weak. His appointments are going to get blocked. That's just the way it is. The time to think about this was 2.5 years ago. It's too late now. It's like the judge discussion above. Obama has simply strategically blown the opportunity, and confrontation now only hurts him. There is no help, politically or policy-wise.
"There is no help, politically or policy-wise" You're right--so why not? What does he have to lose? He might as well try to make things better, polls be damned. Most of the electorate doesn't understand the economy. They're going to vote with their wallets. His only chance of re-election is to emerge as a courageous leader that took decisive action to help the economy. Let the Republicans try to impeach him--how's that any different from the rampant rhetoric out there today?
ReplyDeleteNo independent I know even considers Perry or Bachmann a remote possibility. Huntsman or Paul, maybe.