G.O.P. Says Fed Action Could Hurt Economy

by
July 19, 2012
By , The New York Times

WASHINGTON — House Republicans pressed the Federal Reserve chairman, Ben S. Bernanke, on Wednesday to forswear additional actions to stimulate growth, warning that the results would be counterproductive.

Mr. Bernanke avoided commitments during two days of Congressional testimony, but he told a Senate committee on Tuesday that the Fed was prepared to expand its efforts if it concluded that job growth had stalled.

Republicans on the House Financial Services Committee, which hosted Mr. Bernanke on Wednesday, wasted little time in responding.

They questioned whether the Fed’s existing efforts were bolstering growth and suggested any benefits had been exhausted. They fretted that the Fed was seeding higher inflation and postponing a necessary reckoning with the federal debt.

“The truth is the Federal Reserve cannot rescue Americans from the consequences of failed economic and regulatory policies passed by Congress and signed by the president,” said the committee chairman, Representative Spencer Bachus, Republican of Alabama.

Democrats made no countervailing effort to convince Mr. Bernanke that he should take additional action, instead congratulating the Fed chairman in the manner of people confident that they were speaking to an ally.

“I want to thank you for your steadfast commitment to taking action as you deem appropriate,” said Representative Michael E. Capuano, Democrat of Massachusetts.

Said Representative Al Green, Democrat of Texas, “I would like to yield most of my time to you” to speak about the Fed’s successes.

Representative John Carney, Democrat of Delaware, asked, “The Fed is doing everything it can to address the unemployment part of your mandate, is that correct?”

Mr. Bernanke paused a moment before responding that the Fed “certainly” could do more, and was considering whether it should.

“We are very committed to ensuring, or at least doing all we can to ensure, that we continue to make progress on unemployment,” he said earlier in the hearing.

The three hours of testimony provided little clarity about what the Fed’s policy-making committee would do at its next scheduled meeting July 31 and Aug. 1. Mr. Bernanke said Tuesday that the Fed remained uncertain about the economy, which appears to be growing slowly — recovering from crisis, but not at a rapid enough pace to reduce persistent unemployment.

The Fed’s beige book survey of regional business conditions, published Wednesday, reported “modest to moderate” growth in late June and early July. The regional reports were weaker in aggregate than the last report in early June.

While the Fed has responded vigorously to any sign that the economy is slipping back toward recession, it has hesitated to address the current malaise.

To read more, visit: http://www.nytimes.com/2012/07/19/business/economy/house-members-press-bernanke-to-shun-further-action.html

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