There were at least tepid hopes that Federal Reserve Chairman Ben Bernanke would announce significant steps to improve the domestic economy today, but he choice otherwise. Republicans are relieved, but they appear to be the only ones.
As was the case two weeks ago, when he not-so-subtly urged Congress to approve fiscal stimulus, Bernanke once again said he would "welcome economic support" from Capitol Hill. That, of course, is no longer an option -- congressional Republicans make no secret of their refusal to act.
But the Fed chairman still isn't willing to step up in a big way, either. Bernanke announced "a modest increase in its efforts to reduce borrowing costs for businesses and consumers by extending its existing 'Operation Twist' asset-purchase program through the end of the year," but chose not to take significant action to accelerate growth or lower unemployment, despite the fragility of the recovery, the slowing job market, and the crisis in Europe.
Repeating a line we've heard before, Bernanke said, "We are prepared to do what is necessary. We are prepared to provide support for the economy." He's just not "prepared" to do anything of any significance right now -- we're in trouble, but not enough trouble to stop the Fed from sitting on its hands.
Jonathan Bernstein argues this is today's most significant political story -- he's right -- adding that there's also "a real divide between the parties on how the Fed should be responding to the weak recovery."
It's true that Barack Obama has not made monetary policy a priority, and has (at least publicly) declined to put any pressure on the Fed to act. But Mitt Romney wants the Fed to go in the other direction entirely: He opposes any further efforts by the Fed to help the economy. He has gone at least half-Paulite and seems far more concerned about (phantom) inflation fears than he does about economic growth.
Indeed, on Sunday, in a little-noticed part of his Face the Nation interview, Romney bashed "politicians" who "want to do everything they can just before an election to try and temporarily boost something" when they should be concerned about "the potential threat down the road of inflation." ... What we have here is Romney also benefiting from a presumption that he cares about economic growth, when in that interview he's explicitly expressing far more concern about inflation.
To believe the Fed should be focusing more inflation, which barely exists, and less on economic growth is to be completely detached from reality.