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ThePlumLIneGS whorunsgov plumline
Posted at 11:05 AM ET, 09/02/2011

Help us, Ben, you’re our only hope

The jobs report is gloomy. The prospects for a policy fix are even gloomier. Will Congress act to get the economy moving? It seems highly unlikely. What liberals should understand is that Republicans really do believe (or at least are going to act as if they believe, which is the same thing) that slashing government spending, including putting hundreds of thousands of government workers out of work and threatening millions of others with the same fate, is good for economic growth. They don’t see themselves choosing between austerity and growth; they believe those things go together. In that climate, there’s little room for compromise, because the things that Democrats believe will promote growth and create jobs are seen by Republicans as hurting the economy — and vice versa.

Granted, as Steve Benen points out today, the acrobatics that some Republicans perform over this can seemingly defy physics, or at least common sense; does House Speaker John Boehner really believe that the whole problem is the threat of tax increases? But whether it makes sense or not, this is an old story, and one that’s not going to change any time soon.

Meanwhile, as Suzy Khimm explains, there’s very little that Barack Obama can do on his own.

What does that leave? As far as government policy is concerned, it leaves only one hope: the Federal Reserve. Khimm is right that the president can’t order the Fed to adopt pro-growth policies. He can use public and private jawboning to try to put pressure on it, and he certainly could, right now, use his Article II authority to make recess appointments so that there would be two more voices in favor of growth when the Fed meets later this month … but ultimately, Ben Bernanke and the rest of the Fed board can do pretty much whatever they want.

That’s where the ballgame is. Obama might as well try to get what he can out of Congress and do what he can administratively, but realistically there’s just not much that’s going to happen there. And as I read it, economists don’t all agree on exactly what the Fed should do, and how much it would help. But Fed action, such as another round of quantitative expansion, is pretty much the best hope for a turnaround quick enough to save the economy over the next year — and, with it, Barack Obama’s presidency.

By  |  11:05 AM ET, 09/02/2011

 
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