For all of the liberal moping about Barack Obama’s alleged deficiencies when it comes to rhetoric and negotiations, there is one place that Obama really has been doing a lousy job: Influencing monetary policy.
Today the market plunged again after the Fed put out a statement saying that policy will be unchanged in the face of weak economic performance. This is just a reminder that Obama has had plenty of chances to influence the Fed through appointments and jawboning, and he’s wound up with a policy that’s preoccupied with fighting (apparently phantom) inflation instead of using aggressive and creatives policies to fight unemployment.
The point here is that the Fed is a good target for liberal organizing, and it’s all too often overlooked.
Liberals should be pressing Obama to immediately name people for the two open seats on the Fed, and to threaten the Senate that he will recess appoint them if they are not approved in, say, 30 days. It’s outrageous that the Senate filibustered Nobel Prize winner Peter Diamond when Obama nominated him, but even more outrageous that Obama did little to fight for him — and that liberals didn’t appear to care very much about it.
Beyond pressing Obama, liberals should be actively campaigning against the do-nothing Fed. Remember, Tea Partiers and Ron Paul style libertarians have been threatening the Fed for some time, pushing on policies that (liberals believe) would sacrifice economic growth. Where’s the push in the other direction? Perhaps this should be organized around demands that Ben Bernanke resign; hey, if Republicans can call for Tim Geithner’s head, why shouldn’t liberals be pressing Bernanke to leave?
Look, it’s easy to rail against the president for failing to be “tough” in negotiations, or for not giving the perfect speeches. All the mumbo-jumbo about quantitative easing and discount rates comes across as a lot more obscure-sounding than liberal attacks on budget cuts to Medicare or Social Security. And economists, include those who support liberal goals, disagree about exactly what the best course of Fed action is and how much monetary policy can help at all.
But it’s really not hard to understand that Fed can choose between fighting for economic growth (and the jobs that come with it) or fighting against inflation — and that liberals most definitely do have a dog in that particular fight. Matt Yglesias has been shouting about this for a long time and he’s absolutely right. The truth is that liberals should treat the Fed the way they treat the Supreme Court, as one of the most important targets out there for organizing and political pressure. And if they push, this is one area where they probably could exert some real influence on Barack Obama — and, perhaps, on some policies that really matter.