Fed Nominee Says He Will Avoid Fray Of Politics
Friday, October 28, 2005
Ben S. Bernanke urged Congress last week to reduce the federal deficit, cut government spending and make the Bush administration's recent tax cuts permanent.
Bernanke was speaking then on behalf of the president, as his top economic adviser, at a hearing of Congress's Joint Economic Committee.
But was he also expressing his own views? That's what lawmakers and analysts have been asking since Monday, when Bush nominated Bernanke to become the next chairman of the Federal Reserve, a position requiring political independence from the White House and Congress.
Current Fed Chairman Alan Greenspan has frequently advised Congress on a range of fiscal policy issues, exerting great influence and drawing both praise and criticism in the process. When he steps down Jan. 31 -- after more than 18 years as one of the most powerful officials in Washington -- many on Wall Street, on Capitol Hill and at the White House will be eager to see if his successor gains similar clout.
Some lawmakers and interest groups quickly invoked Bernanke's recent comments in favor of extending the tax cuts as signs of the policy prescriptions he would offer as Fed chief.
But Sen. Charles E. Schumer (D-N.Y.) said such assumptions are wrong. Bernanke assured Schumer on Monday that he was speaking to the congressional committee as chairman of Bush's Council of Economic Advisers and that he hoped to avoid such policy debates during his confirmation process and at the Fed, the senator recalled yesterday.
Bernanke, a Republican, indicated that he would prefer to limit his future public comments mainly to Fed policy, which includes both banking regulation and the use of interest rates to keep inflation and unemployment low, Schumer said.
"I told him he should rethink that," Schumer said. "I would encourage him to be a positive force for deficit reduction."
Similarly, Senate Banking Committee Chairman Richard C. Shelby (R-Ala.) said yesterday that the panel members plan to question Bernanke on a wide range of economic issues beyond Fed policy.
"This will be a very involved hearing on both sides of the aisle," Shelby said after a private meeting with Bernanke. The committee hopes to hold the session sometime next month, Shelby added.
During his testimony last week, Bernanke expressed several opinions likely to be revisited at the confirmation hearing.
"I think it's important that we make the tax cuts permanent," he said, referring to tax-rate reductions and other provisions that are scheduled to expire in a few years.