House Majority Leader James C. Wright Jr. of Texas added his voice yesterday to the small but growing chorus of demands in Congress that Federal Reserve Chairman Paul A. Volcker resign because of the economic hardship the Fed's tight monetary policy has produced.
Wright, saying that lower interest rates are the "key to recovery" from recession, complained with a hint of bitterness that Volcker has been unresponsive to those in Congress who want to see rates come down.
"I've tried eight times to talk with Mr. Volcker," Wright said, explaining that he wanted to give the Fed chairman an "understanding" of how high rates are hurting the nation. But each time, Wright said, "I've been unsuccessful."
Volcker was "very pleasant" in meetings but behaved like a "benign Buddha" who "pats you on the head" and offers reassuring promises that everything will work out, the majority leader added.
While the Federal Reserve is theoretically responsible directly to Congress, Volcker acts as though he's "answerable to nobody," Wright said.
A spokesman for Volcker said the Fed chairman would have no comment on Wright's remarks.
A number of Democrats on Capitol Hill have been demanding that Volcker be replaced by someone who will slightly ease the reins on growth in the money supply. They have been joined by some Republicans, such as Rep. Jack Kemp of New York, who have called for Volcker's ouster in favor of a Fed chairman who would use a so-called "monetary rule," such as the gold standard. Volcker has said he sees no need for such a rule and he's rejected suggestions that money supply growth targets be raised.
Wright maintained that it was a mistake for the Fed to abandon its previous practice of trying to achieve specific interest rate targets. With Volcker at the helm, the central bank made this change in October, 1979 in an effort to dampen then-rampant inflation and now concentrates on achieving its money supply growth targets.
But the result, Wright said, has been extraordinarily high rates and a monetary policy so tight that it has "nullified" the fiscal policy set by Congress and the president.
"I would see to it at least that fiscal and monetary policy work in tandem," Wright said. "They haven't."