Bernanke’s A Liability
I’ve written about bad governance previously but more apropos is my post about issues with the nomination process and the outrageous levels of blocking the Republicans have partaken in.
One thing Obama most definitely does not have a good winning streak is in the nominations process. There are over one hundred nominations being held up and some of them are of vital importance.
This is true also of the Chairman of the United States Federal Reserve who was nominated by the Obama administration and confirmed by the Senate—one of the few appointed positions in government that the Senate has decided was important enough to bother considering filling.
Niklas Blanchard has written about Bernanke’s role in the financial crisis and the mediocre recovery the nation has seen despite the $800 billion stimulus passed by the Democratic Party in 2009. He writes:
During this time many things seem to happen all at once, and what was originally a mild and manageable recession quickly started deteriorating. By late September, you could rarely turn on the television without hearing some horrible and frightening piece of news coming from a quaint little street in New York. Fears of a financial panic were in the air — and on Monday, October 6th, our fears were confirmed. This misled everyone from the real culprit: tight money.
Matthew Yglesias agrees:
Most importantly, your fiscal policy and your monetary policy can’t work at cross-purposes. Or, rather, undertaking fiscal initiatives that the monetary authorities oppose is likely to be directly counterproductive. For months now it’s been clear that the Fed doesn’t want to undertake any additional monetary expansion of its own. And in his sworn testimony, Fed Chair Ben Bernanke indicated that he didn’t believe additional fiscal expansion was a good idea either. All the talk has been of “exit strategies,” paths to tighter monetary policy that the Fed will enact when it thinks the time is right.
In essence, Bernanke has the power to turn this recession around. True, perhaps the recession is over but the unemployment numbers—something I consider just as important as the health of the overall economy—but if unemployment continues in the path of slow recovery, there will be resounding political and economic repercussions. Voters will be incensed that, despite all the money spent to counter the recession and unemployment, the feeling will be that the country has yet to recover. This is going to be the big downfall of the Democratic Party in the coming 2010 elections; incumbents beware, especially if, as John Sides of The Monkey Cage says, the President is from the same party:
Discontent with Congress does not lead to a general tendency to kick out incumbents. Occasionally voters do get upset and give the boot to a large number of incumbents—but they almost always take out their dissatisfaction on the members of only one party—the president’s party.
Beyond the politics, however, massive, long-term unemployment leads to an atrophied workforce riddled with inexperience, lack of confidence and, especially in the freshly educated, lacking in direction. Don Peck:
There is unemployment, a brief and relatively routine transitional state that results from the rise and fall of companies in any economy, and there is unemployment—chronic, all-consuming. The former is a necessary lubricant in any engine of economic growth. The latter is a pestilence that slowly eats away at people, families, and, if it spreads widely enough, the fabric of society. Indeed, history suggests that it is perhaps society’s most noxious ill.
The worst effects of pervasive joblessness—on family, politics, society—take time to incubate, and they show themselves only slowly. But ultimately, they leave deep marks that endure long after boom times have returned. Some of these marks are just now becoming visible, and even if the economy magically and fully recovers tomorrow, new ones will continue to appear. The longer our economic slump lasts, the deeper they’ll be.
If it persists much longer, this era of high joblessness will likely change the life course and character of a generation of young adults—and quite possibly those of the children behind them as well. It will leave an indelible imprint on many blue-collar white men—and on white culture. It could change the nature of modern marriage, and also cripple marriage as an institution in many communities. It may already be plunging many inner cities into a kind of despair and dysfunction not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years.
In essence, not only will there be serious political repercussions but the cultural, spiritual and social mutilation and upheaval will be an intense, long-wrought and difficult to stop or, at least, change, cost to the fabric of the nation.
As mentioned before, Obama owns much of the blame for nominating Bernanke into the same position he held as chairman—a tenure during which he was strongly involved in creating the financial crisis in the first place. Not all the blame can be laid at Obama’s feet, however: the nomination process has been turned into a caricature of itself due to blanket holds by politically motivated Senators and the Republican Party as a hole. If confirming nominees has become a huge burden for the Senate because of threats to filibuster by the minority party, choosing a brand new and untested nominee to the position of chairman of the Federal Reserve would prove to be a battle too difficult for the president to possibly, ever, win. Regrettably, the members of the Senate seem to be too self-involved in politics to realize that Bernanke played a major role in the crisis by not taking proper measures to counter the downward slope—easy money could have kept the recession from becoming as tragic as it did become.
In essence, Bernanke has become a liability and the Senate, mired in politics and the partisan game, has become unequipped to handle the problems the nation is facing. All parties are to blame however the active players, those who are not cooperating with the elected majority, bear the most blame for this travesty.