One-Man Fire Brigade
Ben Bernanke may or may not succeed in saving the economy, but at least he has the courage to try — and the honesty to tell the truth. The same cannot be said of our elected officials. Congress is buried under a crushing surplus of cynicism, while the White House seems paralyzed by a deficit of courage.
An expert on the Great Depression, Bernanke is determined not to be the Federal Reserve chairman who allows the nation to plummet into Great Depression II. Since our political leaders can’t be bothered to do what urgently needs to be done — stimulate the fragile economy before it sputters out — Bernanke is using a rare bit of legerdemain called “quantitative easing” to pump $600 billion into the financial system.
Fed chairmen are usually as silent as the sphinx, except in official testimony. But Bernanke, facing criticism for his action, went on “60 Minutes” to explain why he’s prepared to do even more.
He took the even more unusual step — for an economist — of using language that non-economists can understand. “The unemployment rate is just not going down,” he said in the interview, which aired Sunday night. “Unemployment is just about the same as it was in mid-2009, when the economy started growing. … And it looks that at current rates, that it may take some years before the unemployment rate is down to more normal levels.”
The jobless rate is a devastating 9.8 percent. Bernanke calculates that unless the recovery is somehow accelerated, it will take four or five years for unemployment to come down to a “more normal” range below 6 percent.
At present, he said, the recovery has so little momentum that “we’re not very far from the level where the economy is not self-sustaining.” In other words, there’s barely enough growth to keep unemployment from rising even higher and the economy from tipping into another slump. Think of it like riding a bicycle: You’re fine as long as you’re moving forward, but slow down too much and you’ll fall over.
All this ought to be obvious on Capitol Hill and at the White House. But Republicans are obsessed with defending the interests of the rich and shrinking the federal government to the point where it can’t do much of anything. Democrats are determined to champion the interests of the middle class and use government as an instrument of fairness and justice. Both parties seem prepared to endure two years of gridlock and posturing until the 2012 election.
But the economy can’t wait two years. At the Fed, Bernanke said, “We do all of our analysis, we do all of our policy decisions, based on what we think the economy needs — not based on when the election is or what political conditions are.”
On “60 Minutes,” Bernanke did more than assert the Fed’s independence. He also spoke forthrightly about several issues that have nothing to do with monetary policy — the Fed’s narrow bailiwick — and really ought to be handled by the politicians.
He went out of his way to call for “cleaning up the tax code” by “closing loopholes and lowering rates” for both individuals and corporations. This would “create more incentives for people to invest,” Bernanke said.
He also bemoaned the widening income gap between rich and poor, which he said was “creating two societies” based on educational disparities. “If you’re a college graduate, unemployment is 5 percent,” he said. “If you’re a high school graduate, it’s 10 percent or more. It’s a very big difference. It leads to an unequal society and a society which doesn’t have the cohesion that we’d like to see.”
The phrase “unequal society” is the kind of language that might make Sarah Palin log on to her Twitter account and blast Bernanke as just another pointy-headed socialist. After all, she has already given a speech denouncing the chairman’s “quantitative easing” initiative. I’d pay good money to hear Palin explain, in detail, how she arrived at her views about monetary policy and the proper role of a modern-day central bank. My guess is that if she says anything, though, she’ll probably just call him a name.
Following last month’s election, Republicans are in a mood to strut and Democrats in a mood to fret. But one official in Washington, at least, is focused on using all the powers of his office to try to make the economy grow and put Americans back to work. Someday, I’m convinced, a grateful nation will say: “Thankee, Bernanke.”
Sorry, couldn’t resist.
Eugene Robinson’s e-mail address is eugenerobinson(at)washpost.com.
© 2010, Washington Post Writers GroupWait, before you go…
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