A majority of Americans are dissatisfied with the nation’s independent central bank, saying the U.S. Federal Reserve should either be brought under tighter political control or abolished outright, a poll shows.
The Bloomberg National Poll underlines the extent to which the central bank’s standing has suffered as it has come under fire in Congress, first from Democrats for regulatory lapses before the financial crisis and then from Republicans for failing to revive an economy in which the jobless rate hovers near 10 percent. Voters from both parties have criticized the Fed’s $3.3 trillion in aid to the financial system.
“The Fed had to do extraordinary things to keep us from going into a great depression, and the public doesn’t see it this way,” said Lyle Gramley, a former Fed governor who is now senior adviser at Potomac Research Group in Washington. “The last time we had any really severe criticism of the Fed was in the early-1980s, when the Fed was pursuing this brutally tight policy to keep inflation under control.”
The survey, conducted Dec. 4-7, also shows deep skepticism, especially among Republicans, over the Fed’s Nov. 3 announcement that it would buy bonds in an attempt to bring down unemployment and prevent deflation. More than half say the purchases won’t help the economy.
The policy, known as quantitative easing, was the target of criticism in Washington and overseas. That prompted Fed Chairman Ben S. Bernanke to appear in an interview on CBS television’s “60 Minutes” program on Dec. 5 to defend his actions.
Across the Spectrum
Americans across the political spectrum say the Fed shouldn’t retain its current structure of independence. Asked if the central bank should be more accountable to Congress, left independent or abolished entirely, 39 percent said it should be held more accountable and 16 percent that it should be abolished. Only 37 percent favor the status quo.
In a previous poll, conducted Oct. 7-10, 35 percent of Americans said the Fed should be radically overhauled, while 8 percent said it should be abolished.
Republicans and independents are more likely to support ending the Fed, with 19 percent of independents, 16 percent of Republicans, and 12 percent of Democrats wanting to do away with the central bank. Among those who identify themselves as supporters of the Tea Party movement, which wants to rein in government, 21 percent want to abolish the Fed.
Dual Mandate
The Fed was founded in 1913. While Congress sets its mandate, politicians let it determine how to achieve those goals through monetary policy and allow it to resolve differences of opinion among its seven board members and 12 Reserve Bank presidents.
Republicans in Congress have taken aim at the Fed’s dual mandate to achieve both maximum employment and stable prices. Last month, two Republicans, Tennessee Senator Bob Corker and Indiana Representative Mike Pence, proposed removing the employment mandate to focus the Fed on stable prices. Corker plans to introduce legislation next year.
That legislation would amend the Humphrey-Hawkins Full Employment Act of 1978, which created the Fed’s dual mandate.
Most members of Congress haven’t taken a hard look at the Fed in decades, said RepresentativePaul Ryan, a Wisconsin Republican in line to head the House Budget Committee. “They’re really beginning to wake up on this,” Ryan said in an interview.
Getting Politics ‘Out’
Pence, the outgoing chairman of the House Republican Conference, said his legislation doesn’t seek to abolish or politicize the Fed.
“Getting the Fed back to its original mission on price stability is precisely how we get politics out of monetary policy,” he said this week at a monetary policy forum in Washington.
Bernanke, 56, made his rare appearance on a nationally broadcast news program to explain his efforts to prop up a recovery so weak that only 39,000 jobs were created last month.
“We’re not very far from the level where the economy is not self-sustaining,” he said in the interview. “It’s very close to the border. It takes about 2.5 percent growth just to keep unemployment stable, and that’s about what we’re getting.” He said it’s possible the Fed will expand its bond purchases.
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Facing a midterm election defeat unparalleled by any other in history, Obama’s fall from grace represents the stark reality that the people are fuming that they allowed themselves to be sold on empty promises and outright lies.