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Republican lawmakers warn Federal Reserve against action on economy

On the eve of a major Federal Reserve policy decision, Republican congressional leaders have taken the unusual step of warning the traditionally independent central bank not to take measures aimed at spurring economic growth.________________________________________________________________________In a letter to Fed chair Ben Bernanke Tuesday afternoon, the Republicans argued that an earlier effort by the Fed to stimulate the economy, known as quantitative easing, may have done more harm than good. "Although the goal of quantitative easing was, in part, to stabilize the price level against deflationary fears, the Federal Reserve's actions have likely led to more fluctuations and uncertainty in our already weak economy," they wrote.________________________________________________________________________The letter was signed by the top two Republicans in both chambers: Speaker of the House John Boehner, Senate Minority Leader Mitch McConnell, House Majority Leader Eric Cantor, and Senate Minority Whip Jon Kyl.________________________________________________________________________Republicans have also largely opposed short-term fiscal measures aimed at sparking growth, such as spending and tax cuts.________________________________________________________________________The Fed's quantitative easing program, based on making large purchases of Treasury bills, did not succeed in producing a sustained recovery. But Bernanke and others have argued that without the program, which ended in June, things would likely have been worse.__________________________________________________________________________At the close of its two-day meeting Wednesday afternoon, the Fed is expected to announce further action--perhaps a plan to increase borrowing by taking steps to push down longer-term interest rates.________________________________________________________________________The Republican letter violates a long-established tradition of insulating the Federal Reserve from political pressure, so that it can make decisions based solely on economic factors. Last month, Gov. Rick Perry of Texas, a leading Republican presidential candidate, suggested that it would be "almost treasonous" for Bernanke to risk inflation by taking steps to promote economic growth.Stan Collender, a veteran federal budget expert, notes that last November, a group of Republican economists and strategists criticized the Fed over QE2. But, he writes:________________________________________________________________________Today's letter is far worse than anything that happened last November. This warning is directly from the Republican congressional leadership instead of just outside economists and strategists, and the letter is almost sinister and ominous in its tone. The threat that terrible things will come to those who help the economy when the GOP is not in charge of the White House sounds very real._________________________________________________________________________

Added: Sep-21-2011 
By: Tongueboy
Tags: economy, the fed, republicans want America to fail
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