The Federal Reserve Turns Left
April 11, 2012
Washington is lost in a snarl of confusion, cowardice and wrongheaded
ideological assumptions that threaten to keep the economy in a ditch for
a long time. That prospect is not much discussed in the halls of
Congress or the White House. It’s as though the crisis has been put on
hold until after the presidential election.
As almost everyone understands, nothing substantial will be accomplished
this year. President Obama is campaigning on warmed-over optimism and
paper-thin policy proposals. Republicans propose to make things worse by
drastically shrinking government spending, when the opposite is needed
to foster a real recovery. The president, like the GOP, embraces
large-scale deficit reduction. In these circumstances, it’s just as well
that the two parties cannot reach agreement. After the election they
may make a deal that splits the difference between bad and worse. In the
worst case, they might inadvertently tip the economy back into
recession.
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