Republicans believe the economy is weak because of “uncertainty” created by the Obama administration. Yet a recent statement by a Federal Reserve President suggests that if there is any uncertainty, it should be blamed on the Republicans for forcing a standoff with the White House over the debt ceiling. This is not from the remarks of an inflation dove, but rather, one of its hawks who recently dissented from the Fed’s plan for further easing.
Here is what Dallas Federal Reserve President Richard Fisher told an audience in Texas today on Wednesday August 17th:
According to my business contacts, the opera buffa of the debt ceiling negotiations compounded this uncertainty, leaving business decisionmakers frozen in their tracks.
With the leadership of the nation―Republicans and Democrats alike―and every talking head in the media making clear hour after hour, day after day in the run-up to Aug. 2 that a financial disaster was lurking around the corner, it does not take much imagination to envision consumers deciding to forego or delay some discretionary expenditure they had planned. Instead, they might well be inclined to hunker down to weather the perfect storm they were being warned was rapidly approaching. … Small wonder that, following the somewhat encouraging retail activity reported in July, the Michigan survey measure of consumer sentiment released just recently had a distinctly sour tone.
Fisher can’t come out and say that the crisis which weakened the economy was the work of the Republicans deciding to take a stand over the debt ceiling, but the evidence bears that out. Republicans sought a confrontation over the debt ceiling and in some cases, even suggested a default was acceptable. Remember when Paul Ryan said we could default for “a day or two or three or four” as long as we had a long term plan? Even Mitch McConnell seems to have learned the wrong long term lesson from this debate:
“I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn’t think that. What we did learn is this — it’s a hostage that’s worth ransoming. And it focuses the Congress on something that must be done.”
No recognition at all that holding the economy hostage seems to weakens it.
If Republicans won’t listen to mainstream economic and political commentators, maybe they can listen to a conservative and hawkish Fed President when he pins the blame for the weaker economy on the political fight that took place in August, a fight that Republicans sought.