Democrats use Federal Reserve as ‘scapegoat’ for bad economic policies: Washington Post column
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In her latest column for The Washington Post, Catherine Rampell called out Democratic lawmakers who seek to blame other sources, such as the Federal Reserve, for the bad economy instead of coming up with policies to lift Americans out of an economic downturn. .
Like President Biden and other administration officials, Rampell has said she does not believe the United States has entered a recession, despite the economy entering its second consecutive quarter of negative GDP growth – the traditional marker of a recession.
Still, she admitted that the worrying economic numbers are prompting Democrats in Congress to sound “the alarm bells so they can dodge responsibility for the inevitable political consequences.”
Rampell argued that if recession fears were so severe, these scapegoating lawmakers should instead “highlight this risk to prepare for possible humanitarian fallout (for example, patching up the tattered safety net)”.
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The author said: “They don’t want to be blamed for an economic collapse, so they preemptively scapegoat the Federal Reserve, which raised interest rates again this week in an effort to reduce the inflation.”
Meanwhile, “President Biden and White House aides have tried to reassure Americans that a recession is not in sight. Nothing to see here, they continue to say, pointing to strong growth jobs as the rest of the outlook dims,” she wrote. , marking the two competing perspectives within the party.
Rampell pointed to several examples of fearmongering and blaming Democrats. “Senator Elizabeth Warren, D-Mass., has warned of a ‘Fed-engineered recession’ and proclaimed that Fed tightening will only succeed ‘to lay off a lot of people and make families poorer.'” .
She also mentioned Rep. Pramila Jayapal, D-Wash., who “claimed the Fed is jeopardizing Biden’s promise to ‘grow the economy from the bottom up and down the middle,’ and urged the central bank to “Resist the urge to raise interest rates further.'”
The Federal Reserve affects monetary policy, which is where “the main risk of recession currently lies”, Rampell acknowledged, while adding that the institution cannot do much and that it “is in a position almost impossible”.
“Inflation needs to come down quickly, before it becomes deeply entrenched in the economy and expectations of price growth engender even more price growth,” she explained, adding that “the Interest rate hikes remain the most powerful tool available to achieve this goal.”
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On Wednesday, the Federal Reserve “raised its benchmark interest rate by 75 basis points for the second straight month as it attempts to rein in searing inflation,” Fox Business reported.
Rampell’s view was that Democrats “could ease the pressure on the Fed” if they “really wanted to reduce recession risks.” Thus, the fate of the economy “does not come down exclusively to monetary policy”. She added, “As I have noted many times, Congress and the President have some tools to (modestly) mitigate inflation.”
The columnist mentioned that Democratic lawmakers could do things like “repeal Trump-era tariffs,” “fix bottlenecks in the legal immigration system that contribute to labor shortages.” or “suspend shipping restrictions that increase the costs of shipping goods, including oil.”
“Instead, many Democrats spend their time ranting about stupid things like ‘corporate greed,’ which won’t affect inflation one way or another,” he said. she asserted, adding, “Worse, some are pushing policies that might push demand further, such as tax cuts or broad student debt cancellation.”
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Rampell also warned that Democrats were considering implementing “price controls” which would “cripple supply.”
However, if the Democrats have done such things, they can always blame the Fed more. Rampell concluded, “These kinds of moves would force the Fed to raise rates even more aggressively. Which, again, makes a recession more likely. At that point, those same Democrats will probably say, ‘I told you It was the Fed’s fault!