Influential House Republican calls for ending Fed's employment mandate
Many Republicans are fuming at the Federal Reserve's recently announced $600-billion bond-buying program, and one of the most influential members of the incoming House majority is calling for an end to the central bank's dual mandate to control both inflation/interest rates and unemployment.
Rep. Mike Pence (R-Ind.), a conservative hero who might be considering a run for president, said he plans to introduce legislation Tuesday to eliminate the portion of the Fed mandate that calls for the central bank "to promote effectively the goals of maximum employment."
The result would be to have the Fed focus like a laser on inflation, Pence said. He made his case Monday on CNBC for removing the dual mandate. His call was echoed Tuesday by Sen. Bob Corker (R-Tenn.), who said he came to the view after a "lengthy meeting" Monday with Fed Chairman Ben S. Bernanke.
Pence, Corker and other Fed critics are worried that the central bank's latest attempt to boost the recovery -- another round of so-called quantitative easing known as QE2 -- will cause more inflation.
“The Fed’s dual mandate policy has failed,” Pence said. “For a record 18th straight month, the nation’s unemployment rate is at or above 9.4%. It’s time for the Fed to be solely focused on price stability and not the recently announced QE2, which will monetize our debt and trigger inflation.”
Although the Federal Reserve Board is independent, Congress can change its mandate, as it did in 1977 when an amendment by Congress to the Federal Reserve Act added the charge of promoting maximum employment.
With strong anti-Fed sentiment among both Republicans and some Democrats, a push for legislation reining in the central bank could have a chance next year in Congress. But President Obama's veto pen would loom over any such action.
-- Jim Puzzanghera
Photo: Rep. Mike Pence (R-Ind.). Credit: Reuters.