House Democrats support fed, urge more fiscal stimulus

"The definition of insanity is doing the same thing over and over and expecting different results."

Here we go again ... and of course Barney Frank is involved ...

From Michael R. Crittenden and Luca Di Leo of The Wall Street Journal on Nov. 10:

The Federal Reserve’s plan to goose the U.S. economy by buying more bonds is welcome and should be matched with fiscal measures, two top House Democrats said Wednesday, though such a move is unlikely.

Offering their support for the Fed’s step following harsh criticism at home and abroad, Reps. Barney Frank (D., Mass.) and Sander Levin (D., Mich.) said they were encouraged by the central bank’s suggestion it stands ready to do more.

The Fed Nov. 3 said it would buy $600 billion of U.S. Treasurys over the next eight months — after having purchased $1.75 trillion in mortgage and government bonds to fight the financial crisis — to try and lift a weak economy in which unemployment remains stuck close to 10%. The step was attacked by Republicans at home, who warned it could spark high inflation and asset bubbles. Foreign government officials from Germany to Japan, who fear it will hurt their export-driven economies by making the U.S. dollar cheaper, also criticized the move.

The two House Democrats, who currently chair the powerful Financial Services and Ways and Means committees, insisted the Fed alone can’t solve the lingering problems of high unemployment and slow recovery from the recent financial crisis.

“Monetary policy alone is insufficient to the task of reducing unemployment on a rapid timetable. Fiscal policy still has a critical role to play,” Frank and Levin said.

The two said they would urge fellow lawmakers to take additional steps, though they acknowledged “it unfortunately appears unlikely that Congress will do so.”

Fed Chairman Ben Bernanke has indicated he would favor fiscal stimulus to boost the economy in the short run, as long as a plan is soon put in place to reduce the high U.S. budget deficit further down the road.

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