As the Washington Post reports and the DMN editorializes this morning, yesterday’s speech was to an audience smaller than the Greater Dallas Chamber: it was aimed directly at Congress. Stepping gingerly outside the traditional bounds of a Fed Chairman, Bernanke let Congress know — in no uncertain terms — that fiscal sanity must be restored now.
A Republican strategist tells me he thinks this may put Congressional Republicans in a bind. Having passed a massive new health care bill that will not — repeat, will not — be repealed, Obama can now start challenging the GOP caucus to make concrete proposals to cut the deficit. There are only three ways: cut entitlements (which will be difficult for a GOP that just tried to stop health care by hitting at its reductions in Medicare spending), cut specific programs that are popular back home in many members’ districts, or increase revenue (i.e., raise taxes). The tide of popular opinion has been going the GOP’s way. But Obama has seven months until the mid-term elections to box them in. The Republicans, with no recognized commander, haven’t been especially adept in adjusting their game plan. Their obstructionist tactics so far have failed entirely. So Bernanke’s speech yesterday can be viewed as the opening salvo in a battle in which the GOP may find itself on the defensive on an issue that should be its cornerstone.
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Message to Congressional Democrats, too: the mechanisms in the health care bill that are supposed to pay for the coverage expansion only work–even on paper–if Congress has the spine to see them through and not back down at the first whimper of protest from doctors, seniors, unions and more. Otherwise, the cost balloons the deficit not long before entitlements hit their blow up point.
Or the debate can be framed thusly: The Obama Administration’s Fed Chair says that fiscal insanity must stop now. Having passed a massive new health care bill, Obama will have to decide how he can heed his Fed Chairman’s request: cut entitlements (which will be difficult for Democratic president that just passed a huge entitlement program), cut specific programs that are popular with citizens, or raise taxes. The tide of popular opinion has been going the GOP’s way. And Obama only has seven months until the mid-term elections to turn that tide. To date he has not been especially adept in doing that. He railroaded the health care bill through Congress despite the opposition to it by a majority of Americans and seems incapable of bipartisanship. So Bernanke’s speech yesterday can be viewed as a challenge to his boss to decide how best to make more moves that will turn even more of the voters against him and his party.
The lesson: 100% Republican policies may not always lead to success, but 100% Democrat policies always lead to failure.
@ JS: Well done, sir.