Who controls economic policy?

[oldfart]

A recurring theme here is to claim credit/blame a president for economic conditions during his term in office. Usually this is done in posts that ignore the fiscal year and budget cycles, resulting in using the wrong years, but that just helps exemplify the problem.

In reality, much of the economy's performance is beyond the control of the president. Monetary policy is the prime responsibility of the Federal Reserve, and it's board of governors is nominated by the president for fixed terms and confirmed by the Senate. In practice, it is rare to see a president butting heads with the Fed over monetary policy, but it has happened and would be a lot more common if president's thought they could do so with success. Like criticism of the Supreme Court, complaining about the Fed rarely brings a change in policy for the president.

The federal budget is likewise a shared responsibility, the president proposes and Congress disposes. How do we allocate that responsibility? It would be more elegant if whatever answer we gave were symmetrical, if it was applied with parallel reasoning for presidents of either party. Even when the same party is in the White House and controls both houses of Congress, sorting it all out is daunting; worse when there is divided government.

So do we just throw out all of these arguments as the useless drivel of hacks? If not, what standards are reasonable in evaluating a president's economic performance?

Is Reagan responsible both for curbing inflation and tripling the debt? How responsible is Reagan for tax policy or jobs growth?

Does Clinton bear any responsibility for deregulation which occurred on his watch, but didn't return to roost until the next president? What part of the financial meltdown can fairly be laid at Bush 43's feet?

 

[Rshermr]

A recurring theme here is to claim credit/blame a president for economic conditions during his term in office. Usually this is done in posts that ignore the fiscal year and budget cycles, resulting in using the wrong years, but that just helps exemplify the problem.

In reality, much of the economy's performance is beyond the control of the president. Monetary policy is the prime responsibility of the Federal Reserve, and it's board of governors is nominated by the president for fixed terms and confirmed by the Senate. In practice, it is rare to see a president butting heads with the Fed over monetary policy, but it has happened and would be a lot more common if president's thought they could do so with success. Like criticism of the Supreme Court, complaining about the Fed rarely brings a change in policy for the president.

The federal budget is likewise a shared responsibility, the president proposes and Congress disposes. How do we allocate that responsibility? It would be more elegant if whatever answer we gave were symmetrical, if it was applied with parallel reasoning for presidents of either party. Even when the same party is in the White House and controls both houses of Congress, sorting it all out is daunting; worse when there is divided government.

So do we just throw out all of these arguments as the useless drivel of hacks? If not, what standards are reasonable in evaluating a president's economic performance?

Is Reagan responsible both for curbing inflation and tripling the debt? How responsible is Reagan for tax policy or jobs growth?

Does Clinton bear any responsibility for deregulation which occurred on his watch, but didn't return to roost until the next president? What part of the financial meltdown can fairly be laid at Bush 43's feet?

Absolutely. I believe you named this post often a food fight. And that is so. On another thread, I suggested that Citizens United provided corporations with new rights that a normal person does not have. And now I have someone saying that I claimed people joining a corporation should have fewer rights.
Agenda drives so much of what is said here that it is near impossible to have any kind of rational discussion. Or, should I say impartial discussion. There are simply too many who want to throw stones at the side they dislike, and who have joined a side. These discussions should be impartial, and based on fact. Difficult in this venue. But if there is a side, I pick the side of the population, imperfect as that may be.

 

[oldfart]

On another thread, I suggested that Citizens United provided corporations with new rights that a normal person does not have. And now I have someone saying that I claimed people joining a corporation should have fewer rights.
Agenda drives so much of what is said here that it is near impossible to have any kind of rational discussion.

I'll admit to being conflicted on this. A good example is monetary policy in the Reagan years. On one level it is tempting to just say that this was the Fed's call and any credit for stifling inflation goes to Volker. But the monetary policy the Fed adopted was effective against inflation only because it created a short but severe recession. Reagan got the blame for the economic downturn (at least that's how I remember the politics), and it seems unfair to me to take a policy and blame him for the recession and not give him credit for curbing inflation, when both were clearly the result of the same policy. I lean toward giving the "Reagan economic team" (I don't think Reagan himself understood monetary policy much) a junior partner share in both, junior to the Federal Reserve.

The recovery from the recession was made easier by the ramp up in defense spending, and that fiscal policy, although motivated by defense concerns and not economic ones, probably avoided a really nasty slump. Would Reagan have gone for non-defense stimulus in 1982--3?

 

[Moonglow]

Who controls economic policy?

The head Jew.