On July 29, the House Financial Services Committee met to vote on, among other bills, the Brady-Cornyn Centennial Monetary Commission Act, HR 2912. This would charter a commission to make an empirical study of Fed policies and job creation, income mobility, economic growth, and other real world outcomes. The legislation passed committee along largely partisan lines.
Sound boring? It’s not. Monetary policy, like the Great Moderation, is one of the key drivers of job creation. And the commission, if enacted, will be the “Monetary Policy Olympics.”
Every Republican present voted aye. Every Democrat voted nay, save Rep. John Delaney (D-Md.), an aye. The Democrats’ vote presented a curious contrast to the hearty bi-partisan House support for the more stringent “Audit the Fed” legislation which passed the 113th Congress with majority Democratic support. Delaney, by far the most distinguished, and accomplished, financial thinker in the House Democratic conference, was not committing political heresy.
The Democrats, except Delaney, now appear bipolar on the matter of the Fed. Over a hundred Democrats last year voted to audit the Fed. Yet the Democratic conference proves resistant to the enactment of this commission, one far less intrusive to the Fed. So what are their stated objections?
Democrats have voiced three main objections. Some have expressed concern that a commission would undermine the Fed’s independence. Several have expressed concern that the commission reflects the composition of Congress, providing more GOP than Democratic commissioners. Others have said that the Fed is doing a good job and should be left alone. These are implausible objections. They deserve consideration, then reconsideration.