One of President Obama’s top economic advisers said Tuesday he opposed “dangerous” legislation that would give lawmakers closer scrutiny over Federal Reserve deliberations.
Jason FurmanJason FurmanWhite House divide may derail needed China trade reform Trump picks top economic adviser The White House budget plan shortchanges our economic future MORE, chairman of Obama’s Council of Economic Advisers, called pending legislation subjecting monetary policy deliberations to outside review “somewhere between superfluous and highly counterproductive.”
Furman argued that the bill, presented by its proponents as a needed check on the central bank, would effectively allow lawmakers critical of the Fed to second-guess its moves.
“What that bill is about is about Congress supplanting its judgment as to what monetary policy should be,” he said in an interview with Bloomberg TV. “Congress shouldn’t be telling the Fed what to do with monetary policy.”
Sen. Rand PaulRand PaulRand Paul to teach a course on dystopias in George Washington University Destructive 'fat cat' tax law a complete flop. It's time to repeal it. Trump must take action in Macedonia to fix damage done by Obama and Clinton MORE (R-Ky.) reintroduced legislation earlier this month that would subject the Fed to external audit of its monetary policy deliberations. The central bank’s financial operations are already subject to outside oversight, but Fed critics in and outside of Congress have pushed for years to allow for a policy review as well.
Since taking unprecedented action during the financial crisis and ensuring recession, the Fed has weathered significant criticism from conservatives, who argue its extremely relaxed policy is ineffective and could expose the U.S. to damaging inflation.
The bill already has 30 cosponsors, and similar legislation has passed the House several times in recent years with bipartisan support. Fed audit efforts stalled in previous Congresses when Senate Democrats refused to take up the bill.
But with Republicans in control of both chambers of Congress, there could be a new effort to advance legislation to the president’s desk.
Sen. Elizabeth WarrenElizabeth WarrenObama makes 0K for speech at A&E event: report Van Jones: Obama should do ‘poverty tour’ Warren reads middle school students' letters on climate change MORE (D-Mass.), a high-profile populist on financial issues, announced her opposition to a Fed audit bill Tuesday, saying it would amount to “congressional meddling.”
Fed officials are frequently reticent to criticize lawmakers, but have been aggressive in opposing “Audit the Fed” legislation. They have argued that allowing lawmakers to demand reviews of policy decisions could subject the Fed to political pressure, and make it less effective.
Fed Chairwoman Janet Yellen has said she would oppose such legislation, and Fed Governor Jerome Powell called the proposals “misguided” in remarks Monday.
“I am concerned about several troubling proposals that would subject monetary policy to undue political pressure and place new limits on the Fed's ability to respond to future crises,” he said.
Despite those protests, bills to subject the Fed to that review have found success in recent years. In 2014, the House passed an “Audit the Fed” bill by a vote of 333 to 92, with over 100 Democrats voting in favor of it.