Even as the struggle over the federal budget intensifies, and the Obama administration tries to avoid catastrophic damage to the economy if a debt limit increase is not approved, it’s important to note that a combination of Federal Reserve policy and Republican control of the U.S. House has completely ended any hope of short-term action to speed the recovery or help the unemployed. Here’s Ezra Klein’s sad summary after watching Ben Bernanke’s press conference yesterday:
This, then, is what the economic policymaking world looks like today: Congress has long since given up on further stimulus, and is arguing over how big its spending cuts should be in 2012 (in one of his most interesting answers, Bernanke said the long-term deficit was a top priority, but large, short-term spending cuts by Congress would force compensatory action from the Fed to protect the economy). The Federal Reserve has given up on doing more, and in June, will pull back to doing slightly less. And the recovery remains shaky, with first quarter GDP growth expected to come in under two percent and few signs that some dam of pent-up demand for workers is about to burst forth. In short? Sucks to be you, unemployed Americans.
Hard to argue with that.