A view from America …
The growth gap of the current recovery compared to an average recovery is $1.3 trillion below normal. (Trillion. With a t.)
Current private sector unemployment is nearly 4 million jobs short of an average recovery at this stage. If the labor force participation rate — people who are working or seeking to work — had not collapsed the unemployment rate would be 10.6% rather than 7.4%.
As Joint Economic Committee chairman Rep. Kevin Brady (R-TX) observed: “[S]ince [President Obama’s] taking office only two million more Americans have found a job while 15 ½ million have gone on food stamps. Putting seven people on food stamps for every person that finds a job isn’t the way to strengthen the middle class.”
Such a punk recovery is disheartening, even shocking. Most of all it’s bewildering. Most elements of macroeconomic policy have not changed much (although there has been serious erosion recently) since the days of Reagan through Clinton. That was a policy mix that created millions of good new jobs and sustained a growth rate sufficient to create a federal budget surplus. Still, no growth. Yet while most policy variables have remained constant, one — monetary policy — has changed, and dramatically.
America’s thought leaders, of both parties, are beginning to wonder. Could monetary policy be the primary culprit behind the growth gap?
The latest entrant to this search for the culprit (and the solution) is the Conservative Action Project (to which this columnist belongs). It is expected to call, as early as today, for a national monetary commission to get to the bottom of this. The Conservative Action Project (CAP) is an influential coalition of conservative thought leaders chaired by President Reagan’s counselor, and Attorney General, Edwin Meese III, and by former Congressman and Bradley Foundation genius award winner David McIntosh. “Participants include the CEO’s of over 100 organizations representing all major elements of the conservative movement—economic, social and national security.”
The Center for American Progress — the left’s CAP — sets the Democratic Party’s social democratic policy agenda. The Conservative Action Project — the right’s CAP — sets the Republican Party’s free market, classical liberal, policy agenda. And the Conservative Action Project is expected to release today one of its occasional Memos for the Movement. It is expected to declare:
“Among the critical agenda items that the Conservative Action Project has identified for the 113th Congress is a call to ‘establish a national monetary commission to review the likely outcomes of principled monetary policy prescriptions.’ This directly tracks a plank in the 2012 national GOP Platform calling for a ‘commission to investigate possible ways to set a fixed value for the dollar.’ The Constitution, in Article I Section 8, gives the power exclusively to the Congress to ‘coin money, (and) regulate the value thereof.’”
It is worth noting that Rep. Marsha Blackburn (R-TN), co-chair of the Republican National Platform Committee, widely is considered the godmother of the monetary commission plank, a plank which memorably resonated throughout the world media.
The CAP is expected to call upon Congress to “pass legislation to create a monetary commission to examine how our monetary policy effects economic growth. … Conservative leaders and organizations should support monetary policy reform that is consistent with free-market, limited-government, constitutional principles.”
The draft Memo — which is more of a Manifesto — describes the issue this way:
“A century after the creation of the Federal Reserve, and decades after Congress gave the Fed their ‘dual mandate’ for both price stability and full employment, many policy makers have rightly called for a re-examination of our monetary policy. Especially in light of the extraordinary actions of the Federal Reserve during the financial crisis since 2008, there is strong need for such a review.
“On March 14th, Rep. Kevin Brady (R-TX), chairman of the Congressional Joint Economic Committee, together with 12 original co-sponsors, introduced legislation, which calls for establishing a commission to ‘examine how United States monetary policy since creation of the Federal Reserve has affected the performance of the U.S. economy in terms of output, employment, prices, and financial stability over time.’
“Such a commission would provide an invaluable opportunity to examine the role that monetary policy under Presidents Bush and Obama has played and continues to play in historically low economic growth and historically high unemployment, as well as in in Washington’s failure to facilitate an economic climate in which abundant money is available at affordable rates to working and middle class families with good credit. As demonstrated by President Reagan, good monetary policy is as crucial to economic growth as is good tax, spending, trade, energy, and regulatory policy.”
Notably signing this memo are some of the most influential and respected movement conservative leaders. The list is far too long to include in full but includes heavyweights such as Grover Norquist, head of Americans for Tax Reform, Chris Chocola, president of the Club for Growth, Brent Bozell, Chariman of ForAmerica, the Honorable Becky Norton Dunlap, former Reagan White House advisor, the Honorable Jim Miller, former Reagan OMB Director, the Honorable T. Kenneth Cribb, former Reagan domestic policy advisor, the Honorable Alfred Regnery, the Honorable J. Kenneth Blackwell, Tony Perkins, president of the Family Research Council, Colin Hanna, president of Let Freedom Ring, Al Cardenas, president of the American Conservative Union, Jenny Beth Martin, co-founder of the Tea Party Patriots, Amy Kremer, president of the Tea Party Express EXPR -1.77%, philanthropist Bill Walton, Gary Bauer, present of American Values, Phil Kerpen, president of American Commitment, Jim Ryun, chairman of the Madison Project, Myron Ebell, president of Freedom Action, Ron Robinson, president of Young America’s Foundation, Chuck Cooper, Mallory Factor, Peter Ferrara, Mario Lopez, Andy Blom, and Dan Oliver. (And this columnist as well.)
Rep. Brady’s legislation to assemble a bipartisan, bicameral, commission to study the impact of monetary policy, under various past and proposed policy regimes, is not, in and of itself, a “conservative” proposal. It’s simply good governance. 25 co-sponsors have enlisted, including a first Democratic co-sponsor, Rep. John Delaney (D-MD), a truly significant Democratic Party thought leader.
According to a poll of over 1,000 voters by Scott Rasmussen conducted about two years ago, the most enthusiastic constituencies for good money (at least the version represented by the gold standard per Rasmussen’s formulation) are not conservatives, Tea Partiers, or even libertarians (who registered strong plurality support). They are African-Americans and labor union members — two core Democratic constituencies.
Good money is not a partisan issue. Empirically studying what makes money good is not an ideological exercise. The members of the right’s CAP, the Conservative Action Project, should, in this context, properly be seen as civic rather than ideological thought leaders. This columnist hopes that the left’s CAP, the Center for American Progress, will show the statesmanship to pause from the inevitable skirmishing over the debt ceiling to join in the call for co-sponsorships for the legislation constituting a bipartisan Monetary Commission introduced by Chairman Brady.
Millions of good new jobs, trillions in new national wealth, and the ensuing plummeting deficit that good money can provide is worth putting aside partisan differences. Passing legislation to permit a drilling down to bedrock facts is the highest and best use of the 113th Congress’s time. And it is a “critical agenda item” of the Conservative Action Project for the 113th Congress.
Republican or Democrat, Conservative or Progressive: good money is good policy and good politics. Time to charter a serious commission.
This article was previously published at Forbes.com.