Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsRepublicans raid the Federal Reserve
MEMBERS OF the House are patting themselves on the back for passing a $325 billion, six-year transportation bill, on a bipartisan basis. This has been a great week in the peoples House, new Speaker Paul D. Ryan (R-Wis.) crowed. The long-overdue bill would indeed provide much-needed stability to federally supported infrastructure upgrades around the country. And the process that produced it was relatively open, with members free to submit and vote on more than 100 amendments, as Mr. Ryan had promised.
In a crucial sense, though, this bill both epitomizes the United States democratic dysfunction and worsens it a bit, if such a thing is possible. Transportation traditionally has been funded by the federal gas excise tax, on the sound reasoning that people who drive on highways should help build and maintain them. Yet this tax, stuck at 18.4 cents per gallon since 1993, no longer raises sufficient revenue. And for political reasons the House leadership ruled out an increase blocking Democrats from even bringing the issue to a vote on the new, more open House floor.
Instead, the six-year bill cobbles together financing from expedients: one-time strategic petroleum sales; ostensibly improved tax compliance; and, most dubiously, a raid on the Federal Reserves capital. The Fed returns the vast majority of earnings on its portfolio (swollen by recession-fighting expansive monetary policy) to the treasury. But it retains some each year, matched by payments from banks, as a buffer against losses. The practice strengthens the Federal Reserves balance sheet and thus increases public confidence in its ability to weather a crisis, albeit marginally. It is part of what makes the Fed a credible, independent central bank.
Yet the House bill would undermine this long-standing, conservative practice, a version of which other major central banks around the world also follow, by taking $29.3 billion that the Fed has socked away and forbidding the bank from replenishing it. Note that the maneuver does not generate new financial resources, as taxes or offsetting spending would have done. Rather, it takes money out of one government pocket the Fed and puts it into another the highway program. This is an offset only in the artificial world of budget scoring.
In a crucial sense, though, this bill both epitomizes the United States democratic dysfunction and worsens it a bit, if such a thing is possible. Transportation traditionally has been funded by the federal gas excise tax, on the sound reasoning that people who drive on highways should help build and maintain them. Yet this tax, stuck at 18.4 cents per gallon since 1993, no longer raises sufficient revenue. And for political reasons the House leadership ruled out an increase blocking Democrats from even bringing the issue to a vote on the new, more open House floor.
Instead, the six-year bill cobbles together financing from expedients: one-time strategic petroleum sales; ostensibly improved tax compliance; and, most dubiously, a raid on the Federal Reserves capital. The Fed returns the vast majority of earnings on its portfolio (swollen by recession-fighting expansive monetary policy) to the treasury. But it retains some each year, matched by payments from banks, as a buffer against losses. The practice strengthens the Federal Reserves balance sheet and thus increases public confidence in its ability to weather a crisis, albeit marginally. It is part of what makes the Fed a credible, independent central bank.
Yet the House bill would undermine this long-standing, conservative practice, a version of which other major central banks around the world also follow, by taking $29.3 billion that the Fed has socked away and forbidding the bank from replenishing it. Note that the maneuver does not generate new financial resources, as taxes or offsetting spending would have done. Rather, it takes money out of one government pocket the Fed and puts it into another the highway program. This is an offset only in the artificial world of budget scoring.
https://www.washingtonpost.com/opinions/republicans-raid-the-federal-reserve/2015/11/06/f7dcec06-84b3-11e5-a7ca-6ab6ec20f839_story.html?hpid=hp_no-name_opinion-card-e%3Ahomepage%2Fstory
InfoView thread info, including edit history
TrashPut this thread in your Trash Can (My DU » Trash Can)
BookmarkAdd this thread to your Bookmarks (My DU » Bookmarks)
3 replies, 987 views
ShareGet links to this post and/or share on social media
AlertAlert this post for a rule violation
PowersThere are no powers you can use on this post
EditCannot edit other people's posts
ReplyReply to this post
EditCannot edit other people's posts
Rec (0)
ReplyReply to this post
3 replies
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
Republicans raid the Federal Reserve (Original Post)
spanone
Nov 2015
OP
"That sounds like a TERRIBLE idea" That sums up about every single idea from the Republicans
cstanleytech
Nov 2015
#2
AleksS
(1,665 posts)1. That sounds like a TERRIBLE idea
That sounds like a TERRIBLE idea.
So I guess I'm not surprised the GOP is on board. They've been trying to tank the federal reserve as long as I can remember. It's like they don't even know what those words mean. Ryan's a goddamn idiot.
Is Ryan jumping on the loony-tunes "reinstate the gold standard" crazy train?
cstanleytech
(26,318 posts)2. "That sounds like a TERRIBLE idea" That sums up about every single idea from the Republicans
for the past 30+ years.
Nye Bevan
(25,406 posts)3. If this indeed a "bipartisan bill" which Obama will presumably sign,
shouldn't this be titled "Republicans and Democrats raid the Federal Reserve?"