Mitt Romney has yet again stated that he will not be reappointing Ben Bernanke as the chairman of the Federal reserve. According to the Wall Street Journal, this decision directly opposes one of Romney’s top advisers, who believes Bernanke would be valuable to the Romney administration, if he is allowed to continue for a third term.
Mitt Romney told Fox Business that he would be replacing Ben Bernanke, if he wins the election against Barack Obama in November. This statement came just two days after Glenn Hubbard, one of Romney’s top economic advisers, told Reuters TV that Bernanke should get “every consideration” in regards to his remaining at the Federal Reserve. Hubbard called Bernanke a “model technocrat”, and suggested that he should receive high praise for his work and diligence at his post.
In fact, Ben Bernanke has indeed, done more than anyone else in the Obama administration to attempt to turn America’s economy around. While his decisions have been questioned by many of both America’s common citizens, and Washington’s elite politicians, no one has tried as hard to salvage the U.S. from the downhill slide we have taken towards another Great Depression, than Bernanke. His efforts have included long hours of planning, and difficult decision making, including the bailout of the U.S. automakers, and banks.
If Mitt Romney doesn’t allow Bernanke to continue at his post, then who will he appoint? On August 27, we reported that Mitt Romney had not yet considered a choice to replace Bernanke. You can read that report here. We also reported on Aug 31, in a post by Sheeraz Raza, that Romney may select Glenn Hubbard, the adviser mentioned above, to replace Bernanke. However, Hubbard told Fox Business that these rumors were pure speculation.
Other people who might be considered for the job include John Taylor, a Stanford professor, and someone who was once seen as a competitor to Alan Greenspan, Marty Feldstein, a Harvard professor, and Jerome Powell. Fox Business seems to think that all of these would be viable names to list as replacements for Bernanke.
The Romney campaign has remained tight lipped regarding who their choice might be, and all of these people definitely have the qualifications for the job. Also, fox points out that Romney may still surprise everyone and take Glenn Hubbard’s advice and retain Ben Bernanke for another term.
With the economy at a very slow pace, and the housing and auto markets barely showing signs of recovery, Romney will have his work cut out for him, if he wins in November. The American people will expect instant relief from a new administration, in terms of economic policy. The problem with a demand for instant relief is that the U.S. budget is so large, that even a drastic change in spending or tax cuts could take years to show any true signs of change.
Think of a budget in terms of a boat on the water. Compare your weekly budget to a ski boat, or fishing boat. These samll crafts may be easily maneuvered at a high rate of speed, and can turn sharp corners in the water, simply because they are small and light. Now compare the U.S. budget to being a large cruise ship, many times larger than the smaller boats mentioned before. While it is capable of being turned, it takes much longer to respond to commands from the helm, and show a noticeable change in direction, simply because it is so massive in size.
Our economy is much the same. We could make a change in our spending on a personal level, and see resulting savings in our bank accounts within a few weeks. However, a change in the U.S. government spending would not result in such a short term change. We must be willing to wait for the effects of the changes once they are made. This may mean several years of careful budgeting and a tightening of the belt, so to speak.
No matter who he should choose to place as chairman of the Federal Reserve, Mitt Romney has some difficult days ahead of him, as he tries to correct the mistakes in the U.S. budgeting and spending habits. Thankfully, his years at Bain Capital have given him experience in the field of streamlining a budget, and making it profitable. It will be interesting to see if he puts that experience to work in Washington, should he win the election.