Department of "Huh?!" ("When the Economy Started to Falter" Edition

Well, It Depends What "Nearly" Means, Doesn't It?

Larry Meyers says Bernanke has "nearly begged" for fiscal stimulus. David Leonhardt says that he has not begged for fiscal stimulus. Seems to me both are right--for a Federal Reserve definition of "nearly":

Has Bernanke Pleaded?: WLaurence H. Meyer, a former Federal Reserve governor, said the following in today’s Times:

Bernanke has said that fiscal stimulus, accommodated by the Fed, is the single most powerful action the government can take for lowering the unemployment rate, when short-term rates are already at zero… He has nearly pleaded with Congress for fiscal stimulus, but he can’t count on it.

I am among Mr. Meyer’s many admirers, but I don’t think that’s quite right. Yes, if you go back and read Mr. Bernanke’s recent speeches and Congressional testimony, you will see he believes that last year’s stimulus bill helped the economy and that more government spending or tax cuts now would help again. But he has made a deliberate choice to avoid making that point strongly or clearly.... Mr. Bernanke had perhaps more ability to influence this debate than anyone else. Imagine if he had given a speech earlier this year, as the economy started to falter, that included something along the lines of:

Last year’s stimulus program was not perfect, and we will never know its precise effect on the economy. But the available evidence — including the Fed’s own analytical tools and those of the Congressional Budget Office and private economists, as well the timing and pattern of spending by consumers, businesses and governments — suggests that the program made a major difference. It appears that more than one million jobs, and perhaps substantially more, would not exist now had the program not been enacted. Similarly, additional fiscal stimulus today, in the form of government spending or tax cuts, could play an important role in helping the economy to continue to recover from the recent financial crisis, especially if this short-term stimulus were paired with policies to reduce the deficit in future years.”

An argument like this would have made national headlines and cut through some of the more frivolous criticism of the stimulus. It may even have affected the debate as much as Alan Greenspan’s endorsement of the Bush tax cuts did in 2001. We’ll never know because Mr. Bernanke opted not to use his bully pulpit. That’s certainly his right as Fed chairman, but I don’t think he deserves credit today for trying.