Dear Monetary Policy Observer,
A major theme of the upcoming 2014 elections is income inequality, with Democrats offering solutions like a minimum wage hike and Republicans pushing lower taxes and deregulation. A recent Forbes.com article by APIA’s senior advisor on economics, Ralph Benko, points out that neither of these hold promise to stop stagnation in jobs or raise middle class standard of living. The only major policy change since the great growth of the Reagan/Clinton years has been monetary policy. Benko makes the case for a bipartisan Commission such as the one offered in the Brady-Cornyn Centennial Monetary Commission Act as a viable way for both parties to really address income inequality and restore a climate of equitable prosperity.
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American Principles In Action
To gain the political edge in the upcoming fight over income inequality the GOP needs to pivot to the real presenting issue: restoring good money to America and the world. The economy, notwithstanding the Bush tax cuts, has been, on average, stagnant for over a decade. Punk job creation was, net, as horrendous under a Republican president as it now is under a Democratic president.
Only one of the major policy factors that can generate prosperity with equity dramatically changed from the Reagan-Clinton to the Bush-Obama era: monetary policy. The Federal Reserve went on a bender. It made the dollar soggy and groggy. Job creation withered.
Now economic thought leaders of the Congress — such as John Cornyn, Kevin Brady, House Financial Services Committee Chairman Jeb Hensarling (R-Tx), and, on the Democratic side, rising star freshman Rep. John Delaney (D-Md) — have put down a marker to open up a new national conversation. Could bad money be driving out good jobs?
The Brady-Cornyn Monetary Commission is meticulously structured as a bipartisan, bicameral, neutral forum to study the empirical data, draw conclusions, and report back to Congress with recommendations, fast. Can this engage both parties? Yes. Kemp-Roth — which began the process of dramatically lowering marginal tax rates across-the-board — ignited a healthy competition between the parties. Brady-Cornyn, if enacted, is likely to ignite a healthy competition between Republicans and Democrats on how, by restoring good money, to create jobs in a climate of equitable prosperity.