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Look Ahead: The Bernanke Hearings


We're going to talk more about this with David Wessel. He's deputy Washington bureau chief of The Wall Street Journal and a regular guest on this program. David, good morning.

Mr. DAVID WESSEL (The Wall Street Journal): Good morning.

INSKEEP: Is there anything that might stand in the way--obviously stand in the way of Ben Bernanke's confirmation?

Mr. WESSEL: No. President Bush has found the John Roberts of central banking. His resume is pretty impressive, as you know, and even the liberal Democrats on the Banking Committee say they may poke at him a little, but they don't expect any problem getting his confirmation through the Senate.

INSKEEP: Let me take that analogy a step further. Are you saying that this is a guy who is likely to be confirmed, even though there are plenty of people who will disagree with him on substance?

Mr. WESSEL: Yes, I think so. For the last six months, Ben Bernanke has been the chairman of President Bush's Council of Economic Advisers, and as such, he's been defending the president's spending policies, tax cuts, deficits, and the Democrats don't like that. And I think at the hearing, we'll hear them poking him a little bit on that, asking if he really believes all the things he said, or was he just speaking for the president, and asking for his assurance that as chairman of the Federal Reserve, that he will hold himself out as an independent arbiter of fiscal policy the way Alan Greenspan did.

INSKEEP: The way Alan Greenspan did. Now there are a lot of Democrats who are very unhappy with Alan Greenspan, who went on record, for example, in saying that the tax cuts were a good idea. A number of years later, decided the deficits were a bad idea. They felt that he was extremely political after a while. Are Democrats going to ask for reassurances that Bernanke will be different?

Mr. WESSEL: Members of Congress love the chairman of the Fed to talk about their issues as long as he agrees with them. I think what the Democrats in the Senate will try and do is make sure that Mr. Bernanke understands they expect him to be independent of the White House, even though he's working there now.

INSKEEP: What questions do lawmakers have about a position that Bernanke has taken in the past? He has said that it would be advisable to set a public target for the amount of inflation that is deemed acceptable.

Mr. WESSEL: Right. Mr. Bernanke believes that the Federal Reserve ought to be more transparent and more accountable, and the way in which he would do that is to set a public target and then we could judge whether they were succeeding or failing. It doesn't seem like the members of Congress are too exercised about this, although some of them will worry that he will be too tough on inflation at the expense of unemployment. I suspect he can talk his way out of that one. And interestingly, they don't seem to be talking now that he needs a change in the law to set such a target. The members of Congress seem very willing to leave monetary policy in the hands of the Fed chairman, and although they're a little suspicious of this target, I think he'll reassure them that he'll move very slowly and only with a consensus of other Fed officials.

INSKEEP: So he could just set his own target if he wants to do that.

Mr. WESSEL: Many people think the Fed already has an inflation target of between 1 and 2 percent. It's just implicit, and they don't discuss it. Chairman Greenspan talks about price stability all the time without defining it, and it would be welcome in some quarters if the Fed were a little more explicit about what it's aiming at.

INSKEEP: When Bernanke says that the Fed could become more transparent and accountable, does this mean that as chairman of the Fed, he would actually say things that people could understand?

Mr. WESSEL: Mr. Greenspan had an approach to speaking that was very hard to understand. Mr. Bernanke, as a professor, can be clear when he wants to be, and he has argued that it's important for the public to know why the Fed is doing what it's doing and how it intends to do it. The test is whether he can take that academic theory into practice once he's the chairman of the Fed and the markets begin moving on every word and adverb he uses.

INSKEEP: David Wessel is deputy Washington bureau chief for The Wall Street Journal. David, thanks.

Mr. WESSEL: Thank you.

INSKEEP: This is MORNING EDITION from NPR News. I'm Steve Inskeep.

RENEE MONTAGNE (Host): And I think I'm Renee Montagne. Transcript provided by NPR, Copyright NPR.