PUBLIC RADIO'S MARKETPLACE COMMENTARIES:

Why The Public Can’t Do Anything About The Two Biggest Public Issues

Robert B. Reich

Marketplace, December 6, 2006

Democrats won control of Congress on two big issues – the war in Iraq and the economy. Yet both issues will remain almost completely out of their control, at least for the next two years.

The President remains commander-in-chief until January 2009. And in that role, according to the Constitution, he has the authority to decide defense policy and military strategy. Unlike Lyndon Johnson, who felt the pressure in 1967 when public opinion turned against the Vietnam War, President Bush is not up for reelection, so public opinion won’t sway him. The President said recently he’ll stay the course in Iraq – even though the administration’s own intelligence review says our presence there is causing more terrorism, not less.

The economy is also out of the hands of Democrats or the American electorate, notwithstanding that most Americans say they don’t like the way it’s being handled. Because of the huge budget deficits, fiscal policy can’t be used to fine tune the economy. The only lever that counts any more is monetary policy, which means Ben Bernanke and the Federal Reserve Board’s Open Market Committee are the only game in town.

Bernanke said last week that outside of the automobile and housing sectors, economic growth remains solid, and a tight labor market could spur inflation. Translated, this means the Fed won’t lower interest rates. It may even raise them.

Bernanke is wrong. Most peoples’ wages are going nowhere, and the auto and housing slumps could turn into a recession, especially if the Fed raises rates and chokes off demand. But there’s nothing anybody can do about Bernanke’s wrong-headedness.

Like the decisions of George Bush as commander-in-chief of the military, the decisions of Ben Bernanke and his Open Market Committee – the commanders-in-chief of the economy – are beyond democratic control.

That’s democratic with a small "d."