Republican presidential candidate Mitt Romney renewed support for auditing the Federal Reserve, wading into an issue that threatens to spark a fight at his party’s national convention next week.
“The Federal Reserve should be accountable,” Romney told thousands of voters at a campaign rally Monday in Goffstown, New Hampshire. “We should see what they’re doing.”
Under pressure from anti-tax Tea Party activists and other small government advocates, Republicans are considering including a plank in their platform calling for a full audit of the central bank -- a prospect that concerns many party leaders and their financial supporters. Romney’s remarks could put pressure on the Republican Platform Committee -- which is currently meeting in Tampa, the convention site -- to adopt the proposal.
On the platform committee’s website, proposals to audit the Federal Reserve are among the most popular. Representative Ron Paul of Texas, a longtime Fed critic who made opposition to it a major theme of his failed bid for the Republican presidential nomination, has said that if Romney’s backers resist the effort, it could result in a political battle at the convention.
Romney has chosen his words on the issue carefully, stopping short of siding with Paul even as he seeks support from him and his supporters.
“I would like to see the Fed audited,” Romney said today. Still, he cautioned that Congress shouldn’t be given the authority to run the central bank.
“I want to keep it independent,” he said. “There are very few groups that I would not want to give the keys to. One of them is Congress.”
Romney hasn’t endorsed legislation authored by Paul, which mandates a Government Accountability Office audit of the Fed that includes its deliberations on changes to the benchmark interest rate and other monetary policy decisions.
Romney’s running mate, Representative Paul Ryan of Wisconsin, has taken a harder line against the central back, backing Paul’s legislation and sponsoring a 2008 bill to force the Fed to focus solely on inflation.
“There is nothing more insidious that a government can do to its countrymen than to debase its currency - yet this is in fact what is occurring,” Ryan said at a December 2010 event sponsored by FreedomWorks, a think tank that promotes small government. FreedomWorks was originally called Empower America, where Ryan worked as a speech writer in the 1990s.
Ryan, who shared the stage with Romney at Monday’s rally, didn’t comment on the Fed question from an audience member.
Fed Chairman Ben Bernanke has said audits would undermine the central bank’s independence in setting interest rates.
Glenn Hubbard, one of Romney’s lead economic advisers, called Paul’s measure a “bad bill,” in a July 2009 opinion article in the Wall Street Journal. Of Congress’s efforts to wield more oversight of the Fed, he said: “This is trouble.”
“The Fed must above all maintain its political independence in conducting monetary policy,” Hubbard wrote in his article, which was also signed by Harvard University finance professor Hal Scott, a former American Stock Exchange governor, and Brookings Institution Chairman John L. Thornton, a former Goldman Sachs executive.
Some of Romney’s biggest financial backers share that view. Sander Gerber of Hudson Bay Capital, who attended a June 28 fundraiser for Romney at New York’s Pierre Hotel as well as one in Jerusalem July 30, and has given more than $30,000 over the past year to his campaign and the Republican Party, said some of the central bank’s operations should not be open to audit.
“I believe the Fed’s effectiveness hinges on its ability to be apolitical,” Gerber said in an e-mail, adding that he had not studied the issue thoroughly. At the same time, he added, it must “represent the interests of the people. Some things should be audited, other things not.”
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