Tags: Romney | Adviser | Fed | Economy

Romney Adviser: Fed Can’t Do Any More to Help Economy

Thursday, 29 March 2012 02:35 PM

The Federal Reserve has run out of tools to fix the economy and more meaningful fiscal reforms are needed now, including home refinance plans, corporate tax cuts and better long-term budgeting, says Glenn Hubbard, dean of Columbia business school and Mitt Romney adviser.

The Federal Reserve has cut interest rates to near zero and has injected over $2.3 trillion into the economy via monetary stimulus measures with the aim of encouraging price stability and hiring.

Still, unemployment rates remain well above pre-recession highs and economic growth remains somewhat lackluster.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

Now it's time for the Fed to stand down and the government to take center stage.

"The real issue here is for the government to step up with better fiscal policy than we've seen to promote economic growth," Hubbard tells Yahoo's The Daily Ticker, a finance blog.

Three things the federal government could do but isn't should include encouraging massive home-loan refinancing for more homeowners in trouble on their mortgages, craft better long-term federal budgeting that would allow for tax cuts today paid for by reform down the road, and cut corporate tax rates to foster investment and jobs demand.

Such policies would improve the weak labor market by fueling more economic growth, which many say won't break 3 percent his year.

"If we grow at consensus forecasts of around 2.5 percent were are not really going to move the needle much on joblessness and that is a social problem," Hubbard says.

Fed Chairman Ben Bernanke has said he can't rule out using more monetary policies to reanimate the economy, as with the unemployment rate standing at 8.3 percent, it's "far too early to declare victory."

"Well, we don't take any options off the table," Bernanke tells ABC News.

"We don't know what's going to happen in the future, and we have to be prepared to respond to however the economy evolves."

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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Thursday, 29 March 2012 02:35 PM
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