Bal Harbour, FL
The Federal Reserve Board plays a major role in determining economic policy for the U.S. For working men and women, its decisions spell the difference between a job and unemployment, or between long overdue wage increases and continuing wage decline.
Fifty years ago Congress enacted the Employment Act of 1946, which declares it to be the policy as well as the responsibility of the federal government "to use all practicable means ... to promote maximum employment, production and purchasing power." For five decades that law -- buttressed in 1978 by the HumphreyHawkins Full Employment Act -- has stood as an unfulfilled commitment to Americats working families. Worse, the Fed has acted as if a reduction in unemployment below six percent is a major threat to inflation and the economy. Now Senator Connie Mack (R-FL) has introduced a bill to strip out the federal government's responsibility to promote full employment and the Federal Reserve's responsibility for anything other than price stability.
The chairman of the Fed, Alan Greenspan, has led an unjustified assault on the Bureau of Labor Statisticst calculation of the rate of inflation through the Consumer Price Index (CPI). The principal point of that assault is to undermine the security of millions of retirees and other Social Security recipients who depend on the CPI for indexation of their benefits. If this effort succeeds, working men and women will suffer as well; a reduced CPI will lead many employers to further restrict wage increases while triggering a back-door tax increase for the American people.
President Clinton's decisions about whom to appoint as chair, vice chair and member of the Board of Governors of the Fed are among the most important economic policy decisions he makes. But Republicans in the Senate have begun to undermine the nomination process for the Fed through their attacks on Felix Rohatyn because of his pro-growth policies, leading Mr. Rohatyn to request that his name not be submitted for the Fed.
As the nation marks the 50th anniversary of the Employment Act of 1946, the AFL-CIO urges President Clinton to appoint men and women as Fed chair, vice chair and member of the Board of Governors who believe the Federal Reserve should promote full employment and economic growth as well as price stability. President Clinton is to be commended for recommending someone like Felix Rohatyn who reflects these standards. Mr. Greenspan does not meet these criteria.