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A Project of The Annenberg Public Policy Center

Double Whopper, No Beef

The Romney campaign crams two howling falsehoods into a very few words:

  • It accuses President Obama of being personally responsible for actions by the Federal Reserve Board, which is independent.
  • It claims Obama is “spending your tax dollars” in the Fed’s latest move to buy mortgage-backed securities, when in fact the Fed is turning a big profit for the Treasury, reducing the deficit.

Romney campaign manager Matt Rhoades committed both these whoppers in an appeal for donations that was emailed Sept. 17 and repeated on the campaign’s website blog.

Matt Rhoades, Sept. 17: Barack Obama is at it again — spending your tax dollars to bail out his failed economic plan. It’s more of the same from an out-of-touch president with no plan to fix our economy and put Americans back to work.

This past week, the Federal Reserve announced it would print $40 billion every month to prop up this administration’s jobless recovery — that’s money we can’t afford for jobs we will never see.

Neither claim is true, or even close.

Independent Fed

The Fed by law is independent of the president and Congress, and operates under a board of governors whose members cannot be removed by the president for their policy views. The current chairman, Ben Bernanke, served as President George W. Bush’s chief economic adviser in 2005 and was appointed to head the Fed by Bush in 2006. Obama reappointed him in 2010, and the Senate confirmed him by a bipartisan vote of 70 to 30. (Opposition coming from 18 Republicans and 11 Democrats plus independent Bernard Sanders of Vermont, who votes with Democrats.)

Rhoades would have been correct to say “The Fed is at it again,” since this is the third round of what is technically called “quantitative easing,” meaning moves to inject more money into the economy. But it’s not the president’s doing, and legally cannot be.

‘Your Tax Dollars’?

And Rhoades gets it backward when he claims “your tax dollars” are being spent. Actually, the Fed gets no money from Congress at all. In fact, it turns a profit for taxpayers.

And those profits have been increased precisely because of earlier “quantitative easings” by the Fed, which earns money from interest on the funds it lends to banks and other financial institutions. The Fed transferred just under $32 billion to the Treasury in 2008, but that jumped to over $47 billion in 2009, $79 billion in 2010 and just under $77 billion last year, according to figures from the Fed’s annual reports.

Unlike Burger King’s “Double Whopper,” which reportedly contains more than 900 calories, there’s not much meat to Rhoades’ claims about the Fed’s latest move. We’re reminded of Walter Mondale’s reference to a 1984 Wendy’s commercial, when the Democratic vice president challenged his presidential primary foe Gary Hart’s supposed lack of substance with the debate line “Where’s the beef?

Rhoades could fairly argue that Obama’s failure to get the economy moving briskly forward has forced the Fed to take action for the third time. That would be a matter of opinion. It’s also fair to argue that the Fed is taking on too much risk to bolster the flagging economy. That’s also a matter of opinion. But to claim that Obama is himself “spending your tax dollars” on this is doubly wrong.

— Brooks Jackson