Federal Reserve Chairman Ben Bernanke will visit an Army base in Texas on Thursday for a financial literacy event with trappings of a campaign stump, as the central bank faces weak support in voter polls and is under attack by politicians on the right and the left.
Among other activities at Ft. Bliss in El Paso, Bernanke is scheduled to greet soldiers returning from duty in Iraq and to hold a town hall meeting with Army families. It is Bernanke's first visit to an Army base as Fed chairman; a Fed historian said he could not recall a Fed chairman ever visiting a military installation.
While officials said the trip was instigated by base commanders, some Fed-watchers think the timing and venue are no coincidence -- the Fed is under attack from two prominent Texas politicians running for the Republican presidential nomination, Gov. Rick Perry and Rep. Ron Paul.
In August, Perry suggested Bernanke's push for significant monetary easing to help the economy was "treasonous" and that Bernanke would get an "ugly" reception in Texas. Paul, a libertarian, wants to abolish the Fed altogether.
"Make no doubt about it--this is a political campaign by the Fed to endear itself to voters, to explain itself a little bit further..."
- Stan Collender
"It's going right into the belly of the beast," said Stan Collender, a partner with Qorvis Communications in Washington, D.C., who specializes in financial public relations. "Make no doubt about it--this is a political campaign by the Fed to endear itself to voters, to explain itself a little bit further...The Fed has to establish its credentials--or reestablish its credentials--in a way that people understand what it does, appreciate what it does, and understand that it's working for them...(not) just for Wall Street."
A Fed spokesperson declined to comment for the record on any political implications of Bernanke's trip. The Associated Press quoted Fed officials as saying that Ft. Bliss was chosen because it has a successful financial literacy program that Bernanke wants to highlight.
Bernanke has publicly insisted the Fed will not bow to political pressure. He also has made more openness, transparency and communication at the Fed a top priority of his chairmanship. Among other things, he has initiated quarterly press conferences, held several "town hall meeting"-style events and participated in a profile on CBS's "60 Minutes."
"I am not sure I would make much of the fact that this (appearance) happens to be in Texas," said Roberto Perli, a former Fed economist now with research firm ISI Group. "I don’t think (Bernanke) would necessarily have to go to Texas if he wanted to reinforce the Fed’s independence--he did that already more convincingly by easing policy" after being warned against that in a letter from Republican Congressional leaders in September, Perli said.
"We listen to everyone's input," Bernanke said at a press conference last week. "We are going to make our decisions based on what's good for the economy, and we're not going to take politics into account."
Allan Meltzer, a professor of political economy at Carnegie Mellon University who is known as one of the Fed's unofficial historians, said he did not recall a specific talk by a Fed chairman to a military audience, "but that could have happened."
Meltzer added, "Bernanke has been under pressure not only from candidates but from Congress. In the past, he has gone on TV. That was a first. And he now runs a news conference...Are these efforts to increase 'openness' or responses to political criticism, or both? How can one tell?"
An official familiar with the event's planning said it had been "in the works for some time" and suggested it had not been scheduled in response to Perry's attacks.
In a Gallup poll last week, Bernanke came in dead last with voters who were asked which 10 leaders and institutions they most trusted to create jobs. Bernanke clocked in at 40%, just behind leaders in Congress; President Obama logged in with 52% and small business owners topped the list at 79%.
A Bloomberg poll in December found that 39% of those polled said the Fed should be held more accountable; 16% said that it should be abolished and 37% favored no changes.
Collender said he thought trips like the one to Ft. Bliss will help improve Bernanke's and the Fed's public standing "a little bit" but that "the thing that will help the most...(in) getting people off the Fed's back is if the economy is just humming along--what he's got to do is buy some time until some of the things that the Fed's putting in place...get a chance to work."