Because the Fed can’t do much of anything.
Members of the Federal Reserve lowered their expectations for economic growth and raised their projections of the nation’s unemployment rate, cautioning for the first time in recent memory that the low employment rate “over the next several years… would likely be below levels they consider to be consistent” with their mandate to maximize employment, according to meeting minutes released Wednesday. [...]
So, the Fed is communicating to the market its awareness of its limits to boost employment while keeping inflation in check, the former top Fed economist said.
The Republican solution is to cut taxes, which adds to the deficit and doesn’t have the same stimulative effect on job creation. (PSST! They’re not really deficit hawks, it turns out.)
The reasonable and rational solution, however, is to pass a jobs bill that immediately spends money on, you know, jobs. It, too, will add to deficit, but it will immediately stimulate job growth. Then, when the economy has stabilized, the hawks can tweak out on the budget all they want.
There is no other solution, other than to clap real hard and hope for fairies. The Fed can’t do it. Tax cuts won’t do it. And refusing to spend money won’t do it. Can anyone tell me when, if ever, we created jobs, grew the economy and stabilized both housing and the stock market by focusing on deficit reduction and deficit reduction alone?