NY Sun: Romney, the Fed and the Constitution

From the New York Sun:

Governor Romney’s latest statement in support of the independence of the Federal Reserve has brought a sharp warning from Congressman Ron Paul that the Constitution vests responsibility over monetary policy in the Congress.

The congressman’s riposte came in response to a statement by Mr. Romney — quoted Wednesday in the Christian Post — that, while the former Massachusetts governor supports an audit of the Federal Reserve, the Fed should maintain its independence from Congress.

Dr. Paul’s riposte suggests that even though Mr. Romney is preparing to run for president on a platform calling for an audit of Fed monetary policy and the establishment of a commission to look at a modern gold standard, it’s not yet clear whether Mr. Romney is on the same wavelength as the long-time campaigner for monetary reform.

“The Federal Reserve should be accountable," Mr. Romney was quoted by the Post as saying at a New Hampshire campaign stop Monday. "We should see what they're doing." But the online newspaper reported that in response to a question later, the governor qualified his support for an audit of the Fed by saying, "I want to keep [the Fed] independent.”

“There are very few groups that I would not want to give the keys to,” Mr. Romney was quoted by the Post as saying. “One of them is Congress.”

In an email Friday, Congressman Paul was asked by The New York Sun whether he was with Mr. Romney on the point. The congressman emailed a reply saying, “But weren't the ‘keys’ or responsibility over monetary policy given to Congress by the Constitution.” He added, “but of course without power to create money out of thin air to buy up debt in secrecy.”

The congressman was referring to Article One, Section Eight of the Constitution, which grants to Congress the power to coin money and regulate the value thereof, and of foreign coin, and to fix the standard of weights and measures. It also grants to Congress the power to borrow money on the credit of the United States.

The monetary powers are some of the most clearly enumerated grants to Congress in the entire Constitution. It is hard to remember a presidential candidate laying down such a blunt marker against Congress at the outset of a general election campaign.

The comments by Messrs. Romney and Paul come as the struggle over a Fed audit is heating up in the Congress. The House passed late last month and by a bi-partisan majority a measure that would authorize a major audit of the Fed — not only of its financial books but of its closed door deliberations. The measure, which faces an uphill battle in the Senate, is opposed by the chairman of the Fed, Ben Bernanke, on the grounds that it would interfere with the central bank’s independence. The plank calling for an audit of the Fed in the draft Republican platform emerged this week, on the eve of the Republican National Convention at Tampa.