Bernanke and Congress Once Again Go Through the Monetary Motions

The Fed chair and lawmakers reached as much of an understanding as they always do (i.e., very little).

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There are a few things you can expect of any Bernanke visit to Capitol Hill: a fuller-than usual hearing room, for example, and a data-heavy rundown of economic health.

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And when the Fed chairman on Wednesday testified before the Joint Economic Committee in his regular "economic outlook" hearing, the proceedings sounded a lot like Bernanke's last testimony before the committee, last year:

Bernanke: "The Fed is doing its job and doing it well."

Lawmakers: "We're not so sure. What is the Fed's next move?"

Bernanke: "Not sure. Also, for heaven's sake, don't ruin everything with austerity."

Lawmakers: "Mm hm. And you shouldn't ruin everything with inflation."

As far as summaries go, it's a little reductive, but it also represents what the conversation between the Fed and its critics on Capitol Hill has looked like for over a year.

In his prepared remarks on Wednesday, Bernanke credited Fed policies aimed at stimulating the economy -- including low interest rates and asset purchases known as "quantitative easing" -- with boosting the housing market and eliminating some of the headwinds the economy has faced during the recovery.

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Without Fed action, he said, "this recovery would be weaker than it has been."

He also cautioned committee members that a recent spate of spending cuts and tax increases is significantly slowing economic growth. Bernanke rattled off a list of culprits for a slower-than-necessary recovery: an expiring payroll tax cut, tax increases on wealthy Americans, caps on discretionary spending, sequestration cuts, and cuts to defense spending.

And as always, Bernanke was careful not to make any policy prescriptions, telling lawmakers that he is not advocating one of the above policies over another. Rather, he said, "taking them all together, they have the effect of being a drag on economic growth, and perhaps more than necessary." Bernanke advocated tackling the nation's long-term debt issues once the economy has further stabilized.

He also gave no firm indications of when the Fed will end its monthly asset purchases known as "QE3," saying that the timeline of the program will depend upon economic data.

Several committee members responded by expressing common concerns about low interest rates and a ballooning Fed balance sheet. The committee chairman, Rep. Kevin Brady, R-Texas, wondered how long it could last and how effective those policies could be.

"I don't question the intention of current Fed policy to fulfill its dual mandate, but I question the policy's effects on employment and worry about its future risks," he said.

[READ: Why the Fed's QE3 Is Great for the Rich]

Or, in other words, the Fed's heart is in the right place, but its policy may be counterproductive.

Opponents of accommodative policy often say that it could cause hyperinflation, pointing out that quantitative easing -- sometimes simply referred to as "printing money" -- could send inflation spiraling upward, leaving the Fed unable to put on the brakes.

Committee members also criticized low interest rates, saying that they hurt savers -- another critique Bernanke often faces.

Of course, there was more nuance to the conversation on Capitol Hill. Criticism of Fed policy tends to fall along partisan lines. Republican lawmakers have been more apt than Democrats to critique Bernanke's loose policy, as well as the Fed's "dual mandate" to foster both price stability and employment. Some say that Fed policy should be limited only to keeping inflation in check.

In addition, the economy is stronger than it was last year, and some key threats, like the European economic crisis, have eased considerably.

Democrats, meanwhile, are more likely to defend the dual mandate. Sen. Amy Klobuchar, D-Minn., told her fellow committee members that "now is not the time for the Fed to take its eye off promoting employment."

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So what does it matter if Bernanke and the committee do the same song and dance every so often? A little repetition of the same old argument may not hurt, but it does emphasize why the debate over economic policy in Washington is so intractable. Even though economics relies on cold, hard data, it is also a Rorschach test, especially in the hands of politicians.