I told him it was because he deserved no less since the major news and media folks were doing their best to downplay his incompetence and the lies of this administration.
Now we have an investigation of Benghazi in full bloom and an admission that this administration's IRS has "flagged"conservatives with Tea Party and Patriot in their name.
Obama promised to have the most open and honest administration and now we know that was a pack of lies. We also know that his packed pro-labor NLRB was recently smacked down by a D.C Appeals Court for continued over reaching.
I would be delighted to get off Obama's back but he keeps providing me more and more evidence why I, and others of the same mind and concern, should keep on his case.
It is one thing to be incompetent, to be out of your league but it is another to have such contempt for voters that you will lie and alter facts and allow servants of the government to die for fear truth would damage your campaign and its questionable message about the weakness of our jihadists enemies.
Even as recent as this week some Middle East Arab nations asked Obama to lead. A fat chance!"
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SEMPER FI!
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I know this will get under the skin of some of my friends but Fox is the only news station left that truly reports and analyzes just about all news. The rest basically report on soft items that have a prurient cast to them, ie sex trials, Cleveland etc..---
Now we find the IRS has been spending special attention on conservatives. with funny names like Tea Party etc. This is reminiscent of Hitler and his acts of intimidation.
More evidence of how thin skin this administration is. This is , and I repeat, the administration that Obama pledged was going to be the most honest, the most open and the one which would not favor lobbyists. All have proven to be a pack of lies. (See 1 below.)
Meanwhile another radical who loves this nation, like me, speaks out about Benghazi. He does so because weakness equals encouragement and encouragement means more attacks on our soil!
We have a confused, compromised and weak president who does not know what he is doing. In the Wall Street Journal today there is an article about the the Arab community in the Middle East asking our president to lead.(See 1a, 1b and 1c below.)
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Must have been the act of an American terrorist who happened to have some extra bombs he was afraid to explode in America. (See 2 below.)
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Has The Fed put themselves into a damned if they do and damned if they don't position?
By pumping money into the economy it was their intent to cause the stock market to go up, which is has, make investors enjoy the wealth effect, which they are, and then The Fed hoped consumers would go out and spend money, which they have not, so the economy would roar, which is has not.
Had the Fed been more successful they would now be facing an economy which was getting better, which it is modestly speaking, and thus interest rates would begin upticking and, thus, possibly causing feed back problems as borrowing would reflect an improved economy with subsequent higher interest rates reflecting as much. This has not happened, so the Fed is stuck with a huge balance sheet of debt, the dollar has held because the Euro has tanked and most believe inflation is ahead which, of course, is the easy way out of all the debt The Fed and Obama have created.
Ah, but then the consumer eventually gets it in the neck, the middle class gets squeezed and where will the employment come from if this all results in a future restraint on spending.
Martin Feldstein discusses this conundrum. (See 3 below.)
What is more interesting is that Japan's Abe is copying our Fed.
---
Dick
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1)
IRS admits targeting conservatives for tax scrutiny in 2012 election
By
The Internal Revenue Service on Friday acknowledged that it flagged political groups with “tea party” or “patriot” in their names for special scrutiny when they applied for tax-exempt status, an admission that is fueling long-held suspicions among conservatives that the agency has been singling them out for unfair treatment.
The IRS official who oversees tax-exempt groups, Lois Lerner, said the actions, although not motivated by partisan concerns, were wrong, and she apologized twice on Friday.
She said that between 2010 and 2012, about 75 of these groups were selected for extra screening as part of a broader review of political advocacy organizations that were seeking tax-exempt status. Front-line IRS employees working in the tax-exempt unit in Cincinnati selected groups with “tea party” or “patriot” in their names, she said, as a shorthand because of the proliferation of these groups in recent years.
The employees also requested donor lists from some of the groups and sent questionnaires seeking overly broad information, Lerner acknowledged.
“That’s absolutely inappropriate and not the way we ought to do things,” Lerner said in a briefing with reporters. “They didn’t do it out of any political bias.”
Lerner would not say whether any of the IRS employees involved have been disciplined, but she said that new policies have been put in place to prohibit this kind of screening and that, overall, none of the 75 groups have been rejected for approval so far.
The IRS apology did not mollify either conservative political groups or Republican lawmakers, who have been warning for more than a year about unfair treatment from the agency.
“I call on the White House to conduct a transparent, government-wide review aimed at assuring the American people that these thuggish practices are not underway at the IRS or elsewhere in the administration against anyone, regardless of their political views,” Senate Minority Leader Mitch McConnell (R-Ky.) said Friday. “An apology won’t put this issue to rest.”
One of the nation’s largest tea party groups, the Tea Party Patriots, said it rejected the IRS’s explanation and demanded the resignations of all officials involved. The group also called on President Obama to apologize for ignoring its groups’ concerns.
“The IRS has demonstrated the most disturbing, illegal and outrageous abuse of government power,” said Jenny Beth Martin, national coordinator for Tea Party Patriots. “This deliberate targeting and harassment of tea party groups reaches a new low in illegal government activity and overreach.”
The IRS, part of the Treasury Department, operates as an independent agency. Lerner said she has had no contact with administration officials over the issue. White House and Treasury officials had no immediate comment on Friday.
The disclosure comes after more than a year of tense debate about the tax status of conservative political groups. Tea party groups and other conservative organizations have said they have been the subject of inappropriate screening by the IRS, prompting formal complaints by Republican lawmakers.
1a)Let Benghazi's Chips Fall
The second fulcrum event is the testimony this week by Gregory Hicks, the Tripoli embassy's No. 2 at the time of the assault. The Hicks testimony left no doubt that Benghazi was an attack by organized terrorists. In the course of that long night, Mr. Hicks or his aides discussed what was happening with the Pentagon, the State Department and the U.S. Africa Command in Stuttgart, Germany. A lot of public officials were in the loop, and in real time.
1b)Why discovering the truth about Benghazi matters—and it has to do with 9/11
By Guy Rodgers
Executive Director
Dear Richard,
There’s a lesson from 9/11 that MUST be applied to the Benghazi terror attack—and very few people are talking about it.
We know terrorist attacks against America pre-9/11, such as the 1993 World Trade Center bombing and the attack on the USS Cole, emboldened Osama bin Laden.
He watched the weak and confused responses by our government to those terrorist attacks and concluded the United States government and its people didn’t have the will to fight back against a larger attack.
He even alluded to this in one of his videos in the late 90’s, when he made reference to the world watching to see who is “the strong horse.”
Fast forward to Benghazi.
It should be abundantly clear by now to any reasonable observer that there were government decisions made prior to the attack that compromised security in Benghazi; there were decisions made during the attack that compromised the ability to rescue those under attack; and there were decisions made after the attack to alter the narrative to make it look like a video prompted the attack.
Even the “establishment media” has finally, finally, finally begun to take a closer look at this.
For instance, this short, must-see ABC News report, provides powerful evidence that it was people inside the Obama administration who changed the talking points about what happened in Benghazi—not the intelligence community as White House Press Secretary Jay Carney claimed on November 28, 2012.
Here’s one excerpt from that ABC News report:
Nuland was referring to information from the CIA that was originally included in the talking points. The CIA clearly had concerns about previous al Qaida-related activity and how it could not “rule out” that al-Qaida related Islamists were involved in the attack.
In other words, Nuland was more concerned about the State Department getting a black eye for ignoring security warnings than it was about putting out the truth as to why those four men died.
In spite of all of these new revelations, there are those(Hillary) who still ask, “Why does it matter?”
Here’s why we won’t let this go. It’s because of the lesson America should have learned from 9/11.
9/11 happened in large part because American leadership displayed weakness, confusion, and a lack of resolve in responding to the terrorist attacks that occurred prior to 9/11.
Now, today, consider what jihadists around the world are watching:
Are there Republicans in Washington who want to use this debacle for partisan, political purposes? Of course—just as there would be Democrats trying to do so if this happened on the watch of a Republican president.
Our reason for pressing forward is this:
We cannot, as a nation, afford once again to send signs of weakness and confusion to the jihadist world, as we did before 9/11.
If we do, we are giving the jihadists of the world every encouragement to attack us again in a major way.
The “easy button” would be to, as John Kerry said, move on to other matters.
But our mission to protect our national security—our very reason for being—and our responsibility to our fellow Americans, will not allow us to do that.
This is why, on Monday, we will issue a national ACTION ALERT to pressure House Speaker John Boehner to appoint a special select committee to finally and completely ferret out the truth—and issue recommendations regarding what must be done so that this does not happen again.
Yours for a safe and free America,
Guy Rodgers
1a)Let Benghazi's Chips Fall
The House should appoint a Select Committee.
Congressman Frank Wolf of Virginia has written House Speaker John Boehner, requesting the creation of a bipartisan Select Committee to investigate the Benghazi terror debacle. It is an excellent idea. A Select Committee is the only means available now for the U.S. political system to extricate itself from the labyrinth called Benghazi.
There have been two fulcrum events in the accounting of what happened in Benghazi. The first was U.N. Ambassador Susan Rice's September 16 declarations on TV that Benghazi was part of the Islamic world's violent, spontaneous reaction to the incendiary California YouTube video.
That assertion, soon revised to acknowledge that Benghazi was a terrorist attack, set in motion a tug of war between some Congressional Republicans and the Obama Administration, with a press corps mostly uninterested in pursuing the story
The second fulcrum event is the testimony this week by Gregory Hicks, the Tripoli embassy's No. 2 at the time of the assault. The Hicks testimony left no doubt that Benghazi was an attack by organized terrorists. In the course of that long night, Mr. Hicks or his aides discussed what was happening with the Pentagon, the State Department and the U.S. Africa Command in Stuttgart, Germany. A lot of public officials were in the loop, and in real time.
The distance and discrepancy between what Mr. Hicks was telling these officials across the U.S. government that night and what Ambassador Rice told the American people five days later is vast. That distance needs to be explained, and the loop closed for the sake of public accountability.
There are strong reasons for doing so, starting with the murdered U.S. ambassador, Christopher Stevens. Across this country's history, the murder of an American ambassador, the nation's representative, has been taken as not merely a tragedy but an attack on U.S. interests that demands an official accounting to the American people.
Nothing about Benghazi, including the Accountability Review Board report, has reflected that U.S. tradition. It has instead represented the more recent impulse in our politics to sweep uncomfortable events out of the news, move forward in the Twitter news cycle, or grind it down into no more than partisan pettiness.
Has partisanship been in play here? Yes, as always in Washington. But the terrorist assault on a U.S. mission abroad deserves not to be quashed by partisanship.
It may be that a bipartisan Select Committee would validate the Obama Administration's version of events. So be it. And if so, the Administration officials on duty then should not fear it. But after the Hicks testimony, the idea that the American political system should move on from the murder of a U.S. ambassador in a distant land doesn't sit right.
Mr. Boehner said on Thursday that the Administration should release its email communications on Benghazi, but it won't do so unless they are subpoenaed. Frank Wolf, one of the House's most senior Members, has it right. Benghazi's explanation deserves the best effort elected officials can give it, and the right vehicle is a Select Committee with subpoena power and deposition authority.
1b)Why discovering the truth about Benghazi matters—and it has to do with 9/11
By Guy Rodgers
Executive Director
Dear Richard,
There’s a lesson from 9/11 that MUST be applied to the Benghazi terror attack—and very few people are talking about it.
We know terrorist attacks against America pre-9/11, such as the 1993 World Trade Center bombing and the attack on the USS Cole, emboldened Osama bin Laden.
He watched the weak and confused responses by our government to those terrorist attacks and concluded the United States government and its people didn’t have the will to fight back against a larger attack.
He even alluded to this in one of his videos in the late 90’s, when he made reference to the world watching to see who is “the strong horse.”
Fast forward to Benghazi.
It should be abundantly clear by now to any reasonable observer that there were government decisions made prior to the attack that compromised security in Benghazi; there were decisions made during the attack that compromised the ability to rescue those under attack; and there were decisions made after the attack to alter the narrative to make it look like a video prompted the attack.
Even the “establishment media” has finally, finally, finally begun to take a closer look at this.
For instance, this short, must-see ABC News report, provides powerful evidence that it was people inside the Obama administration who changed the talking points about what happened in Benghazi—not the intelligence community as White House Press Secretary Jay Carney claimed on November 28, 2012.
Here’s one excerpt from that ABC News report:
| In an email to officials at the White House and the intelligence agencies, State Department spokesman Victoria Nuland took issue with including that information because it “could be abused by members [of Congress] to beat up the State Department for not paying attention to warnings, so why would we want to feed that either?” |
Nuland was referring to information from the CIA that was originally included in the talking points. The CIA clearly had concerns about previous al Qaida-related activity and how it could not “rule out” that al-Qaida related Islamists were involved in the attack.
In other words, Nuland was more concerned about the State Department getting a black eye for ignoring security warnings than it was about putting out the truth as to why those four men died.
In spite of all of these new revelations, there are those(Hillary) who still ask, “Why does it matter?”
Here’s why we won’t let this go. It’s because of the lesson America should have learned from 9/11.
9/11 happened in large part because American leadership displayed weakness, confusion, and a lack of resolve in responding to the terrorist attacks that occurred prior to 9/11.
Now, today, consider what jihadists around the world are watching:
|
| What message is being sent, loud and clear, to our jihadist enemies in America and around the world? The same message of weakness, confusion and a lack of resolve that was sent prior to 9/11. But this time it’s worse, because not only has the response by this administration been weak and confusing, it has compounded that failure by attempting to cover up what really happened. |
Are there Republicans in Washington who want to use this debacle for partisan, political purposes? Of course—just as there would be Democrats trying to do so if this happened on the watch of a Republican president.
Our reason for pressing forward is this:
| THE JIHADISTS OF THE WORLD NEED TO KNOW, WITHOUT A SHADOW OF A DOUBT, THAT THERE ARE PEOPLE IN THE UNITED STATES WHO WILL NOT CAPITULATE IN THE FACE OF TERRORISM AND WHO ARE NOT CONFUSED ABOUT WHO THE ENEMY IS AND WHY THE ENEMY IS ATTACKING US. THEY NEED TO KNOW THAT THERE ARE PEOPLE IN AMERICA WHO WILL NOT REST UNTIL WE HAVE A FULL ACCOUNTING OF WHY THESE MEN DIED, SO THAT AMERICA CAN TAKE APPROPRIATE ACTION TO ENSURE SOMETHING LIKE THIS NEVER HAPPENS AGAIN. THEY NEED TO KNOW THAT THERE ARE PEOPLE IN THE UNITED STATES WHO WILL CONTINUE TO DEMAND THAT OUR GOVERNMENT POLICIES RELATED TO JIHAD BE CHANGED TO ACCURATELY DEFINE WHO OUR ENEMY IS AND WHY THEY ARE ATTACKING US. |
We cannot, as a nation, afford once again to send signs of weakness and confusion to the jihadist world, as we did before 9/11.
If we do, we are giving the jihadists of the world every encouragement to attack us again in a major way.
The “easy button” would be to, as John Kerry said, move on to other matters.
But our mission to protect our national security—our very reason for being—and our responsibility to our fellow Americans, will not allow us to do that.
This is why, on Monday, we will issue a national ACTION ALERT to pressure House Speaker John Boehner to appoint a special select committee to finally and completely ferret out the truth—and issue recommendations regarding what must be done so that this does not happen again.
Yours for a safe and free America,
Guy Rodgers
1c)Arabs Ask U.S. to Lead on Syria
The U.S.'s closest Arab allies are jointly pressing PresidentBarack Obama to take the lead in bridging the Middle East's divisions over Syria, traveling to Washington to personally drive home their fears that some of the region's other leaders are strengthening radicals and prolonging President Bashar al-Assad's rule.
The coordinated message was delivered to Mr. Obama during separate White House meetings in recent weeks with Jordan's King Abdullah II, the United Arab Emirates' Crown Prince Mohammed bin Zayed al-Nahyan and Saudi Arabia's Foreign Minister Saud al-Faisal, according to senior U.S. and Arab officials familiar with the discussions.
The three royals' message to Mr. Obama was a not-so-subtle slap at Qatar and Turkey—both of which, officials in these Arab countries believe, are funneling funds and possibly weapons to groups promoting political Islam and in particular to those aligned with the Muslim Brotherhood.
They are also concerned that aid from Qatar has bolstered the Al-Nusra Front, a powerful Syrian militia fighting Mr. Assad's forces, which the U.S. has designated as a terrorist organization.
"We need someone to manage the players" in the region, said a senior Arab official involved in the discussions. "The U.S. and the president are the only ones who can put Qatar in its place."
Qatari officials, who have publicly denied supporting the Al-Nusra Front, declined to comment Thursday. A Turkish official denied Prime Minister Recep Tayyip Erdogan's government was favoring Islamist parties in Syria or anywhere else in the region. "We just support the rights of the Syrian people," the official said.
Saudi Arabia, Jordan and the U.A.E. are central players in American efforts to bring about an end to the civil war in Syria, contain Iran's nuclear program and kick-start a new round of Arab-Israeli peace talks. But the U.S. also relies heavily on Qatar and Turkey to advance a Syrian political transition and to restart the Mideast peace process.
Throughout Syria's conflict, the five Sunni lands have backed efforts to support the rebels. But they have largely broken into two camps when it comes to supporting specific rebel groups or leaders—which U.S., European and Arab leaders say has contributed to the fracturing of the opposition, both militarily and politically.
Throughout Syria's conflict, the five Sunni lands have backed efforts to support the rebels. But they have largely broken into two camps when it comes to supporting specific rebel groups or leaders—which U.S., European and Arab leaders say has contributed to the fracturing of the opposition, both militarily and politically.
Riyadh, Amman and Abu Dhabi are positioning themselves as a moderate front in the Syrian crisis, said these officials, seeking to support rebel factions not aligned with the Islamist Muslim Brotherhood or linked to extremist militant groups like al Qaeda.
Arab officials said they haven't pressed Mr. Obama to deploy American troops in Syria or to use U.S. warplanes. Instead, they hope he will play a higher-profile role in seeking to forge a moderate, unified coalition that is purged of "radical" elements that threaten Syrian minorities who might otherwise already have broken with Mr. Assad.
A White House official declined to comment on the specifics of Mr. Obama's talks with the three Arab leaders but stressed that he is aggressively working to unify the Mideast states on Syria.
Mr. Obama also met with Qatar's prime minister, Sheikh Hamad bin Jassim al-Thani, last month in Washington. He will host Mr. Erdogan at the White House in the coming weeks, the official said.
Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov announced on Tuesday a plan to host a new international conference on Syria, possibly by month-end in Geneva.
"A major part of the discussions has been and will continue to be what we can do together to support the Syrian opposition and bring an end to the bloodshed," said National Security Council spokeswoman Caitlin Hayden.
In more than two years since political rebellions broke out across the region, Jordan, the U.A.E. and Saudi Arabia have all been alarmed by the sudden dominance of the Muslim Brotherhood in the newly democratic governments in Egypt and Tunisia, viewing their emergence and ideology as threats to the stability of their monarchies.
Syria's civil war has posed a particular challenge to King Abdullah and the Hashemite Kingdom, which shares a long land border with Syria.
More than a half-million Syrian refugees have fled into Jordan over the past 18 months, placing strains on Amman's finances and public services, according to Jordanian officials. The influx also risks upending the country's fragile mix of Bedouin tribes, Palestinian refugees and political supporters of the Muslim Brotherhood, who have increasingly challenged King Abdullah's writ in recent years.
Qatar and Turkey, however, have both aggressively sought to use the Mideast's transition to expand their diplomatic, economic and religious influence, say U.S. and Arab officials.
The two countries have been the most aggressive in seeking to overthrow Mr. Assad. Qatar has been the primary financial supporter of the new governments in Cairo and Tunis, providing billions of dollars in aid to President Mohammed Morsi's government over the past 18 months, according to Qatari officials.
"In my opinion, some of our region, they did not like what happened…and they don't like it when the Muslim Brotherhood came," Sheikh Hamad, Qatar's prime minister, said in remarks in Washington last month. "But we respect the [other's] will and the people's will in the other nations."
Relations between the Obama administration and Jordan, Saudi Arabia and the U.A.E. have been strained by these seismic shifts in the Mideast's politics over the past two years, said U.S. and Arab officials.
Saudi Arabia and the U.A.E., in particular, believed the White House didn't do enough to support former Egyptian strongman Hosni Mubarak or Bahrain's royal family, said these officials.
The countries also felt the White House was naive to how Islamist organizations like the Muslim Brotherhood and Iran would seek to benefit from the region's political vacuums.
Still, the leaders from these countries have stressed in recent weeks that Washington is the only country that can prevent Syria from deteriorating into a failed state. Many worry this breakup could lead to zones of influence inside Syria, controlled by al Qaeda, the Muslim Brotherhood, and Iran and its allies.
"[There] has to be a transitional period that results in a political solution that includes all the segments of Syrian society, no exclusion whatsoever," Jordan's foreign minister, Nasser Judeh, said Wednesday in Rome, underscoring Amman's concerns about Syria's territorial integrity.
Mr. Obama's ability to unify the Arab states and Turkey will also be crucial for his attempts to revive the Arab-Israeli peace process.
Mr. Kerry has been shuttling between Mideast capitals since taking over the State Department in February in the hopes of reviving a 2002 Arab League peace initiative. It calls for Muslim countries to recognize Israel in return for the establishment of a Palestinian state based on the borders before the 1967 Arab-Israel war.
But power inside the Arab League and broader Muslim world has shifted dramatically since 2011, said American and Arab diplomats.
Egypt and Jordan had previously been the principal Arab supporters of the Palestinian diplomats, but Cairo and Amman are increasingly being replaced by Qatar and Turkey. Both countries have strong relationships with the Palestinian militant group Hamas, which has so far refused to recognize Israel as part of any peace negotiations.
Qatar's Sheikh Hamad currently heads the Arab League diplomatic team working with Mr. Kerry to restart the peace process. But some Arab officials said they are wary of his leadership and ties to Hamas. The Gulf kingdom currently hosts Hamas's political leader, Khaled Meshaal.
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2)Explosion at Iranian Military Chemical Complex
By Ronen Solomo
Three explosions heard in the area of the Bidganeh area west of Tehran were reported briefly on Tuesday. While the Iranian regime is trying to hush the matter, it can be determined now that the blast occurred at 14:00 in the Raja-Shimi chemical industrial complex, which is affiliated with the Iranian Ministry of Defense and deals in the production of chemical materials for military use.
Opposition officials have reported that considerable damage was caused to the facility and the authorities have instructed local teams not to discuss the number of casualties at the scene. The complex in question has been suspected throughout the past decade of being part of an Iranian program for developing chemical weapons. The factory processes different types of chemicals that can also be used to produce fuel for surface-to-surface missiles. This morning, the Iranian Deputy Interior Minister for Security Affairs Ali Abdullahi explained that the reason for the explosions that were heard well in the area of Tehran was a controlled and planned detonation of old ammunition.
Does the Iranian version sound familiar? This was also the version that Iranian authorities stated immediately after the November 2011 blast that rocked the military complex near the village of Bidganeh, the location of the Revolutionary Guards' fifth missile division, responsible for the launch of Shahab-3 and Shahab-4 missiles. Days later it was revealed that the blast took place at the center of a missile research center which developed solid engine fuel for long-range surface-to-surface missiles. The blast, which was caused during an advanced solid engine fuel test, eradicated the center and resulted in the deaths of 17 of center's people, including General Hassan Tehrani, the head of Iran's missile program.
The facility presently being reported about is located on the same path that passes towards the area of the Safa industrial area, at a distance of two kilometers from the missile research center, the activity of which has since been transferred to another site.
In the recent period, Iran's Minister of Defense, General Ahmad Vahidi and his deputy, General Majid Bokaei, have discussed Iran's breakthrough in the development of the Sajil ballistic missile, which can reach any target in Israel as well as portions of the European continent. The Sajil is a two-stage ballistic missile propelled by solid fuel, and Iran is striving to extend its range.
This week, Deputy Minister Bokaei discussed the advanced development of solid fuel (a development that was halted in the wake of the 2011 explosion) and promised to reveal the accomplishment soon. Bokaei spoke during a memorial ceremony for one of the operatives who died in the November 2011 explosion at the missile base.
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3)
But despite the Fed's current purchases of $85 billion a month and an accumulation of more than $2 trillion of long-term assets, the economy is limping along with per capita gross domestic product rising at less than 1% a year. Although it is impossible to know what would happen without the central bank's asset purchases, the data imply that very little increase in GDP can be attributed to the so-called portfolio-balance effect of the Fed's actions.
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3)
Martin Feldstein: The Federal Reserve's Policy Dead End
Quantitative easing hasn't led to faster growth. A better recovery depends on the White House and Congress.
By MARTIN FELDSTEIN
The Federal Reserve recently announced that it will increase or decrease the size of its monthly bond-buying program in response to changing economic conditions. This amounts to a policy of fine-tuning its quantitative-easing program, a puzzling strategy since the evidence suggests that the program has done little to raise economic growth while saddling the Fed with an enormous balance sheet.
Quantitative easing, or what the Fed prefers to call long-term asset purchases, is supposed to stimulate the economy by increasing share prices, leading to higher household wealth and therefore to increased consumer spending. Fed Chairman Ben Bernanke has described this as the "portfolio-balance" effect of the Fed's purchase of long-term government securities instead of the traditional open-market operations that were restricted to buying and selling short-term government obligations.
Here's how it is supposed to work. When the Fed buys long-term government bonds and mortgage-backed securities, private investors are no longer able to buy those long-term assets. Investors who want long-term securities therefore have to buy equities. That drives up the price of equities, leading to more consumer spending.
But despite the Fed's current purchases of $85 billion a month and an accumulation of more than $2 trillion of long-term assets, the economy is limping along with per capita gross domestic product rising at less than 1% a year. Although it is impossible to know what would happen without the central bank's asset purchases, the data imply that very little increase in GDP can be attributed to the so-called portfolio-balance effect of the Fed's actions.
Even if all of the rise in the value of household equities since quantitative easing began could be attributed to the Fed policy, the implied increase in consumer spending would be quite small. According to the Federal Reserve's Flow of Funds data, the total value of household stocks and mutual funds rose by $3.6 trillion between the end of 2009 and the end of 2012. Since past experience implies that each dollar of increased wealth raises consumer spending by about four cents, the $3.6 trillion rise in the value of equities would raise the level of consumer spending by about $144 billion over three years, equivalent to an annual increase of $48 billion or 0.3% of nominal GDP.
This 0.3% overstates the potential contribution of quantitative easing to the annual growth of GDP, since some of the increase in the value of household equities resulted from new saving and the resulting portfolio investment rather than from the rise in share prices. More important, the rise in equity prices also reflected a general increase in earnings per share and an increase in investor confidence after 2009 that the economy would not slide back into recession.
Earnings per share of the Standard & Poor's 500 stocks rose 50% in 2010 and a further 9% in 2011, driving the increase in share prices. The S&P price-earnings ratio actually fell to 17 at the start of 2013 from 21 at the start of 2010, showing the importance of increased earnings rather than an increased demand for equities.
In short, it isn't at all clear that the Fed's long-term asset purchases have raised equity values as the portfolio balance theory predicted. Even if it did account for the entire rise in equity values, the increase in household equity wealth would have only a relatively small effect on consumer spending and GDP growth.
There is one further puzzle about the quantitative-easing program. The Fed's purchase of Treasury bonds and other long-term securities has not been nearly as large as the increase in the government debt during the same period. The Fed's balance sheet has grown by less than $2.5 trillion since the summer of 2007, while the federal debt has grown by more than twice that amount just since the beginning of 2009. As a result, the public has had to absorb more than $2 trillion of net government debt during the past three years. At best, the Fed's long-term asset purchases reduced the extent to which the federal deficits crowded out equity purchases.
The Federal Reserve has rationalized its use of long-term asset purchases and its explicit guidance about future values of short-term interest rates by noting that conventional monetary policy—lowering the federal-funds rate—is not possible now that the fed-funds rate is very close to zero. With a dual mandate that includes growth as well as price stability, the Federal Open Market Committee apparently feels a compulsion to do something. Unfortunately, the evidence suggests that it hasn't worked.
Mr. Bernanke has emphasized that the use of unconventional monetary policy requires a cost-benefit analysis that compares the gains that quantitative easing can achieve with the risks of asset-price bubbles, future inflation, and the other potential effects of a rapidly growing Fed balance sheet. I think the risks are now clear and the benefits are doubtful. The time has come for the Fed to recognize that it cannot stimulate growth and that a stronger recovery must depend on fiscal actions and tax reform by the White House and Congress.
Mr. Feldstein, chairman of the Council of Economic Advisers under President Ronald Reagan, is a professor at Harvard and a member of the Journal's board of contributors.
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