There is Barney vs. Ben: Barney Frank, chairman of the House Financial Services Committee, vs. Ben Bernanke, chairman of the Federal Reserve Board. Bernanke wants his colleagues to begin to think about setting an explicit, though flexible, inflation target to use as a guide in setting interest rates. Exceed the target, and raise rates. Frank fears that will divert the Fed from its other mission, maintaining full employment. In short, in one corner we have soft-money Democrats, for whom a whiff of inflation holds no terror, but to whom a few tenths of a percentage point rise in the unemployment rate is anathema. In the other corner we have the Fed, ever fearful that once inflation takes hold it is difficult to wring out of the system without causing a major recession.
For the Democrats, corporate profits have risen, partly because the administration's free-trade policies have forced American workers to compete with $1-a-day Asian labor, while allowing big corporations to outsource work that once provided good jobs for Americans.
Democrats howled in anger when the full-year trade figures were released. The trade deficit hit $764 billion last year, a rise of 6.5 percent over 2005, and the fifth consecutive record. That prompted House speaker Nancy Pelosi to demand that the president deliver a plan within 90 days to reduce the deficit with the European Union, China, and Japan. Pelosi is fond of
setting deadlines--for the passage of favored legislation, or the withdrawal of troops from Iraq, or, now, the adoption of protectionist measures.
She wants Bush to take a tougher line in talks with China, including levying tariffs on imports that are "subsidized," either directly or by the Chinese policy of keeping the renminbi at an artificially low level.