[Congressional Bills 110th Congress]
[From the U.S. Government Printing Office]
[H.R. 6053 Introduced in House (IH)]
110th CONGRESS
2d Session
H. R. 6053
To require the Board of Governors of the Federal Reserve System to
focus on price stability in establishing monetary policy to ensure the
stable, long-term purchasing power of the currency, to repeal the Full
Employment and Balanced Growth Act of 1978, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 14, 2008
Mr. Ryan of Wisconsin (for himself and Mr. Fortuno) introduced the
following bill; which was referred to the Committee on Financial
Services, and in addition to the Committees on Education and Labor and
the Budget, for a period to be subsequently determined by the Speaker,
in each case for consideration of such provisions as fall within the
jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To require the Board of Governors of the Federal Reserve System to
focus on price stability in establishing monetary policy to ensure the
stable, long-term purchasing power of the currency, to repeal the Full
Employment and Balanced Growth Act of 1978, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Price Stability Act of 2008''.
SEC. 2. FINDINGS; STATEMENT OF POLICY.
(a) Findings.--The Congress finds the following:
(1) Price stability is a prerequisite for sustainable long-
term economic growth, job creation, and moderate interest
rates.
(2) Inflation erodes the value of Americans' income and
savings.
(3) Inflation distorts the pricing system and the efficient
allocation of resources in the economy.
(4) Inflation makes long-term planning difficult and raises
the effective tax rate on capital, thereby impeding investment.
(5) Through its determination of monetary policy, the Board
of Governors of the Federal Reserve System is ultimately
responsible for controlling the long-run rate of inflation in
the economy.
(6) The multiple policy goals of the Full Employment and
Balanced Growth Act of 1978 cause confusion and ambiguity about
the appropriate role and aims of monetary policy, which can add
to volatility in economic activity and financial markets.
(7) There is a need for the Congress to clarify the proper
role of the Board of Governors of the Federal Reserve System in
economic policymaking, in order to achieve the best environment
for long-term economic growth and job creation.
(8) An explicit price stability goal would promote
transparency, accountability and credibility in monetary
policy.
(9) Price stability should be the primary long-term goal of
the Board of Governors of the Federal Reserve.
(b) Statement of Policy.--It is the policy of the United States
that--
(1) the principal economic responsibilities of the
Government are to establish and ensure an environment that is
conducive to both long-term economic growth and increases in
living standards, by establishing and maintaining free markets,
low taxes, respect for private property, and the stable, long-
term purchasing power of the United States currency; and
(2) the primary long-term goal of the Board of Governors of
the Federal Reserve System should be to promote price
stability.
SEC. 3. MONETARY POLICY.
(a) Amendment to the Federal Reserve Act.--Section 2A of the
Federal Reserve Act (12 U.S.C. 225a) is amended to read as follows:
``SEC. 2A. MONETARY POLICY.
``(a) Price Stability.--The Board and the Federal Open Market
Committee (hereafter in this section referred to as the `Committee')
shall--
``(1) establish an explicit numerical definition of the
term `price stability'; and
``(2) maintain a monetary policy that effectively promotes
long-term price stability.
``(b) Market Stability and Liquidity.--Subsection (a) shall not be
construed as a limitation on the authority or responsibility of the
Board--
``(1) to provide liquidity to markets in the event of a
disruption that threatens the smooth functioning and stability
of the financial sector; or
``(2) to serve as a lender of last resort under this Act
when the Board determines such action is necessary.
``(c) Congressional Consultation.--Not later than February 20 and
July 20 of each year, the Board shall consult with the Congress at
semiannual hearings before the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the
House of Representatives, about the objectives and plans of the Board
and the Committee with respect to achieving and maintaining price
stability.
``(d) Congressional Oversight.--The Board shall, concurrent with
each semiannual hearing required by subsection (c), submit a written
report to the Congress containing--
``(1) numerical measures to help assess the extent to which
the Board and the Committee are achieving and maintaining price
stability in accordance with subsection (a);
``(2) a description of the intermediate variables used by
the Board to gauge the prospects for achieving the objective of
price stability; and
``(3) the definition, or any modifications thereto, of the
term `price stability' established in accordance with
subsection (a)(1).''.
(b) Compliance Estimate.--Concurrent with the first semiannual
hearing required by section 2A(b) of the Federal Reserve Act (as
amended by subsection (a) of this section) following the date of
enactment of this Act, the Board of Governors of the Federal Reserve
System shall submit to the Congress a written estimate of the length of
time it will take for the Board and the Federal Open Market Committee
to fully achieve price stability. The Board and the Committee shall
take into account any potential short-term effects on employment and
output in complying with the goal of price stability.
SEC. 4. REPEAL OF OBSOLETE PROVISIONS.
(a) Full Employment and Balanced Growth Act of 1978.--The Full
Employment and Balanced Growth Act of 1978 (15 U.S.C. 3101 et seq.) is
hereby repealed.
(b) Employment Act of 1946.--The Employment Act of 1946 (15 U.S.C.
1021 et seq.) is amended--
(1) in section 3 (15 U.S.C. 1022)--
(A) in the section heading, by striking ``and
short-term economic goals and policies'';
(B) by striking ``(a)''; and
(C) by striking ``in accord with section 11(c) of
this Act'' and all that follows through the end of the
section and inserting ``in accordance with section
5(c).'';
(2) in section 9(b) (15 U.S.C. 1022f(b)), by striking ``,
the Full Employment and Balanced Growth Act of 1978,'';
(3) in section 10 (15 U.S.C. 1023)--
(A) in subsection (a), by striking ``in the light
of the policy declared in section 2'';
(B) in subsection (e)(1), by striking ``section 9''
and inserting ``section 3''; and
(C) in the matter immediately following paragraph
(2) of subsection (e), by striking ``and the Full
Employment and Balanced Growth Act of 1978'';
(4) by striking section 2;
(5) by striking sections 4, 5, 6, 7, and 8; and
(6) by redesignating sections 3, 9, 10, and 11 as sections
2, 3, 4, and 5, respectively.
(c) Congressional Budget Act of 1974.--Title III of the
Congressional Budget Act of 1974 (2 U.S.C. 631 et seq.) is amended--
(1) in section 301--
(A) in subsection (b), by striking paragraph (1)
and redesignating paragraphs (2) through (9) as
paragraphs (1) through (8), respectively;
(B) in subsection (d), in the second sentence, by
striking ``the fiscal policy'' and all that follows
through the end of the sentence and inserting ``fiscal
policy.'';
(C) in subsection (e)(1), in the second sentence,
by striking ``as to short-term and medium-term goals'';
and
(D) by striking subsection (f) and inserting the
following:
``(f) Repealed''; and
(2) in section 305--
(A) in subsection (a)(3), by inserting before the
period at the end ``, as described in section 2 of the
Price Stability Act of 2008'';
(B) in subsection (a)(4)--
(i) by striking ``House sets forth the
economic goals'' and all that follows through
``designed to achieve,'' and inserting ``House
of Representatives sets forth the economic
goals and policies, as described in section 2
of the Price Stability Act of 2008,''; and
(ii) by striking ``such goals,'' and all
that follows through the end of the paragraph
and inserting ``such goals and policies.'';
(C) in subsection (b)(3), by inserting before the
period at the end ``, as described in section 2 of the
Price Stability Act of 2008''; and
(D) in subsection (b)(4)--
(i) by striking ``goals (as'' and all that
follows through ``designed to achieve,'' and
inserting ``goals and policies, as described in
section 2 of the Price Stability Act of
2008,''; and
(ii) by striking ``such goals,'' and all
that follows through the end of the paragraph
and inserting ``such goals and policies.''.
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