[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2445 Introduced in House (IH)]
104th CONGRESS
1st Session
H. R. 2445
To require 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
September 29, 1995
Mr. Saxton (for himself, Mr. Ewing, Mr. McCollum, and Mr. Thornberry)
introduced the following bill; which was referred to the Committee on
Banking and Financial Services, and in addition to the Committees on
Economic and Educational Opportunities 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 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 ``Economic Growth and Price Stability
Act of 1995''.
SEC. 2. FINDINGS; STATEMENT OF POLICY.
(a) Findings.--The Congress finds that--
(1) during the 25 years preceding the date of enactment of
this Act, the United States experienced a deterioration of
potential economic growth;
(2) there is sufficient evidence to suggest that increased
Government spending, deficits, high taxes, and regulation have
significantly contributed to slower economic growth, higher
inflation, and diminished expectations;
(3) micromanagement of the economy and fine tuning have not
alleviated economic hardship;
(4) the conditions and goals established by the Full
Employment and Balanced Growth Act of 1978, have not been and
could not be met, and continue to cause confusion and ambiguity
about the appropriate role of monetary policy;
(5) the multiple policy goals of the Board of Governors of
the Federal Reserve System, stipulated in the Full Employment
and Balanced Growth Act of 1978, have created uncertainty about
the aims of monetary policy, which can add to volatility in
economic activity and financial markets, costing workers jobs
and harming economic growth;
(6) 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 the lowest possible interest
rates;
(7) recognizing the dangers of inflation and the
appropriate role of monetary policy, political leaders in
countries throughout the world are directing the central banks
of those countries to institute reforms that focus monetary
policy on the single objective of price stability, rather than
on multiple policy goals; and
(8) because price stability leads to the lowest possible
interest rates and is a key condition to maintaining the
highest possible levels of productivity, real incomes, living
standards, employment, and global competitiveness, price
stability should be the primary long-term goal of the Board of
Governors of the Federal Reserve System.
(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 of Governors of the Federal
Reserve System (hereafter in this section referred to as 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) 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 Banking and 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.
``(c) Congressional Oversight.--The Board shall, concurrent with
each semiannual hearing required by subsection (b), 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
`price stability' established in accordance with subsection
(a)(1)(A).''.
(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 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
repealed.
(b) Employment Act of 1946.--The Employment Act of 1946 (15 U.S.C.
1021 et seq.) is amended--
(1) in section 3--
(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), by striking ``, the Full Employment
and Balanced Growth Act of 1978,'';
(3) in section 10--
(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 through 8; and
(6) by redesignating sections 3, 9, 10, and 11 as sections
2 through 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 (8) as
paragraphs (1) through (7), 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), 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) [Reserved.]''; 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
Economic Growth and Price Stability Act of 1995'';
(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 Economic Growth and Price Stability Act
of 1995,''; 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
Economic Growth and Price Stability Act of 1995''; 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 Economic Growth and Price
Stability Act of 1995,''; 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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