Republicans attack Obama on U.S. dollar

By Tabassum Zakaria

WASHINGTON (Reuters) - Leading Republicans echoed Sarah Palin on Thursday in attacking President Barack Obama over the weakness of the U.S. dollar.

Analysts warn it is risky business playing politics with the U.S. currency, which has traditionally been off limits as a play to score points against political opponents.

That taboo appears to have been broken.

Palin, the former Republican vice presidential candidate and ex-governor of Alaska, launched her dollar criticism on her Facebook page. She linked dollar weakness to U.S. dependence on foreign oil, large U.S. deficits and questions about whether the dollar deserves to retain its vaunted status of reserve currency.

"We can see the effect of this in the price of gold, which hit a record high today in response to fears about the weakened dollar," Palin wrote on Facebook this week.

"All of this is a result of our out-of-control debt. This is why we need to rein in spending, and this is also why we need energy independence."

Republicans in Congress said the previous Republican administration of former President George W. Bush also deserved blame for dollar weakness but, since taking office on January 20, Democrat Obama was calling the shots.

"I agree with her," Senator Charles Grassley, top Republican on the Senate Finance Committee, said when asked by Reuters about Palin's dollar criticism.

"A lot of the recession we are in now goes back to Bush. But the extent to which we passed the $787 billion stimulus bill that is not doing any good -- this president is responsible for," he said.

"It is not the Bush administration anymore. It is nine months into this administration. You can't blame Bush anymore," Grassley added.

SENSITIVE SUBJECT

The dollar is a sensitive subject and U.S. officials who are in office will almost always decline to discuss it in public for fear of moving the market.

Dollar weakness also strikes at the very heart of America's image of itself as a world power.

"It sounds like the new frontier is the declining dollar," Darrell West, director of governance studies at The Brookings Institution said.

"It's unusual for there to be party attacks on the value of the dollar," he said. "Historically that has been a bipartisan issue because you don't want to play politics with the dollar, it's a very risky game."