NEW YORK (FORTUNE) - The members of the Senate Banking Committee are throwing a lot of questions today at Ben Bernanke, President Bush's nominee to succeed Alan Greenspan as Fed chairman -- about inflation targeting, about transparency at the Fed, about taxes.

But when it comes to the really big economic questions of the day, it's not the prospective Fed chairman but the guys on Capitol Hill and the White House who need to be put on the hot seat.

The Federal Reserve has but a single significant economic tool at its disposal. To wield a crude analogy: The economy is a plane, and the Federal Open Market Committee -- headed by the Fed chairman and consisting of the Fed governors in Washington, D.C., the president of the New York Fed, and a rotating cast of other regional Federal Reserve Bank presidents -- controls the throttle.

But that's all it controls. Repairs, refueling, route, choice of plane, allocation of seats between first class and economy -- not to mention in-flight dining and entertainment -- are the responsibility of others. The hand at the throttle can keep the engine from overheating or the plane from stalling out, but that's about it.

The Fed chairman cannot, for example, do much to affect the most important economic measure of all: the standard of living. The great news on that front in the past decade is that labor productivity has been rising at a much faster pace than in the 1970s and 1980s.

But while those productivity gains made their way into paychecks in the late 1990s, that has since stopped. The main culprits appear to be competition from the rising economic powers of China, India, and the Internet; skyrocketing health-care costs; pension-funding shortfalls; and unceasing pressure from financial markets to keep costs down.

This is not a problem that calls for a massive government solution. It is the sheer free-market vibrancy of the U.S. economy that will probably be its greatest strength in the decades to come. But in a more competitive world, there will be far less room for error in economic policymaking.

To thrive, the U.S. needs to churn out better-prepared high school graduates; it needs to lower health-care costs or at least allocate them more rationally; it needs to find a way to pay for the baby-boomers' retirement that doesn't bankrupt all our old-line corporations or result in huge tax hikes; and it needs to find a way to stop borrowing so much money from foreigners.

Sure, it will help if the Fed does a competent job with monetary policy, but that's not what's going to determine the economic possibilities for our grandchildren.

Yet we got so used to leaving economic affairs in the hands of the Fed during the Greenspan years that those who should be addressing the issues outlined above have been able to get away with going AWOL. Greenspan may deserve the flak he gets from Democrats for reawakening the deficit monster by giving tacit support to President Bush's 2001 tax cuts. (Bernanke said today that as Fed chairman he would refuse to comment on tax legislation.)

But it wasn't the Fed chairman who voted for the cuts and signed them into law, and it certainly wasn't he who launched the federal government on a spending binge that has now surpassed Lyndon Johnson's. The White House and Congress also have so far shown no interest in making hard decisions about health care, and while corporation pension legislation may pass this year or next, it will probably be just a Band-Aid.

As for Social Security, the President did talk about shoring it up but backed down after running into a wall of resistance on Capitol Hill. Congress and the White House have responded to economic competition from overseas mainly with saber rattling and protection for that industry of the future, textile manufacturing.

Why are we letting them get away with this? Mainly because American voters don't like hard decisions any more than politicians do. But it is also because certain segments of informed America and official Washington suffer from the delusion that the truly critical decisions about our economic future will soon be in the hands of the scholarly, bearded, former Princeton economics-department chairman poised to take charge at the Fed.

Sorry, folks, it's time to get over our collective Greenspan-era dream. The really big choices are in the hands of the politicized rabble of the White House and Capitol Hill. Yeah, those guys. The ones we elected.

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Four reasons for the Fed's continuing "conundrum" -- click here.

Why you shouldn't be scared of stagflation -- click here.