"What a Difference a Fed Board Member Makes"
In keeping with what I said earlier about emphasizing the political importance of the fundamentals, I doubt any political reporters in Washington would ever come up with Brad DeLong’s advice on regaining control of the narrative but it’s something the White House should take seriously:
Recess appoint two Fed governors who think like Ben Bernanke and Janet Yellen–Barry Eichengreen, David Romer, Alicia Munnell, Peter Diamond, Martin Baily, Jeffrey Frankel, there are a huge number of people who would be happy to take a recess appointment as a Fed Governor–to give them some backup on the FOMC.
This lies at the intersection of the fact that reporters underrate the importance of the economy in determining political outcomes, reporters underrate the importance of the Fed in determining economic outcomes, and reporters underrate the importance of the other committee members in determining Fed policy. I’m not nearly as certain as DeLong is that Bernanke has some secret desire to engage in more expansionary monetary policy, but whatever Bernanke secretly does or doesn’t want, this move would boost the odds of monetary expansion and economic growth and thereby do wonders for Obama’s political standing the best way of all—by delivering better living standards for the American people.
But the way Washington works, I bet when Obama huddles with his advisors to talk about the path going forward, nobody ever brings up the fact that the two standing vacancies on the Fed Board of Governors is a huge deal.