"Diamond in the Rough"
As I’ve been saying for months now, by far the most politically tractable way of boosting the economy is for (a) the Senate to confirm Barack Obama’s nominees to the Federal Reserve Board of Governors, and (b) for those nominees to side with the “dovish” faction that wants to boost the economy. Replacing retrenchment-minded Senators with expansion-minded Senators would also work, but there’s no way for it to happen. Getting Fed Board nominees approved should be child’s play for the White House, but they had a curiously laid-back attitude about making these appointments in the first place, have been weirdly low-key about getting them confirmed, and it keeps not getting done:
The Senate sent the nomination of Peter Diamond, one of President Barack Obama’s three nominees for the Federal Reserve Board, back to the White House because of objections from at least one lawmaker.
The office of the executive clerk of the Senate said the procedural move occurred as part of actions taken on nominees without debate before the chamber left for a summer break. Don Stewart, a spokesman for Senate Republican Leader Mitch McConnell, said he expects the White House will resubmit the nomination.
While Diamond, 70, may still win confirmation, it’s a snag for the Massachusetts Institute of Technology economics professor who once taught Fed Chairman Ben S. Bernanke. Alabama Senator Richard Shelby, the senior Republican on the Banking Committee, said last week that Diamond, while a “skilled economist,” may not be qualified to make decisions on monetary policy.
Shame on McConnell and his colleagues for doing this. Holding up crucial jobs over BS in a time of mass unemployment is horrifying. But at least they appear to appreciate the stakes. The longer the Fed stays deadlocked the longer the economy will stay stuck in neutral, and the better conservative challenger candidates will do in the fall. If Rahm Emanuel and Harry Reid don’t understand how this works, I’m sure Christina Romer could explain it between now and September 3.