Peter Diamond Withdraws As Fed Board Nominee

Peter Diamond, the Nobel Prize winning economist who Senator Richard Shelby deemed insufficiently qualified to serve on the Federal Reserve Board of Governors, is withdrawing his name from consideration and has penned a nice slam of the Republican Senators who blocked him.

What’s telling as to the deep politics of this, however, is that it’s only now after Republican opposition to him mounted and the nomination was dead that Diamond’s out there aggressively defending his own qualification. Back when Shelby was a lone voice holding Diamond up in the 111th Congress, there was no high-profile criticism forthcoming from the Senate Democratic leadership or the White House. No encouragement was given to outside progressive voices to write about this and no surrogates were dispatched in the press to try to put the nomination over the finish line. What’s more, by the time Diamond’s name was even put forward the seat in question had lingered vacant for over a year so it was difficult for the White House to argue that it was an urgent post. And yet it was an urgent post, and the administration should have acted with much more dispatch to put names forward and press the 111th Congress to confirm them. The moral blame for the Fed situation should rest with Shelby and monetary cranks like Ron Paul and Paul Ryan, but the administration has made serious tactical and strategic blunders here.

Progressives need to start taking monetary policy seriously, as I argue in a recent piece in Democracy. If you’re going to be in Minneapolis for Netroots Nation please come to the panel I’m organizing on the Fed and monetary policy.

Meanwhile, given the current politics of the country I think the nominee we really need isn’t a Peter Diamond style solid social democrat. What we need is a monetary economist with right-wing views on economic policy in general, but the right ideas about monetary stimulus. The kind of people who Ramesh Ponnuru found persuasive and will speak a language congressional Republicans care about.