Don’t shake anything up, Joe, it might be too risky.
America’s left-wing radical commander-in-chief threw caution to the wind Monday, renominating Jerome Powell, a Republican investment banker and lawyer, for a second term as Fed Chair. Lael Brainard will be Vice Chair.
The decision won’t please Progressives. Elizabeth Warren will be especially vexed.
The setup (Powell at the helm again and Brainard playing second fiddle) is a microcosm of the Biden White House. It’s a status quo, establishment regime masquerading as a progressive administration dedicated to transformational change.
Importantly, the “continuity pick” meme is a red herring. Both Powell and Brainard were continuity candidates. This wasn’t a choice between preserving the status quo in the interest of avoiding a potentially destabilizing market outcome and installing a Fed Chair who might push for real, transformational change at the possible expense of extreme near-term volatility. It was a choice between irritating the GOP and not irritating them.
In short, Biden struggles to break free of the cognitive cages built over years of service in a relatively stable US political configuration. The tendency to avoid upsetting too many apple carts is amplified by worries that controversial decisions could worsen partisan rancor and give more ammunition to those who spend their days stoking divisive politics to the detriment of the country’s fractured democracy.
Republicans would doubtlessly have seized on a Brainard nomination to accuse Biden of politicizing the Fed. No GOPer would acknowledge the hypocrisy of such allegations when juxtaposed with Donald Trump’s comically overt efforts to commandeer US monetary policy in the style of Turkey’s Recep Tayyip Erdogan.
While the idea of an “independent” Fed has always been something of a joke, Trump’s explicit, public demands for rate cuts and habit of mercilessly deriding Powell on social media, drew comparisons to banana republic tactics, and even ran afoul of some Republican lawmakers, although they expressed their disapproval quietly.
The White House alluded to Trump’s antics on Monday. “Chair Powell has provided steady leadership during an unprecedently challenging period, including the biggest economic downturn in modern history and attacks on the independence of the Federal Reserve,” a press release said. (I’d be remiss not to note that “unprecedently” may not be a word.)
“As I’ve said before, we can’t just return to where we were before the pandemic, we need to build our economy back better, and I’m confident that Chair Powell and Dr. Brainard’s focus on keeping inflation low, prices stable and delivering full employment will make our economy stronger than ever before,” Biden said. “Together, they also share my deep belief that urgent action is needed to address the economic risks posed by climate change, and stay ahead of emerging risks in our financial system.”
And so, Progressives lose another battle. It’s a testament to just how far away from transformational change the nation is when nominating a Harvard PhD with a resume that includes more than a decade of public service and a half-dozen years teaching economics at MIT, for Fed Chair, would have counted as a “controversial” decision.
To be fair, the broad American public seems uninterested in radical changes, except maybe for the 30% who want to live in a fascistic authoritarian regime a la Salazar/Franco in the 50s…
And progressives are definitely being hampered by the identity politics shenanigans of a vocal twitter minority.
Lets go!
A small interest uptick as a “nod” to the old time hawks, who have not yet accepted that we are in a new paradigm is a relatively near term certainty. Then the US, with the smallest balance sheet (as a percentage of GDP), will be free to keep US interest rates as low as they can without upsetting the apple cart.
Elected politicians will be required to make sure that as wealth disparity continues to get worse, they provide enough of a social network so people in the wealthiest country in the world (which controls the printing press of the world’s reserve currency), have housing and food.
Not saying this was my dream for America, but I invest according to reality, not my silly dreams.
Biden has pursued a reaonably progressive agenda when you consider the narrow majority his party holds in both houses of Congress and when dealing with a court system stacked against him. The disappointment should be with Obama who had a large majority in the House and for a while had 60 seats in the Senate. Now if the Democrats were able to pass a few more bills and come back to have a sweep in 2024, and did nothing with that- well that should merit negative comments. Pelosi has done a really good job getting bills through the House- betting some sort of bill for the social safety net emerges out of the Senate before Christmas. The true disappointment will be lack of a voting rights act. My guess is the Supreme Court is going to throw out or severely damage Roe v Wade- that overeach will have political reprecussions in 2024 to the detriment of the right wing.
sure hope so, activist Supreme Court-wise, but the 2016 was a referendum on McConnell and Republicans Supreme Court nominee defiance, and that did not motivate the masses to vote along those lines, with the result 1/3 of the US gov’t (judicial branch) now firmly in right wing hands for the foreseeable future…and with Manchin and Synema punting on voting rights, I’m nowhere near as optimistic as you at this point…
Thanks for noting this. The heat of politics sometimes makes us lose perspective: in one year this country went from depression to growth, existential crisis to semblance of stability, from neglected infrastructure to a massive investment in the future.
The current internal wrangling isn’t different from what Obama had to deal with when passing Obamacare, which we now take for granted. A law will get passed, we’ll get a moderate lifestyle improvement -like public day care-, and in 10 years we’ll wonder why Joe missed a chance for greater change.
Perhaps Biden is using retaining Powell as a means to pacify the GOP and get more social spending approved? We’ve seen this strategy go south too many times with the GOP failing to meet behind the scenes agreements thereby blocking the Dems’ agenda.
Powell believes in the institution and is emotionally healthy. These day, that may be as good as it can get…..
H-Man, Powell will give us what he has given in the past — transparent but with little forward guidance other than waiting on the data, Not a bad idea from the Biden camp. They are trying to sail a ship into hurricane like water. Powell knows the gameplan. but so many fires.