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.