Policy: Economy

GOP keeps its powder dry on Larry Summers' likely nomination for Federal Reserve chairman

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Larry Summers’ widely anticipated nomination as Federal Reserve chairman has generated an unheard-of level of pre-emptive opposition. The politicking has extended to some senators revealing that they will vote against Summers’ confirmation, a notable development given that President Obama still could pick someone other than the Harvard economics professor.

Yet one little-publicized aspect of the drama surrounding Summers is that it has been driven almost solely by Summers’ fellow Democrats. Other than an August outburst from Sen. Pat Roberts of Kansas, who said, "I wouldn't want Larry Summers to mow my yard," Republicans have mostly refrained from commenting on the months-long, high-profile contest between Summers and current Fed Vice Chairwoman Janet Yellen.

Yet the GOP’s relative silence on the nomination process, which has been put on hold while the administration focuses on the civil war in Syria, does not indicate that Republicans are any more comfortable with Summers than they would be with Yellen.

Many Democrats and liberal groups are speaking out in an effort to stop Summers's nomination before it gets started. Republicans, for now, are happy to watch as Obama spends political capital on a process that is usually routine. If and when Summers gets the official nomination, expect the Republican opposition to become just as fierce and vocal, and perhaps even more so, than the Democratic insurrection has been so far.

And Summers' candidacy will likely require Republican aid. Three prominent liberal Democrats on the Senate Banking Committee — Jeff Merkley of Oregon, Sherrod Brown of Ohio, and Elizabeth Warren of Massachusetts — have suggested they would vote against Summers, the Wall Street Journal reported last week. With the panel divided 12-10 between Democrats and Republicans, the Democrats’ refusal to go along could mean that Summers' nomination could be in the hands of committee Republicans. Without support from at least three Republicans, Summers could fail to advance to a confirmation vote in the full Senate.

Many Democrats perceive Summers as too close to Wall Street and do not trust him on matters of financial regulation. Twenty of the upper chamber’s Democrats, in response to rumors in July that Summers would be the pick, signed a letter circulated by Brown that pointedly recommended Yellen for her pro-regulation views. Merkley and Warren also signed the letter.

But Republicans, who in general view current monetary policy as recklessly loose, are less likely to see such a distinction between the two candidates.

“I assume a lot of Republicans will be opposed to both,” an aide to Republican Sen. David Vitter of Louisiana told the Washington Examiner. Vitter is a member of the Banking Committee.

None of the Republicans on the panel were willing to comment on Summers. But many of them in the past have opposed nominations of Fed officials less activist and less partisan than Summers, who has been one of the top architects of Democratic economic policy over the past two decades as an adviser to Obama and Treasury Secretary under Bill Clinton.

Vitter, for instance, voted against reappointing Ben Bernanke as Fed president in 2010 in opposition to Bernanke’s oversight of bank bailouts during the financial crisis and activist monetary policy, even though Bernanke was originally a George W. Bush appointee.

The panel’s ranking Republican member, Mike Crapo of Idaho, also voted against Bernanke in 2010 and appears to hold Summers’ fate in his hands if Summers is nominated.

In fact, 18 of 40 Republican senators opposed Bernanke in 2010, an unusual expression of disapproval.

Alabama’s Richard Shelby was one of those Republicans who was opposed, and also successfully blocked one of Obama’s nominees to the Fed’s Board of Governors, Nobel Prize-winning MIT economist Peter Diamond, on the grounds that Diamond “ is an old-fashioned, big government Keynesian.”

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