Blog post

Why Fed Nomination Fights Don’t Get Crazy

Why is the politics of Federal Reserve Board appointments so different from Supreme Court choices? Partisanship is not entirely absent from the Fed’s choices. Although President Joe Biden renamed the (Republican) chair originally chosen by former President Donald Trump, the rest of his current choices would all be unlikely choices for any Republican president. Yet there is nothing like the current fights over court confirmations. As political scientist Jonathan Ladd notes, presidents also don’t try to maximize their influence over time by choosing candidates who will serve full 14-year terms. I have two answers. The first is that neither party saw the need for an untraditional program for the Federal Reserve, in the same way that Democrats in the 1930s and Republicans since the 1960s have seen the need for a non-traditional program for the courts. As Ladd points out, “In some ways, like SCOTUS, different interests in society had agendas for the Fed, but they weren’t aligned with party coalitions. The second answer is based on the presidency. Presidents do not have much immediate interest in knowing who sits on the courts. They may care about certain political outcomes, but the main way judicial appointments affect their terms is to satisfy their party’s coalition. At Monkey Cage, political scientist Amanda Hollis-Brusky argues that Republican presidents tend to make ideological choices, while Democrats make choices to accommodate diverse demographics. Maybe so. But it’s also the case that Democratic presidents know that choosing traditional Democratic-leaning jurists will produce political results that Democratic groups love; Biden may call these choices non-ideological, but it’s not like he can choose a black woman who is likely to vote with the court’s conservatives and have the Senate Democrats back her up. Besides, Biden probably couldn’t get away with choosing a crony with few political views, as President George W. Bush tried and failed to place White House attorney Harriet Miers on the court. Both sides seem to care more about likely political outcomes than anything else. Even so, the presidents themselves don’t really have much at stake. It’s not like a president can appoint enough judges to prevail. Meanwhile, even the most high-profile Supreme Court decisions are unlikely to have a direct effect on re-election. But the Fed? It’s very different. The Fed can directly affect the economy, and the economy can make or break the president’s re-election chances. So while some policy tasks, such as regulating financial markets, may not be essential for the president, overall there are very strong incentives to select competent decision-makers for the board of directors of the Fed. Not only that, but the outcomes favored by the presidents of both parties — high growth, low unemployment, stable prices — are nearly identical. Sure, the Democrats may have a little more tolerance for inflation and the Republicans a little more willingness to live with unemployment, but that has nothing to do with the huge political differences that characterized the fights at the Supreme Court. What this suggests is that Democrats and Republicans will likely win roughly similar choices. Of course, some picks will prove more competent than others, but over time both sides should tend to converge on fairly similar nominees, and we should expect them to be pretty resilient to whatever. is too far from the mainstream. If one party strays too far, either the economy will crash and its next candidates will revert to the old normal, or the economy will thrive and the other party will adopt whatever new policies seem to be working and make them the new mainstream. dominant. I should note that Senate confirmation votes for Biden’s Fed nominees can end up being very partisan, but that’s because many senators from both parties decided to vote against most of the candidates, controversial or not. . And there are certainly policy areas where Biden’s picks will differ from traditional Republican picks. But an expectation of fundamental competence in managing monetary policy is an anchor that should prevent Democratic Fed candidates from straying too far from Republican candidates. This in turn makes it unlikely that the Senate, the president or the political system will view Fed appointments as similar to high-stakes judicial appointments.