Today Ezra Klein reports that the likelihood of Larry Summers being appointed to chair the Fed is now reaching a peak despite a lot of early and often angry opposition to the idea:
The latest smoke signal went to CNBC’s John Harwood, who reports that “a source from Team Obama told CNBC that Larry Summers will likely be named chairman of the Federal Reserve in a few weeks though he is ‘still being vetted’ so it might take a little longer.”
My reporting suggests much the same (though I’m less certain of the timetable). The White House’s economic team is lockstep behind Summers. And President Obama’s mind has long been pretty much made up. His preference for Summers comes from two years of working with the guy every single day and two more years in which they were routinely in touch. It’s not a soft lean.
The question remains, however, whether Summers might not be confirmable.
Reuters points out that Summers’ first hurdle would be in the Banking Committee. Democrats hold a 12-10 majority there, but three of those Democrats — Jeff Merkley (Ore.), Sherrod Brown (Ohio) and Elizabeth Warren (Mass.) — are skeptical of Summers. If they refuse to vote for his nomination then that means the Obama administration needs to find some Republicans willing to make up the shortfall.
The wider Senate poses problems, too. Democrats have 54 votes — six short of the number needed to shut down a filibuster. If they lose a handful of progressives on the cloture vote then they could need 10 or so Republicans to make up the difference. Securing that many Republican votes under normal circumstances is difficult. But these wouldn’t be normal circumstances.
Senate Minority Leader Mitch McConnell (R-Ky.) will see an opportunity to deal the Obama administration a substantial and humiliating defeat on a key nomination. Sen. Rand Paul (R-Ky.)will see an opportunity to grandstand against the Fed. Every Republican will see an opportunity to hammer the administration’s policies on stimulus and housing. And that’s before anyone gets to scandals in Summers’ past, like the comments on women in the sciences or the Shleifer affair, not to mention the consulting and speaking fees he’ll need to report on his financial disclosure forms. Will those Republican votes really materialize for Summers?
And if not, is Harry Reid willing to consider the “nuclear option” for a nomination outside the previously demarcated area of executive branch nominations? And even if he is, are there enough Senate Democrats willing to hang tough on a threat to invoke the “option” if the beneficiary is Larry Summers?
Ezra notes Janet Yellen wouldn’t be a slam dunk for confirmation, either, and might arouse more intense ideological wrath from conservative inflation-hawks and Fed-haters.
But if Summers is who Obama actually wants, as everyone has concluded, then we’re about to find out exactly how much trouble he is willing to invite—from Democrats as well as Republicans, and even from the Democratic rank-and-file for which Yellen could well become a very popular figure (the word “popular” is rarely attached to Summers)—over a non-legislative goal in his second term.
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