Darren McCollester/Getty Images
Massachusetts Institute of Technology professor Peter Diamond prepared to address the media last October after winning the 2010 Nobel Prize in Economic Sciences. Last week, more than a year after being nominated for a seat on the Fed, and facing Republican opposition, Diamond withdrew his nomination.
Massachusetts Institute of Technology professor Peter Diamond prepared to address the media last October after winning the 2010 Nobel Prize in Economic Sciences. Last week, more than a year after being nominated for a seat on the Fed, and facing Republican opposition, Diamond withdrew his nomination. Darren McCollester/Getty Images
President Obama's push to get the economy back on track has hit significant roadblocks in the institution where he once served: the U.S. Senate. True, it's still controlled by Democrats. But Republicans, by simply threatening a filibuster, can block presidential nominees for key economic posts — and that's exactly what they've done.
Three months ago, for example, the president announced he was nominating Commerce Secretary Gary Locke to be the next U.S. ambassador to China. Days later, the minority leader, Sen. Mitch McConnell of Kentucky, convened a news conference at the Capitol.
"I'm here today to announce that we have got 44 signatures on a letter to the president indicating that we don't intend to move forward on the nomination of a new secretary of commerce or any other trade-related position that requires confirmation of the Senate," he said.
McConnell said Republicans would block such nominations until the White House submitted three pending trade agreements — with Panama, Colombia and South Korea — for congressional consideration.
While those agreements remain stalled over GOP objections to training for displaced workers, last month President Obama nominated John Bryson, a former energy executive and a co-founder of the Natural Resources Defense Council, to be commerce secretary. Republicans reacted angrily.
"Instead of appointing truly an economic leader, he has appointed an environmental extremist," said Wyoming Sen. John Barrasso, adding that the president's choice would make it harder and more expensive for the private sector to create jobs. "So the president might think he's the right man at the right time; I think he is the wrong man at the worst time."
When Even A Nobel Laureate Won't Do
At least half a dozen other nominees for senior economic policy positions have been stalled for weeks and sometimes months in the Senate. Last week, the majority leader, Sen. Harry Reid of Nevada, accused Republicans of bottling up those nominations in a bid to limit Obama to a single term in office. He pointed to the nomination of Massachusetts Institute of Technology professor Peter Diamond.
"Even someone that won a Nobel Prize for economics wasn't good enough to be on the Board of Governors of the Federal Reserve System, according to the Republicans," Reid said.
Diamond was awarded the Nobel Prize last year for his work on joblessness. More than a year after being nominated for a vacant seat on the Fed, Diamond last week withdrew his nomination.
Sen. Richard Shelby, an Alabama Republican, led the effort to keep Diamond off the Fed.
"A lot of people had a lot of questions, not just me ... although he's a smart man, he's a Nobel Prize winner, look what he was in — look in the weeds — he supported all the printing of money, borrowing money, stimulus stuff," Shelby said. "He would just be ratifying what the whole Obama administration's doing through the Fed."
Shelby said he did not want someone on the Fed board who advocated government intervention to fight unemployment.
Michael Barr served the first two years of the Obama administration as assistant secretary of the Treasury for financial institutions. Barr points out that the Fed is, in fact, congressionally mandated to try to spur job growth.
"Peter Diamond is squarely in the mainstream of academic thought in this area," Barr said, "and I think he would have been an exceptionally strong Federal Reserve member, helping the Fed to guide monetary policies."
Meanwhile, pressure is growing from outside groups for Obama to appoint Harvard University Law School professor Elizabeth Warren as head of the new Consumer Financial Protection Bureau. To which Shelby says: "Absolutely not. Absolutely not."
Shelby and 43 other Republican senators have signed a letter saying they will block anyone named to head that bureau until it's restructured to their liking.