Senators, Economists Lobby For Yellen To Be Fed Chairman
RENEE MONTAGNE, HOST:
When the Federal Reserve explained its decision to keep pumping money into the financial system, it pointed to stubbornly high unemployment.
STEVE INSKEEP, HOST:
That has long been a concern for the No. 2 official at the Fed, Janet Yellen. She is now considered the leading candidate to replace Ben Bernanke when he steps down as Fed chairman. His term expires in January.
MONTAGNE: President Obama had been leaning towards another candidate, Larry Summers. But Summers dropped out of contention over the weekend, to head off what promised to be an acrimonious confirmation battle. And that's given a big boost to Yellen's candidacy. NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: President Obama has taken his time in choosing a new Federal Reserve Chairman. It's a four-year post, so whoever he picks will lead the central bank well into the next president's term. And Obama says it's one of the most significant nominations he'll make during his time in office.
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PRESIDENT BARACK OBAMA: The Federal Reserve chairman is not just one of the most important economic policymakers in America, it's - he or she is one of the most important policymakers in the world.
HORSLEY: Asked about the decision last month, Obama pointed to the Fed's twin goals of maximizing employment and keeping inflation in check. Those competing priorities can pull the Fed in opposite directions. For now, though, Obama argues inflation is not the problem.
OBAMA: The challenge is, we've still got too many people out of work, too many long-term unemployed, too much slack in the economy; and we're not growing as fast as we should.
HORSLEY: Supporters say that's why the president should promote the Fed's current vice chair, Janet Yellen, to the top job. Economist Joyce Jacobsen, of Wesleyan University, co-authored a letter signed by more than 500 economists, urging Obama to pick Yellen. She points to Yellen's prescient early warnings about the housing and financial crises. and her longtime interest in combating unemployment.
JOYCE JACOBSEN: She had a long history of thinking about this intellectually before she came to the policy arena. And even during her years during policy, was continuing to work academically on these topics.
HORSLEY: At a conference sponsored by the AFL-CIO in February, Yellen spoke about the painfully slow recovery from the Great Recession that had left 3 million people out of work for more than a year.
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JANET YELLEN: These are not just statistics to me. We know that long-term unemployment is devastating to workers and their families.
HORSLEY: Yellen said the Fed not only had its foot on the gas, but pressed to the floor as it experimented with unconventional measures to encourage job growth. At the same time, she acknowledged, at some point, the Fed will have to start tapping the breaks, though yesterday's announcement means that moment has not yet arrived.
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YELLEN: Whenever the economy is weak and is gaining strength, what is the right time and what is the right amount to take away the punch bowl so that the boom that we hope is coming doesn't get out of hand and turn into the next inflation cycle?
HORSLEY: Yellen told the AFL-CIO conference that's a question of judgment. Sen. Sherrod Brown, a liberal Democrat from Ohio, thinks she'd be a good one to lead the Fed in making that call.
SEN. SHERROD BROWN: I think Janet Yellen understands that it's important that the Fed really look out for everyday people, that the Fed understand how the middle-class gets shrunk, is struggling in this country, something that chairs have not always done.
HORSLEY: Brown sits on the Senate Banking Committee that will consider the president's pick. And he organized a group of about 20 senators who wrote a letter to the president on Yellen's behalf. Both that letter and the one signed by the economist were drafted while Obama's close confidante, Larry Summers, was still in the running and considered the president's preferred choice. Yellen's supporters are wary that even now, overt pressure on Obama could backfire and cause him to choose somebody else. Economist Jacobsen is careful to stress it's the president's choice to make, but she adds a choice of Yellen would likely to be well received.
YELLEN: The White House would lose no face in any way by putting forth her nomination. Indeed, it'd be viewed very positively.
HORSLEY: The stock market rallied early this week on the likelihood of a Yellen pick. She'd be the first woman to lead the Central Bank. A White House announcement could come as early as next week. Scott Horsley, NPR News, Washington.