Senate derails controversial Federal Reserve nominee (for now)

The good news: 49 senators realized confirming Judy Shelton to the Federal Reserve would be ridiculous. The bad news: 48 senators supported her anyway.
Image: The sun rises on the Capitol in Washington on Sept. 19, 2019.
The sun rises on the Capitol in Washington on Sept. 19, 2019.Samuel Corum / Getty Images

The stage was set for the most consequential vote of Congress' lame-duck session: the Republican-led Senate, after balking at Judy Shelton's Federal Reserve nominee for nearly a year, prepared to ignore bipartisan opposition to her and confirm Shelton anyway.

That's not exactly what happened -- at least not yet.

Judy Shelton's controversial nomination to the Federal Reserve suffered a possibly fatal blow Tuesday in a key procedural vote in the Senate. The upper chamber voted against a move to limit debate on the nomination, typically a death knell because the opposition simply could block the vote from ever coming to the full floor.

I can appreciate why Senate procedural developments don't make for exciting reading, but stick with me for a minute.

Shelton needed a simple majority to move forward, which seemed like an easy enough task given that there are 53 Senate Republicans. As of last night, however, three GOP senators -- Tennessee's Lamar Alexander, Maine's Susan Collins, and Utah's Mitt Romney -- opposed her nomination. Shelton's opponents, however, needed one more to defeat her.

Or at least, they thought they did. But when Iowa's Chuck Grassley and Florida's Rick Scott needed to quarantine after COVID-19 exposure, it changed the arithmetic. If either one had been on the Senate floor this afternoon, Shelton almost certainly would've been confirmed.

But they weren't, so she wasn't. Technically, the vote was 47 to 50, but it was really 48 to 49. Senate Majority Leader Mitch McConnell (R-Ky.) switched his vote from "no" to "yes" for procedural reasons, leaving him with the option of bringing the Shelton nomination back to the floor before the end of this Congress.

Indeed, that may yet happen. Once Grassley and Scott are able to leave quarantine, the calculus on the Senate floor may very well change. (Of course, once Arizona's Mark Kelly is seated -- probably later this month -- the arithmetic in the chamber will change further.)

Long story short: for Shelton's opponents, today was a good day, but the effort to block her from joining the Federal Reserve isn't over just yet.

And that, it seems to me, is what matters most. The attention today will be on the 49 senators -- a narrow plurality -- who opposed Shelton's nomination, but my focus is on the 48 senators who actually thought it'd be a good idea to confirm her.

Let's circle back to our earlier coverage. To understand why Shelton is such an outlandish choice, Catherine Rampell had a great column on the nomination in February, explaining that Shelton's opinions on interest rates tend to vary based on which party controls the White House; she's made laughable comments about the gold standard; and she's questioned whether the Federal Reserve should even exist as an independent body.

She also, incidentally, used to write weird memos for Tea Party lawmakers ahead of congressional hearings with Ben Bernanke, and has suggested she does not believe economic statistics produced by the U.S. government. Earlier this year, GOP sources said that in recent years, Senate offices considered Shelton so foolish, even "calling her as a witness for something was beyond the pale."

"In short," Rampell wrote, "Shelton is an opportunist and a quack." Months later, Steven Rattner, a Treasury Department veteran, added, "God help us if Judy Shelton joins the Fed."

For a White House that seems to enjoy putting wildly unqualified people in powerful roles, this wasn't much of a problem. But for senators of both parties, it seemed obvious that confirming Shelton to the Fed was simply not an option. As recently as September, roughly nine months after the president chose her for the powerful role, GOP leaders conceded that the opposition to her nomination was simply too strong.

That is, until last week, when Republicans unexpectedly announced that they're now prepared to confirm her anyway.

It's important to understand why. The timing is almost certainly not coincidental: Shelton's nomination languished in the final year of Trump's presidency, but became viable within days of Joe Biden becoming president-elect. All of a sudden, with the economy ravaged by a pandemic, and the prospects of a meaningful economic aid package fading, most Senate Republicans warmed up to the idea of putting "a quack" on the Federal Reserve's Board of Governors for the next four years.

The obvious explanation is that most GOP policymakers, many of whom were uncomfortable with the idea of Shelton adversely affecting the economy under Trump, are entirely comfortable with the idea of Shelton adversely affecting the economy under Biden.

As MSNBC's Chris Hayes explained late last week, "You've probably heard the phrase, 'salting the earth.' It's a phrase that comes from the Bible -- from the book of Judges in the Old Testament. After an Israelite king quelled a rebellion in his own city, he punished his people by sowing salt into their land, rendering the earth useless for generations to come. There's a real fear now that Republicans will essentially do the political version of that knowing that Joe Biden will soon be president.... [Judy Shelton's nomination] is how they're salting the field. This is the booby trap they're leaving behind."

There is no credible alternative explanation. The GOP-led Senate balked at Shelton for 11 months, and within days of learning of Biden's victory they announced plans to try to confirm Shelton, putting her in a position to bring some truly bizarre economic theories to the Fed.

The result is a familiar dynamic: as indefensible as it was for Trump to nominate Shelton, it's Senate Republicans' willingness to support her that's considerably worse.

It's obviously good news 49 senators balked this afternoon. It's ridiculous that 48 senators voted the other way.

Update: Rampell had a follow-up column on Shelton today, "Simply put, Shelton is a demonstrably unqualified partisan quack who has no business working at the world’s most powerful central bank. Her nomination has been condemned by hundreds of economists and Fed alumni, including prominent Republicans and at least seven Nobel laureates. The senators poised to confirm her appear to know she is unfit."