Brad Delong pleads with an unheeding universe: "Why Oh Why Doesn't Barack Obama Recess-Appoint Joe Gagnon to the Federal Reserve Board of Governors?" His request comes after a trenchant post from Gagnon, a former Fed staffer, on all the fun things the Fed could be doing if it recognized that they should worry more about deflation than inflation. After suggesting a couple of small but critical policy shifts, Gagnon concludes:
Roughly speaking, they comprise a net easing of the stance of monetary policy equivalent to a 100 basis point cut in the federal funds rate. According to the Federal Reserve’s own economic model, such a policy move would reduce unemployment roughly as much as a 2-year $500 billion fiscal package and yet it would actually reduce the federal budget deficit. And it can be reversed quickly should the balance of risks shift from deflation to inflation.
The cake, and the eating of it? Wow.
To Brad's point, it would be nice to see President Obama exercise his recess appointment power more frequently, but there may be more productive ways to do it that still preserve Congress' prerogatives. For example, right now we're still waiting for the Senate to confirm three nominees to the Fed board -- Janet Yellen, Peter Diamond, and Sarah Bloom Raskin. While we wait, the president could simply find someone -- like Gagnon, for instance -- who's qualified for the post but might not want to commit to the job for the long haul. He could have Gagnon agree to resign as soon as the Senate confirms his actual nominees (I'm not sure if all this is legally workable, but stay with me), a move that provides some accountability to the Fed and a new voice in its deliberations, and an incentive for Republicans to confirm his actual nominees.
You could see him going even further in this strategy and recess-appointing some actual crazy leftists to various positions and telling GOP Senators he'll be happy to fire them just as soon as his actual nominees are confirmed. At some point, you have to figure the White House is going to want to think outside the box on this one.
-- Tim Fernholz
