Tom Williams/CQ Roll Call via AP Images
Judy Shelton before the Senate Banking Committee last February
Democrats managed to avert disaster in the Senate on Tuesday, and maybe even were able to assist the financial fortunes of millions of Americans, simply by practicing caution against the coronavirus and getting a Zoom call set up with the president-elect.
The situation concerns Judy Shelton, who up until a couple of days ago looked to be a sure bet to join the Federal Reserve Board of Governors. President Trump nominated Shelton months ago, a highly controversial move because she has what can charitably be described as crazy views about monetary policy. Virtually the entire economics profession, including very conservative Republicans, virulently opposes her. This is someone who was iffy on whether the government should insure bank deposits, and has professed a desire to return to the gold standard. She would have been a solid, in-the-mainstream pick for the central bank maybe in the 1890s (before the Fed even existed), but not so much today.
Nevertheless, after squeaking through the Senate Banking Committee on a party-line vote, the support of Sen. Lisa Murkowski (R-AK) appeared to be enough to give Shelton the votes for confirmation. Sens. Susan Collins (R-ME) and Mitt Romney (R-UT) had announced their opposition to Shelton back in the summer, but Republicans have 53 votes and only need a simple majority—including a tiebreaker from Vice President Pence—to confirm presidential nominees. Without Murkowski, all appeared lost.
This would have been a crucial blow. While Shelton would be just one of seven governors on the board, she could potentially wield significant power. As Sam Bell notes, at least five of the seven governors must agree to any emergency lending under Section 13(3) of the Federal Reserve Act, which is what the central bank is doing right now for its coronavirus response programs. While the maldistribution of Fed actions across the economy is both real and important, doing nothing amid legislative gridlock would make things a good deal worse. Given current and potential Fed vacancies, Shelton could find herself in a position to veto pretty much all of these actions. It would also give Republicans a mole inside one of the few functioning policymaking bodies left, and grind that exception to a halt as well.
Moreover, Shelton would take up a slot that otherwise President-elect Biden would be able to fill, putting his own stamp on the Federal Reserve. Given weak legislative action and the importance of the Fed not only on monetary policy but also on financial supervision, having the incoming administration get more influence would be critical.
By Monday, however, the tide had turned against Shelton—or so it seemed. Retiring Sen. Lamar Alexander (R-TN) came out against Shelton, noting her ties to Trump and stating, “I am not convinced that she supports the independence of the Federal Reserve Board as much as I believe the Board of Governors should.” But Alexander wasn’t planning to be in Washington during the time of the vote this week anyway. It was a convenient way for him to signal opposition that functionally didn’t matter. With all else equal, Senate Majority Leader Mitch McConnell (R-KY) would still have 50 votes, to 49 for the opposition.
But all else wasn’t equal. Republican carelessness about the coronavirus has put two members—Sens. Chuck Grassley (R-IA) and Rick Scott (R-FL)—in quarantine. Since McConnell never put in place an allowance for remote voting, that would give opponents of Shelton a 49-48 lead, denying her confirmation. The critical cloture vote to end debate, set for Tuesday afternoon, was looking tenuous for McConnell.
But there was a complication on the Democratic side as well: the vice president–elect, Sen. Kamala Harris (D-CA). She has not been regularly attending the Senate in the lame-duck session, as Republicans ram through judicial nominees that would pass with or without her vote. Harris had a national-security briefing with President-elect Biden scheduled for Tuesday. Would she be able to make it to the Senate in time to vote against Shelton?
She would. The Biden transition team arranged it so that Harris could attend the briefing remotely, enabling her to stay in Washington to vote against Shelton. There were thoughts that one of the Republican no votes, out of deference to a colleague missing the proceedings, could switch to “present,” making the vote 48-48 and allowing Pence to break the tie. But Romney voted no, Pence didn’t even show up to the chamber, and the die was cast. Shelton’s vote failed.
Republican carelessness got two of their members put into quarantine, eliminating the party’s advantage.
McConnell could always bring up the Shelton nomination again, once Grassley or Scott emerges from quarantine. But time is short. The Senate is expected to be out Thanksgiving week. And after that, by November 30, Sen.-elect Mark Kelly (D-AZ) is eligible to take over Martha McSally’s seat, because he won a special election to complete the term of the late John McCain. That would make the balance in the Senate 52-48 for the rest of the lame duck, and with three votes against, Shelton would have no path to confirmation.
A couple of lessons proceed from this. First, the Senate is a very silly institution. McConnell stubbornly insisting on an 18th-century standard of live participation squandered his opportunity to sabotage the Fed. I’m grateful to him for his error, but it seems that there’s a better way to operate the world’s most deliberative legislative body.
Second, this is a worthwhile parable about the ways in which the parties conduct themselves with respect to the coronavirus. Republican carelessness got two of their members put into quarantine, eliminating the party’s advantage; Democratic use of available technology allowed them to maintain it. So much about how seriously the parties have managed the virus shines through here. And it just might lead to saving millions of people from economic ruin.
