The Federal Reserve, the body responsible for macroeconomic stabilization and Ron Paul's nightmares, is governed by a dual mandate: the maintenance of price stability and promotion of full employment. Since the economy is currently producing fewer goods and services than it's capable of, Chairman Ben Bernanke and other members of the Federal Reserve Open Market Committee have been engaging in expansionary monetary policy — though not aggressively enough, according to many economists — to boost nominal GDP and employment.
The downside of activist monetary policy is inflation. Though it's negligible now — the Consumer Price Index rose just 0.3 percent in March — Federal reserve policy can eventually increase the price of everything from house rentals to hooker rentals. Which I presume is where Senator, confirmed john and alleged diaper fetishist David Vitter comes in, with a hold on Barack Obama's two nominees to the Federal Reserve Board…
Sen. David Vitter (R., La.) has effectively blocked Senate confirmation of the nominees, Harvard University economics professor Jeremy Stein and former private-equity executive Jerome Powell. Wall Street firms have been quietly pressing Mr. Vitter to drop his objections, an aide to the senator said.
Senate leaders aren't expected to bring the nominees to the floor for debate, a potentially lengthy process unlikely to be welcomed by either party in an election year. The Senate generally confirms nominees through the faster process of unanimous consent. Unless Mr. Vitter changes his mind, the two Fed nominations are unlikely to advance.
Political Science research suggests election results are influenced in great measure by macroeconomic performance, so it's little wonder an Obama critic like Vitter would want to stave off a recovery. More than anyone else in the Senate, he has a keen understanding of "swing" voters.
As for the Democrats' ability to break the logjam, options for Harry Reid are limited. He can force the Republicans to engage in a full-scale filibuster, but Democrats are unlikely to corral the 60 votes needed for cloture. And even if Reid forced to Vitter to actually hold the floor in a marathon session without sleep or bathroom breaks, something that rarely happens in today's Senate, the outlook for Democrats remains grim. Though Vitter is well below the Senate's median age, he's one politician guaranteed to know how to put Depends to good use.
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Tags: Ben Bernanke, David Vitter, Federal Reserve, Senate, Unemployment