Monday, January 25, 2010

Bernanke Update

Late last week, the conventional wisdom was that Federal Reserve Chairman Ben Bernanke was headed for defeat in his quest for Senate confirmation for a second term in that job. What a difference a weekend makes, or so we're led to believe.

By this morning, the Washington buzz has shifted to talk of a Bernanke resurrection.

In The Washington Post, Neil Irwin quotes several key people in the White House and Senate as predicting a successful confirmation. Interestingly, not all of the senators who were making those predictions were willing to disclose how they would cast their own votes.

I'm reminded of the situation in 2003, when George W. Bush was successfully pushing for an expansion of Medicare. The Democrats, then in the minority in both houses of Congress, were ideologically inclined to support such a proposal, but they were wary of producing a victory for Bush on the eve of his reelection campaign. The leadership went to extraordinary lengths, both to pass the bill, and to ensure that it would be perceived as bipartisan.

Similarly in the current case, many Republicans are reluctant to confirm Bernanke, even though their party put him in the job, when they controlled both the White House and the Senate, four years ago. I suspect that Republican opposition stems from a combination of libertarian opposition to Bernanke's expansion of the Fed's reach, populist posturing against "bailouts of fat cats", and tactical considerations of how best to maintain Republican momentum going into this year's midterm congressional elections.

It seems as though this intricate Dance Of The Politicians may well produce a confirmation. But nothing is certain right now in Washington.

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