Cloture, But No Closure

We know now there is nothing one can do to be judged unfit to run monetary policy in this country. You can take the economy to the brink of another Depression or even over it, but as long as you write a big enough check on the public's dime you will be praised for "bold action." It's appropriate that Bernanke came from a university: he's never lost tenure.

During the past 30 years there have been exactly three Fed chairmen. The Fed's defenders call this "stability," but it's really the result of a tacit institutional imperative to restrict leadership to as few individuals as possible. William Greider's Secrets of the Temple was appropriately titled: the more people allowed inside, the greater the risk of someone going off the reservation one day. Keep a handful of insiders at the top and give them terms that span decades, and you minimize that possibility. Bernanke isn't just Fed chairman. His 14-year term as Fed governor doesn't end until 2020. Even if the Senate or the White House had determined that his performance as chairman was poor enough to reject him for another term, he could have remained on the Board, untouchable, for another ten years.

The tenure is propitiously self-reinforcing. The longer one stays, the more crucial one's continued presence becomes -- regardless of performance. This was true with Greenspan, and in recent weeks Bernanke's supporters accorded him the same status:

Sen. Thad Cochran (R., Miss.) said that his support for Mr. Bernanke is due to a reluctance to create uncertainty in financial markets. According to a Cochran aide, the senator believes Mr. Bernanke's reappointment "would help bring stability to the markets and establish a comfort zone for those who might be uncertain about the effect a new person might have on the economic environment."

The man has become the system. Of course this says more about the system than the man. Pat Buchanan: "[I]f rejection of Bernanke would cause turmoil in U.S. and world markets, what does that say about the real stability of the system?" Read this for a solution that looks increasingly necessary.

During the debate over Bernanke, a corollary to the "stability" theme developed: the idea that any opposition to the Fed or its chairman constitutes "populism." Proponents invariably and speciously invoke the image of "Nancy Pelosi's hand on the printing press." But there's no natural conflict between policy independence and mandated, valid congressional oversight of the institution. Somewhere along the way, that oversight and indeed any criticism at all became tantamount to "politicization of the Fed," a polite term for control of monetary policy by the mouth-breathing masses. This is both outrageous and dangerous and needs to be turned back.

As for Bernanke's new four-year term, here's a prediction. I think there's a chance he leaves before his term ends. Possible reasons include the unavoidable consequences of recent and current policy, an inability to conduct policy effectively with such a high level of congressional opposition, or a scandal over new details about AIG or something else. I'd assign an equal probability to each scenario. We'll see.

There is one important upside to Bernanke's confirmation. Because he's so controversial, his continued presence will make Fed reform much more likely -- including a full audit that clearly is now urgent. Having won the battle, Bernanke and the Fed's defenders may find it was a Pyrrhic victory. Unfortunately that dynamic has worrisome political implications. The public's unresolved anger from this period is obvious. But if you're not sure about the degree of apathy and despondency on the Left, spend a few minutes poking around the message boards. The enthusiasm gap is so wide you could fit a foreclosed McMansion in it. Nature may abhor a vacuum, but Sarah Palin doesn't.

This is why Obama's decision to continue slapping the country in the face with Bernanke (and Geithner) was profoundly irresponsible. If denying a furious public some scalps and going to the wall for a failed Bush appointee amplifies the impact of broader legislative impotence and provides an opening for political extremism at the national level, it may turn out to be one of the most consequential unforced errors in recent American politics.

Voted For Bernanke:

Akaka (D-HI)
Alexander (R-TN)
Barrasso (R-WY)
Baucus (D-MT)
Bayh (D-IN)
Bennet (D-CO)
Bennett (R-UT)
Bingaman (D-NM)
Bond (R-MO)
Brown (D-OH)
Burr (R-NC)
Burris (D-IL)
Byrd (D-WV)
Cardin (D-MD)
Carper (D-DE)
Casey (D-PA)
Chambliss (R-GA)
Coburn (R-OK)
Cochran (R-MS)
Collins (R-ME)
Conrad (D-ND)
Corker (R-TN)
Dodd (D-CT)
Durbin (D-IL)
Enzi (R-WY)
Feinstein (D-CA)
Gillibrand (D-NY)
Graham (R-SC)
Gregg (R-NH)
Hagan (D-NC)
Hatch (R-UT)
Inouye (D-HI)
Isakson (R-GA)
Johanns (R-NE)
Johnson (D-SD)
Kerry (D-MA)
Kirk (D-MA)
Klobuchar (D-MN)
Kohl (D-WI)
Kyl (R-AZ)
Landrieu (D-LA)
Lautenberg (D-NJ)
Leahy (D-VT)
Levin (D-MI)
Lieberman (ID-CT)
Lincoln (D-AR)
Lugar (R-IN)
McCaskill (D-MO)
McConnell (R-KY)
Menendez (D-NJ)
Mikulski (D-MD)
Murkowski (R-AK)
Murray (D-WA)
Nelson (D-FL)
Nelson (D-NE)
Pryor (D-AR)
Reed (D-RI)
Reid (D-NV)
Rockefeller (D-WV)
Schumer (D-NY)
Shaheen (D-NH)
Snowe (R-ME)
Stabenow (D-MI)
Tester (D-MT)
Udall (D-CO)
Udall (D-NM)
Voinovich (R-OH)
Warner (D-VA)
Webb (D-VA)
Wyden (D-OR)

Voted Against Bernanke:

Begich (D-AK)
*Boxer (D-CA)
Brownback (R-KS)
Bunning (R-KY)
Cantwell (D-WA)
Cornyn (R-TX)
Crapo (R-ID)
DeMint (R-SC)
*Dorgan (D-ND)
Ensign (R-NV)
Feingold (D-WI)
*Franken (D-MN)
Grassley (R-IA)
*Harkin (D-IA)
Hutchison (R-TX)
Inhofe (R-OK)
*Kaufman (D-DE)
*LeMieux (R-FL)
McCain (R-AZ)
Merkley (D-OR)
Risch (R-ID)
Roberts (R-KS)
Sanders (I-VT)
Sessions (R-AL)
Shelby (R-AL)
Specter (D-PA)
Thune (R-SD)
Vitter (R-LA)
*Whitehouse (D-RI)
Wicker (R-MS)

*Denotes voted for cloture