17 Nov Judy Shelton, Trump Fed Nominee, Fails to Advance to Final Vote
WASHINGTON — Judy Shelton’s nomination to fill one of two remaining open seats on the Federal Reserve’s Board of Governors failed to advance to a final vote on Tuesday, a significant setback but one that does not kill her chances at ultimately winning confirmation.
Senator Mitch McConnell, the Republican Senate majority leader, took steps that will allow him to bring up the nomination again, which could give Ms. Shelton another shot at joining the Fed. Still, her failure to clear a closely watched procedural vote signaled the tough road ahead for President Trump’s nominee, whose bid has been contentious from the start.
Mr. Trump announced that he would nominate Ms. Shelton 16 months ago, but her confirmation has been delayed time and again by lawmakers’ skepticism over her views — she is a loyal fan of the president and a longtime proponent of some sort of gold standard, which most economists oppose.
While she had appeared to be on the brink of confirmation this week, the coronavirus complicated Republicans’ last-minute attempt to place Ms. Shelton in a role at the nerve center of the American economy.
On Tuesday morning, Senator Charles E. Grassley, Republican of Iowa, announced that he had been exposed to the coronavirus and by late afternoon he disclosed that he had tested positive. With Senator Rick Scott, Republican of Florida, also in quarantine, Democrats who opposed her nomination had a chance to hold back confirmation with some Republican support.
Senators Mitt Romney of Utah and Susan Collins of Maine, both Republicans, voted against advancing her nomination, and a third Republican, Senator Lamar Alexander of Tennessee, also opposed Ms. Shelton but was not present for the vote because of what a spokesman said were family matters.
In a sign of how narrow the margin was, Senator Kamala Harris of California, the vice president-elect, returned to Capitol Hill for the first time since the presidential election in part to vote against Ms. Shelton’s advancement.
“Senator Harris knows this is an important vote, and she’s here for it,” Senator Chuck Schumer of New York, the minority leader, said at his weekly news conference. “She didn’t need contacting.”
The procedural vote ultimately failed 47 to 50, with Mr. McConnell changing his vote from agreeing to advance the nomination to opposing it so he could revive it before the end of the lame-duck session.
If confirmed, Ms. Shelton, 66, would take one of seven seats on the central bank’s Washington-based board. With her addition, five of the six filled seats would contain Mr. Trump’s appointees. The president has nominated Christopher Waller, a Federal Reserve Bank of St. Louis official, to fill the remaining seat. It is unclear when his less contested nomination could come to a vote.
But Ms. Shelton’s prospects might prove dim. Mark Kelly, a Democratic senator-elect who flipped a Senate seat in Arizona, can be sworn in once his election is certified at the end of the month. Ms. Shelton has such a narrow margin of support that losing that one vote could cost her any chance of confirmation.
Still, if Mr. Grassley or Mr. Scott returns before Mr. Kelly is seated, Ms. Shelton might be approved.
The partisan wrangling and 11th-hour uncertainty over Ms. Shelton’s fate highlight how fraught and politicized her nomination has been.
Key senators have had misgivings about her appointment, in part because of her preference for backing the U.S. currency with gold or some other peg. Ms. Shelton, who advised the Trump 2016 campaign, has written articles praising Mr. Trump and has at times appeared to question the value of central bank independence. She formerly favored higher interest rates, but abruptly changed that position to mirror Mr. Trump’s low-rate preference once she was in the running for a nomination to the Fed.
Her nomination might have been helped along by President-elect Joseph R. Biden Jr.’s election victory. Installing Republican nominees at the Fed before the new administration takes office would limit Mr. Biden’s ability to appoint his own picks. The governors hold seven of 12 votes on interest rates — five of the 12 regional Fed bank presidents also vote at any given time — and the board has sole discretion over big-bank regulatory matters.
While monetary policy is generally set independent of politics and partisan identity does not uniformly map to interest-rate preferences, politics do matter for regulation.
Ms. Shelton was seen as a Fed chair in waiting had Mr. Trump won re-election. That is no longer a possibility. Senators who were on the fence may have been more concerned about confirming someone destined for the most important job in the global economy.
The saga underlines just how bitter partisan divides in Washington have become. This is the first time a political party has tried to pack the Fed after losing the White House, according to Peter Conti-Brown, a Fed historian.
“There wasn’t the same sense of stacking the Fed on the way out,” said Mr. Conti-Brown, who teaches at the University of Pennsylvania’s Wharton School.
As a governor, Ms. Shelton’s formal influence would be limited. She would hold a single vote on policy matters. And there have been partisan loyalties at the central bank in the past. When Ronald Reagan was president and quarreled in private with Paul A. Volcker, the Fed chair at the time, he appointed governors who voted against Mr. Volcker.
But Ms. Shelton has been so forward in her support for Mr. Trump — and so skeptical of the Fed — that it has caused some to worry that she would undermine the institution. Former Fed officials and Nobel laureates have warned against confirming her.
“While we applaud the board having a diversity of viewpoints represented at its table, Ms. Shelton’s views are so extreme and ill-considered as to be an unnecessary distraction from the tasks at hand,” their letter said.
Mr. Conti-Brown said Ms. Shelton, whose term would expire in 2024, could make a difference in public debate around Fed policies simply by voicing a more extreme challenge to Fed actions.
“The dissenting voices on the Federal Open Market Committee change the political environment,” he said. “That’s why the stakes are so high for this.”
Luke Broadwater and Thomas Kaplan contributed reporting.