Trump’s controversial choice for US Federal Reserve ends after Kamala Harris vote

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The nomination of US President Donald Trump’s controversial choice for the Federal Reserve is stuck in the Senate after Vice President-elect Kamala Harris returned to the chamber to vote on Tuesday in a count.Two key Republicans were absent due to concerns over COVID. The 47-50 vote against Judy Shelton came as the Republican-controlled Senate continues to focus its energies in the lame post-election session on confirming Trump’s nominations.

Shelton is an unusually caustic critic of the Fed and was opposed by Republican Senators Susan Collins and Mitt Romney in Tuesday’s vote. Harris focused on the transition to the Biden administration but returned to the chamber for her first vote since winning the vice presidency.

Democratic Senator-elect Mark Kelly is likely to join the Senate when the House returns from its Thanksgiving recess. That could leave Shelton running out of support for confirmation, even as Majority Leader Mitch McConnell seeks another vote next month.

Another Republican opponent, Lamar Alexander of Tennessee, missed Tuesday’s vote, and his return could cement Shelton’s fate, even after Republicans Rick Scott and Charles Grassley returned from quarantine due to exposure to the coronavirus.

Shelton, during his appearance before the Senate Banking Committee for a confirmation hearing on February 13. (J. Scott Applewhite / The Associated Press)

The White House remains “confident”

McConnell initially voted “yes” but changed his vote to reserve the option of calling a second tally if he can line up the votes.

Overall, given the absences and the arrival of Kelly, who beat Republican Martha McSally, Shelton would appear to be missing a vote, assuming there won’t be a vote this week. The Senate is scheduled to be suspended next week for Thanksgiving.

Trump spokesman Judd Deere tweeted on Tuesday that the White House remains “confident that Judy Shelton will be confirmed after reconsideration.”

Shelton, a conservative economist commentator, is opposed by Senate Democrats, most economists and many former Fed officials for her past support for the gold standard and for writings that questioned the political independence of the Fed. According to the gold standard, the value of the US dollar is linked to gold. Under this approach, the Fed has less leeway to adjust interest rates, even during a severe recession.

Accused of about-face

Shelton was approved by the Senate Finance Committee in a 13-12 party vote in July. Senate Democrats criticized her for appearing to do an about-face on many positions, including near zero interest rates. She opposed ultra-low rates during Barack Obama’s presidency but backed them after Donald Trump came to power and demanded that the Fed lower its benchmark short-term rate.

“Shelton has proven to be an economic weather vane, indicating the direction in which she thinks partisan winds are blowing,” Minority Leader Chuck Schumer said.

As a member of the Fed’s powerful board of governors, Shelton would vote on Fed rate decisions and banking regulations. Governors are also voting on whether to institute emergency measures, such as the Fed’s March decisions to start buying corporate bonds for the first time and institute a series of programs to support corporate bonds. financial markets.

Yet, on her own, Shelton is unlikely to have much of an effect on Fed policy, economists have pointed out. The central bank operates by consensus, and Fed governors rarely disagree with interest rate decisions, unlike Fed bank chairmen. For now, the Fed has set its benchmark rate near zero, and Fed officials have said they expect it to stay there until at least 2023. Shelton has been chosen to fill a mandate that expires in 2024.

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