Liberal economist Peter Diamond is likely to be confirmed to a powerful position, despite issues far more severe than those that blocked the confirmations of highly-respected conservatives. It smacks of a big double standard.
Diamond was nominated to one of the most powerful positions in the land — the Federal Reserve’s Board of Governors, which sets monetary policy. (The Fed is now printing hundreds of billions of dollars to buy up government debt and inflate the money supply, in a controversial policy known as “quantitative easing” or QE2, which some economists have predicted will lead to substantial inflation.)
By law, the Board is supposed to be balanced regionally, but it isn’t: its members come almost entirely from the East and West Coast. So does Diamond, a professor at the Massachusetts Institute of Technology (MIT). He has lived in Massachusetts since 1960.
The Obama administration nominated Diamond for a seat on the Board representing a district in the Midwest, claiming he is from Chicago because he has lectured at Northwestern University. But as economist Mark Calabria notes, Diamond is really from Massachusetts, which already has a representative on the Fed (Fed Board member Dan Tarullo). That violates Section 10-1 of the Federal Reserve Act, which says a new Fed member may not come from a district that already has a representative. If Diamond is confirmed, every single member of the Fed’s Board will come from a coastal state, and none from America’s heartland.
Democrats insist this doesn’t matter and is just a technicality, and the Senate Banking Committee approved his nomination last year in a 16-to-7 vote.
But they sang a different tune when Peter Keisler was nominated to the U.S. Court of Appeals for the Fourth Circuit.
The Constitution lets the president pick anyone, regardless of region, to sit on any federal court. But the seat that Keisler was nominated to had customarily been held by a Marylander. Democrats cited that to block Keisler, even though he lived in Maryland, because he worked in Washington, D.C. They did so even though Keisler was given the highest possible rating by the American Bar Association (well-qualified) and was backed even by liberal lawyers who had previously worked with him in the Justice Department (and by the Washington Post).
Keisler was not the first Maryland resident blocked from being confirmed to the Fourth Circuit based on the argument that he lacked sufficient ties to the state. (Keisler was later nominated to the D.C. Circuit, right near where he worked, and the Democrats blocked that appointment as well.)
Diamond was nominated despite lacking knowledge in the areas needed by a Federal Reserve Board member, because he will likely be a yes-man for the Obama administration. As Senator Shelby has noted, he lacks relevant experience in crucial areas of Fed policy. He has no “experience experience in conducting monetary policy,” “bank management or supervision,” or handling “monetary economics,” or economic “crisis management.”
He was nominated not because he was qualified but because of his “policy preferences”: “He supports QE2”; “He supported President Obama’s $800 billion stimulus package and has argued for additional fiscal stimulus”; he supports “higher taxes”; “He supported bailing out big banks during the financial crisis”; and “He has even advocated the creation of a GSE modeled after Fannie and Freddie to subsidize health care.” “In short, Dr. Diamond is an old-fashioned, big government Keynesian.”
His support for even more stimulus spending is troubling, given how the $800 billion stimulus package backfired in many respects, destroying jobs in some sectors of the economy. His support for the creation of another GSE is also disturbing, given how the two existing GSEs — Fannie Mae and Freddie Mac — have had to be bailed out at a cost to taxpayers of hundreds of billions of dollars.
Liberals also argue that Diamond should be confirmed because he received a Nobel Prize in economics. But economics is a highly-specialized discipline, and the research he received a prize for has little to do with what the Fed does. I have a Harvard Law degree, and years of experience handling civil and administrative cases, but that does not mean I would be qualified to sit on a tribunal outside my areas of expertise, like a federal appeals court handling patent claims, or a state court of criminal appeals.
No matter how fancy your degree, or prestigious your publications, you are not qualified to handle matters outside your range of expertise.