BERNANKE GETS FOUR MORE YEARS…. A couple of weeks ago, Kevin Drum hosted a panel discussion at Netroots Nation, and asked progressive participants if they were opposed to reappointing Ben Bernanke for another term as the Fed chairman. No one spoke up. Kevin concluded, “This suggests to me that Bernanke is a shoo-in for winning a second term. If you can’t even get a bunch of liberals at Netroots Nation to oppose him, what are the odds that anyone else is going to lead the fight?”
And with that in mind, President Obama interrupted his vacation this morning to announce that he would, in fact, nominate Bernanke for a second term. The NYT noted that the president is “seeking to keep an air of stability in the financial markets as the nation inches toward an economic recovery.”
“As an expert on the causes of the Great Depression, I’m sure Ben never imagined that he would be part of a team responsible for preventing another,” Mr. Obama said. “But because of his background, his temperament, his courage, and his creativity, that’s exactly what he has helped to achieve.”
The president interrupted his weeklong vacation to Martha’s Vineyard to disclose his decision, which was timed to coincide with the opening of the American financial markets on Tuesday morning. The announcement also came just before the White House released a new projection that the deficit would reach $9 trillion over 10 years.
I’m going to go out on a limb here and speculate that this wasn’t a coincidence. Bernanke’s first term doesn’t end until January, and there was no chance he might pull a Palin and walk away early. So why make the announcement on a slow Tuesday morning? Because the administration didn’t want the markets freaking out about discouraging deficit projections (more on that later).
Bernanke will, of course, face another round of Senate confirmation hearings. I don’t have especially strong feelings about Bernanke getting a second term, and it’s probably safe to assume he’ll be confirmed with relative ease, but there are some fairly important questions he should be prepared to answer.
That said, Noam Scheiber makes a compelling case for continuity, and argued, “Bernanke has been creative, even highly unorthodox, at precisely the moment when the economy demanded these qualities from the Fed, and when a conservative, by-the-book approach would have likely sent us into a depression.”
Tim Fernholz also has a good item this morning: “Ultimately, this is a good short-term pick for today, certainly, as well as the next six months or so of crisis management and the short-term reassurance of the bond markets. Whether or not Bernanke will gain the confidence of Congress and be able to make the tricky calls required to manage monetary policy in a transition to recovery without being held hostage by a single class of investors remains to be seen, but he cannot forget that the decisions he makes about interest rates and his extraordinary lending programs will affect the entire swath of the American economy and particularly unemployment. It’s clear that, after whatever conversations the two have had, Obama has confidence that Bernanke is his man.”
Update: On a related note, be sure to check out James K. Galbraith’s piece in the new issue of the Monthly, “Did Ben Bernanke really save America’s financial system?”