A ‘pathologically self-defeating’ system

With Senate Republicans allowing Peter Diamond’s Fed nomination to whither on the vine, The Atlantic‘s James Fallows considered the developments from a global perspective.

Fallows, writing from China, noted he frequently hears from foreigners who have theories about “America’s irreversible decline,” a notion he rejects. He added, “But if I wanted to make a case that our system really has become pathologically trivializing and self-defeating — and that our problems, theoretically correctable, may be beyond our powers to address — here’s the most recent face I would put to that problem: Sen. Richard Shelby of Alabama.”

Shelby, of course, is the dim-witted Alabama senator who blocked Diamond’s nomination to the Federal Reserve for reasons that spanned from petty to ridiculous. “America is rich and resilient,” Fallows added. “But is it resilient enough to permit folly and self-destruction of this sort?”

That’s an excellent question. It’s all the more pressing when one considers the scope of the problem.

The federal government faces huge gaps of leadership in economic and financial policymaking, with about a dozen senior positions vacant or staffed by temporary caretakers, at a time of economic duress and efforts to write hundreds of new financial regulations.

The void atop much of the government’s financial machinery was underscored Monday when Nobel laureate Peter Diamond withdrew his nomination to serve on the Federal Reserve. The Massachusetts Institute of Technology professor blamed Republicans for blocking his nomination, saying they failed to understand the centrality of unemployment in the Fed’s thinking. Diamond won his Nobel in part for his work on joblessness.

Diamond’s nomination, which was originally made in April 2010, had become a symbol of the government’s near-paralysis at nominating and confirming nominees to fill vacancies in the upper echelons of the Treasury Department, Federal Reserve and financial regulators.

The gaps are particularly striking, given the nation’s sluggish economic recovery, persistent unemployment and a vast effort involving numerous agencies to write rules required by last year’s sweeping overhaul of financial regulations.

American civics at its most basic level tells us how the executive branch is supposed to function, especially in a time of crisis. An administration is supposed to find qualified officials, put them to work, and count on them to do their jobs well for all of our benefit. But the current system doesn’t quite allow this to happen — the president can find qualified people willing to serve, but they can’t get to work because Republicans don’t want them to.

There are competing possibilities for why the GOP acts this way. Maybe it’s knee-jerk partisanship; maybe it’s a desire to sabotage the country to make the president look bad; maybe Republicans hope gridlock will benefit the powerful interests that finance GOP campaigns. Whatever the motivation, the result is the same: the dysfunction of our political process is holding the country back.

Positions related to housing are vacant. The new Commerce Secretary nominee can’t get a vote. The GOP won’t allow any members to join the Consumer Financial Protection Bureau. Top banking regulatory offices are empty. Treasury Department offices related to financial institutions, economic policy, and tax policy are also vacant.

These nominees would be confirmed if given an up-or-down vote, which is why Republicans refuse to allow them to reach the Senate floor.

To Fallows’ point, the United States is going to have to be at the top of its game in the coming years if it expects to remain on top. Under the best of circumstances, we have a tough challenge ahead. With Republicans acting like slow and intemperate children, the challenge may prove too difficult.