Did Fed Nominee Diamond Get 'Borked'?

Senate Republicans blocked the Nobel Laureate from serving on the committee that sets U.S. monetary policy

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Economists can suddenly empathize with judges: they both know what if feels like to become the target of partisan politics. In a New York Times op-ed today, Nobel Laureate Peter Diamond announces that he will withdraw his name to become a governor on the Federal Reserve Board. He was nominated over a year ago, but Senate Republicans have stood in the way of his confirmation ever since. Do nominees to economic-driven posts now have to fear "borking" as well?

Diamond's Case

The verb "to bork" was coined in the late 1980s, shortly after Senate Democrats blocked the confirmation of Judge Robert Bork to the Supreme Court in 1987. In that case, they ran a campaign against his nomination and subsequently denied it. In the case of Diamond, the process was less messy, but the outcome was the same. This time, of course, it was Republicans -- not Democrats -- that did the borking.

Was this a purely partisan maneuver or are Republicans right to argue that Diamond wasn't qualified? In Diamond's op-ed, he explains the chief objection to his nomination:

The leading opponent to my appointment, Richard C. Shelby of Alabama, the ranking Republican on the committee, has questioned the relevance of my expertise. "Does Dr. Diamond have any experience in conducting monetary policy? No," he said in March. "His academic work has been on pensions and labor market theory."

This is a strange argument. In fact, one of the Fed's stated objectives on conducting monetary policy is to pursue maximum employment. So obviously, a deep understanding labor market is an important aspect of what the Fed does, as Diamond convincingly argues in his op-ed.

The Best Candidate vs. a Qualified Candidate

With that said, does this mean that Diamond was necessarily the best choice to fill the open Fed governor slot? He may not have been, as there might be economists with experience better tailored to conducting monetary policy out there. However, even if there were 50 candidates who would be a better fit for the job, does that matter?

Washington rarely manages to appoint the very best candidates to open positions. Politics always plays a role. For example, neither Justice Samuel Alito nor Justice Sonia Sotomayor may have been the foremost experts on constitutional law when they were appointed. With that said, each was sufficiently qualified to serve on the Court. But each also fulfilled the political leanings of the Presidents that appointed them, George W. Bush and Barack Obama, respectively.

You can apply this same theory to economic appointees. Could Diamond have performed competently as a Fed governor? Given his knowledge of economics and background, it seems pretty clear that he could have done so. Would Republicans have preferred someone with more of a free market, freshwater school bias? Of course they would have. And that's likely what drove them to bork Diamond.

A Serious Problem for Senate Confirmation

This poses a serious problem for the Senate confirmation process. There are few candidates out there for any post who will make both parties happy. There was a time when Congress sort of accepted the political reality that the executive in power gets to nominate candidates for various federal posts. Congress judged those nominees based on their experience, and if some Senators didn't like the nominees' political leanings, those Senators held their nose and swallowed.

This problem is likely to worsen before it improves. Recently Senate Democrats called for President Obama to recess appoint Elizabeth Warren as head of the newly established Consumer Financial Protection Agency. Their reason for doing so was largely in response to Republicans' promise to block her confirmation if nominated. The Senate confirmation process may be doomed.

As the partisan politics grow fiercer in Washington, you have to wonder if any politicians will take the higher road. Some of these positions -- like that of a Fed governor -- must be filled. The failure to do could cause harm to the nation. These agencies, courts, and regulators need to be operating on all cylinders to have a shot at being effective. Moreover, if Congress keeps treating these nominees so badly, it's going to become difficult to convince anyone qualified to endure the confirmation process to begin with.

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