Appointment Jujitsu: Peter Diamond for CEA Chair

The Obama Administration has had some bad news on the economic-personnel front. Of course it has also had bad news on the economic-realities front, and the developments are connected. The two-part personnel news:

1. Austan Goolsbee, head of the Council of Economic Advisors and by far the best explainer of big-picture economics in the Administration, is heading back to U Chicago to retain his tenured chair. To see what the Administration is losing, check out the White House Whiteboard site.

2. Peter Diamond, professor of economics at MIT and the most recent recipient of the Nobel award in economics, has been nixed for a seat as a governor of the Federal Reserve by Senator Richard "executive branch appointments, c'est moi" Shelby.

Now Merrill Goozner, at Gooznews, has come up with the obvious solution: President Obama's next appointment should be Peter Diamond to succeed Goolsbee as head of the CEA. As Goozner says:

>>What message would choosing choosing Diamond send? It would be a stick in the eye to Republicans, and especially Alabaman Sen. Richard Shelby, whose love affair with the big banks from his seat on the Senate Banking Committee knows no limits. It would be a boost to Fed chairman Ben Bernanke, who today in a speech in Atlanta made his strongest statement yet that the short-term budget cutting fever now raging in Washington threatens to short-circuit the recovery.

And it would be a signal to the business community that says, "Hey, look, I'm dealing with a pack of assholes here. If you want to see your sales and profits rise over the next four quarters and not have the country sink into a double-dip recession, you'd better start spending and hiring, because the cavalry is led by a bunch of Custers and they're riding off in the wrong direction."<<

As I mentioned in the Rep. Weiner case, the country could use more Democrats who are willing to play tough when they're in the right, and when the interests they care most about are at stake. I believe both those conditions clearly prevail here. It is a travesty that Richard Shelby's wishes should trump Barack Obama's when it comes to a place in the administration for Peter Diamond. And both politics (re-election) and substance (avoiding a contractionary new downturn) argue in favor of the Administration fighting hard on this case.

President Obama, here is your nominee. Like a Fed governor, a CEA chair requires Senate confirmation. But the fight for confirmation is one you should be willing to wage, rather than just letting the likes of Shelby exercise a veto again. After all, this fight is a proxy for defending your economic strategy as a whole.