After a very long summer of Janet Yellen vs. Larry Summers, it appears the White House is ready to kick it into high gear and nominate Yellen for Fed chair. Some economists have reservations about her dovish reputation on inflation, but according to Senate Democrats, Yellen is the only name the White House is talking about right now.
After Larry Summers took his name out the running, the White House "accelerated the vetting process" for Yellen, The New York Times reports, and White House spokesman Jay Carney says a Fed chair nomination could come as early as next week. Senate Democrats already like Yellen, so confirmation shouldn't be too arduous, although the Times insists there will be "hurdles."
Sen. Jeff Merkley told the Times, “certainly my impression is the White House is taking a very serious and fast-track examination of [Yellen] as a potential nominee.” It's not clear exactly when the White House began Yellen's vetting process, but it's definitely sped up since Summers, who was widely considered Obama's first choice, dropped out. Some think serious consideration of Yellen is coming too late. Heidi Moore, the financial and economics editor at The Guardian, is annoyed: "Basic politics: [the White House] made it clear that Yellen was second string, embarrassing her publicly." CNBC's financial blogger John Carney agrees: "If she gets nom, she'll be the Second Choice Chair for rest of O's administration."
So, Yellen probably wasn't Obama's first choice — but that doesn't mean she's not the top pick for plenty of senators, economists, and women's groups. The White House has reportedly been reaching out to Senate Democrats to let them know Yellen will probably be the nominee, asking them to defend her if she's attacked once her nomination is official. That seems a little unnecessary, as at least one third of Democratic senators wrote to Obama back in July urging him to pick Yellen. Sen. Elizabeth Warren and others have been defending Yellen in the press all summer. It's Obama who's failed to speak up for Yellen — he only defended Summers at a press conference in August. Still, the White House is reportedly worried Yellen will "become a target for criticism."
Yellen has already been criticized in the media, but many of the attacks are based on the fact that she's a woman. Joan Walsh at Salon chronicled the sexist whispering campaign against Yellen (and Obama's failure to do anything about it) in August.
The new criticism against Yellen is that she might be too dovish on inflation: she's "embraced the view that the Fed should not balk at a bit of inflation if it comes as part of a policy that is bringing down too-high unemployment," Reuters reports. It's true, Yellen does care about unemployment. In a speech to the AFL-CIO in February, she remarked,
"These are not just statistics to me. We know that long-term unemployment is devastating to workers and their families. The toll is simply terrible on the mental and physical health of workers."
However, some think her dovish reputation is "overblown." Stephen Oliner, a scholar at the American Enterprise Institute former Fed adviser, insists, “the market does have it wrong if they think she is going to be soft on inflation. She has very little tolerance for inflation above the 2 percent target.”
Robert Shiller, the 2001 winner of the Nobel Prize for economics (who's working on a book with Yellen's husband), thinks Yellen's humanity will be an asset to the Fed.
She looks beyond the technical institutions to how they affect people. That might make her feel sympathetic for the unemployed … but is a person who’s concerned about human welfare considered weak or dovish? I don’t think so. We need a less macho government.