The nomination of U.S. President Donald Trump’s controversial pick for the Federal Reserve is stalled in the Senate after vice-president-elect Kamala Harris returned to the chamber to cast a key vote in a tally Tuesday.
Two key Republicans were absent because of COVID-related concerns. Chuck Grassley, 87, later revealed he has tested positive for the virus.
The 47-50 vote against Judy Shelton came as the Republican-controlled Senate continues to focus its energies in the post-election lame-duck session on confirming Trump’s appointees.
Shelton is an unusually caustic critic of the Fed and was opposed by Republican senators Susan Collins and Mitt Romney in Tuesday’s vote. Harris has been focused on the transition to the Biden administration but returned to the chamber for her first vote since winning the vice presidency.
Democratic senator-elect Mark Kelly is likely to join the Senate when the chamber returns from its Thanksgiving break. That could leave Shelton short of support for confirmation even if Majority Leader Mitch McConnell seeks another vote next month.
Another Republican opponent, Lamar Alexander of Tennessee, missed Tuesday’s vote, and his return could cement Shelton’s fate, even after Republicans Rick Scott and Grassley return to the chamber after quarantining because of the coronavirus.
White House remains ‘confident’
McConnell initially voted “aye” but changed his vote to reserve the option to call a second tally if he can line up the votes.
All in all, accounting for absences and the arrival of Kelly, who defeated Republican Martha McSally, Shelton would appear to be one vote short, assuming there won’t be a re-vote this week. The Senate is slated to be recessed next week for Thanksgiving.
Trump spokesperson Judd Deere tweeted Tuesday that the White House remains “confident that Judy Shelton will be confirmed upon reconsideration.”
Shelton, a conservative economics commentator, is opposed by Senate Democrats, most economists and many former Fed officials for her past support of the gold standard and for writings that questioned the Fed’s political independence.
Under the gold standard, the U.S. dollar’s value is tied to gold. With that approach, the Fed has had less leeway to adjust interest rates, even in a severe recession.
Accused of flip-flopping
Shelton was approved by the Senate Finance Committee on a 13-12 party-line vote in July. Senate Democrats criticized her for appearing to flip-flop on many positions, including near-zero interest rates. She opposed ultra-low rates during Barack Obama’s presidency but supported them after Donald Trump took office and demanded that the Fed lower its short-term benchmark rate.
“Shelton has shown herself to be an economic weathervane, pointing whichever direction she believes the partisan winds are blowing,” said Minority Leader Chuck Schumer.
As a member of the Fed’s powerful board of governors, Shelton would vote on the Fed’s rate decisions and on banking regulation. The governors also vote on whether to institute emergency measures, such as the Fed’s decisions in March to start buying corporate bonds for the first time and institute a raft of programs to bolster financial markets.
Still, on her own, it’s unlikely that Shelton would have much effect on Fed policy, economists have pointed out.
The central bank operates by consensus and Fed governors rarely dissent from interest rate decisions, though Fed bank presidents do. For now, the Fed has pegged its benchmark rate to nearly zero and Fed officials have said they expect it to remain there until at least 2023.
Shelton has been picked to fill a term that expires in 2024.