Janet Yellen, Meet Ted Cruz

Obama to throw his Fed nominee to a hostile Tea Party Congress.

Federal Reserve vice chair Janet Yellen speaks to a group of journalists at George Washington University on Thursday, April 4, 2013. 
National Journal
Patrick Reis
Oct. 8, 2013, 4:25 p.m.

Pres­id­ent Obama nev­er had an easy path to win­ning con­firm­a­tion for the next head of the Fed­er­al Re­serve. But he’s de­cided to make it all the more dif­fi­cult by in­tro­du­cing Janet Yel­len at a time when con­gres­sion­al ire has hit new heights — and his op­pon­ents are already tout­ing plans to make the nom­in­ee’s life dif­fi­cult.

Obama is re­portedly plan­ning to send Yel­len’s name to the Sen­ate Wed­nes­day, ask­ing the cham­ber to con­firm her as the next head of the world’s most power­ful cent­ral bank.

More than most nom­in­ees, the pick for Fed dir­ect­or has tra­di­tion­ally been the prerog­at­ive of the pres­id­ent, as sen­at­ors have been reti­cent to risk the mar­ket tur­moil that could res­ult from a pro­longed battle over the bank’s lead­er. But at a time when Re­pub­lic­ans have demon­strated their will­ing­ness to use any and all means avail­able to lever­age policy con­ces­sions, there’s no reas­on to be­lieve that that pre­ced­ent will be enough to ush­er Yel­len through an easy con­firm­a­tion.

In­deed, Sen. Ted Cruz, R-Texas, has already said he’ll use the nom­in­a­tion to look for lever­age to pass le­gis­la­tion re­quir­ing a deep­er audit of the Fed­er­al Re­serve, a long-time dream of former Rep. Ron Paul, an­oth­er Re­pub­lic­an from Texas, that has be­come a main­stream goal of the mod­ern GOP.

“That gives the op­por­tun­ity to lever­age,” Cruz said this sum­mer when asked about Obama’s up­com­ing Fed nom­in­ee. “I cer­tainly hope that, work­ing to­geth­er, we could force a vote on the Audit the Fed bill.”

Yel­len’s nom­in­a­tion also comes at the nadir of re­la­tions between Re­pub­lic­ans and the Fed­er­al Re­serve. Chair­man Ben Bernanke was first picked by former Pres­id­ent George W. Bush, but his ef­forts to shock the eco­nomy in­to a stronger re­cov­ery have stretched his ties with Re­pub­lic­ans well bey­ond their break­ing point.

Con­ser­vat­ive crit­ics ar­gue Bernanke’s hy­per­act­ive bank has put the coun­try at risk of in­vest­ment bubbles and in­fla­tion shocks while provid­ing lim­ited re­turn in terms of eco­nom­ic growth. And with the rise of the Tea Party, Bernanke’s vis­its to the Hill have grown more con­ten­tious. At a Ju­ly hear­ing in the House, Bernanke begged the House Fin­an­cial Ser­vices Com­mit­tee Re­pub­lic­ans to avoid drama over the debt lim­it, only to be told by a pair of le­gis­lat­ors that he was over­step­ping his bounds.

Yel­len is now be­ing thrown in­to the middle of that de­bate, and there’s no in­dic­a­tion she plans to move the bank in a dir­ec­tion that will garner GOP ap­prov­al. Yel­len is viewed as — if any­thing — more ag­gress­ive than Bernanke in her mon­et­ary policy, and she has staunchly de­fen­ded the Fed’s ef­forts to use easy money to fight un­em­ploy­ment.

As with all nom­in­a­tion fights, the most likely out­come is that the Sen­ate will even­tu­ally con­firm Yel­len to to head the Fed, hand­ing her Bernanke’s place when his term ex­pires in 2014. But giv­en the cur­rent polit­ic­al cli­mate, her path will be neither quick nor pain­less.

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