WASHINGTON – The nomination of Judy Shelton, 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. The 47-50 vote 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 two GOP senators, Susan Collins of Maine and Mitt Romney of Utah, 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.
Senator-elect Mark Kelly, D-Ariz., 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, R-Ky., seeks a revote next month.
Another Republican opponent, Lamar Alexander of Tennessee, missed Tuesday's vote, and his return could cement Shelton's fate, even after Rick Scott, R-Fla., and Charles Grassley, R-Iowa, return to the chamber after quarantining because of exposure to the coronavirus.
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 Martha McSally, R-Ariz., Shelton would appear to be one vote short, assuming there won't be a revote this week. The Senate is slated to be recessed next week for Thanksgiving.
Trump spokesman Judd Deere tweeted Tuesday that the White House remains “confident that Judy Shelton will be confirmed upon reconsideration.”
Shelton's nomination has been sharply partisan for a nominee to the Federal Reserve's Board of Governors. The Fed seeks to maintain a degree of political independence, though it is often criticized by members of Congress and in recent years by Trump. The vice chair of the Fed's board, Richard Clarida, was approved by a vote of 69-26 in August 2018.
White House economic adviser Larry Kudlow is said to be a strong supporter of Shelton's. The Trump White House has at times struggled to get its nominees on the Fed board. Its previous two picks, economics commentator Stephen Moore and the late Herman Cain, a former GOP presidential candidate, both withdrew without a Senate vote in the face of strong opposition.
Shelton, also 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. Under that approach, the Fed would have less leeway to adjust interest rates, even in a severe recession.
“I think her views are too extreme,” said Richard Fisher, former president of the Dallas Federal Reserve, said Tuesday on CNBC after the Senate vote. “I just don’t think it would send the right signal to have her as governor at this time."
Shelton was approved by the Senate Banking 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 President Barack Obama’s presidency but supported them after 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 Senate Minority Leader Chuck Schumer, D-N.Y.
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.
This story has been updated to correct to delete a reference to Sen. Bill Cassidy missing the vote. He voted ‘yes.’