No Democrats voted in Waller’s favor Thursday, and they were joined by only one Republican, Sen. Rand Paul of Kentucky.
Though the Fed is supposed to be apolitical and independent from the White House, Trump spent much of his presidency publicly attacking the Fed, embroiling the central bank in heated political battles it strives to avoid. And while Waller is seen by economists to be fairly mainstream, Democrats have staunchly opposed Trump’s more controversial nominees, including Shelton.
A macroeconomist, Waller is the director of research at the Federal Reserve Bank of St. Louis. His main research areas include monetary theory and macroeconomic theory. Before joining the St. Louis Fed in 2009, Waller led the economics department at the University of Notre Dame, among other academic postings.
Waller’s term runs through January 2030. He is also the first Fed governor to be seated during a lame-duck session, though he was formally nominated earlier in the year.
Waller “will bring both a solid theoretical background in monetary economics, as well as practical experience doing monetary policy,” said David Beckworth, an expert on monetary policy at George Mason University’s Mercatus Center. “His work at the St. Louis Fed includes helping advise the regional president how to vote on monetary policy, as well as running a large department of research economists.”
Waller’s nomination has often been framed in contrast to Shelton’s, and he has largely stayed under the radar while Shelton’s confirmation battle has swerved from one direction to the next. Waller is viewed by lawmakers and economists as representing the mainstream sphere of the Republican Party, while Shelton is associated with the deregulatory views of more-conservative economists.
Shelton’s confirmation was blocked by the Senate last month, and she faces increasingly slim odds of being confirmed by the end of the year.
On Thursday, Senate Majority Whip John Thune (R-S.D.), the party’s chief vote-counter, said another vote on Shelton’s nomination was “unlikely” at this point.
Senate Majority Leader Mitch McConnell (R-Ky.) can still bring up Shelton’s nomination for another vote. But it’s unclear whether there is the political will or urgency to do so.
On Wednesday, Mark Kelly (D-Ariz.) was sworn in to office, replacing Republican Sen. Martha McSally and narrowing the GOP’s Senate majority to 52-48 for the final days of the lame-duck session. Republican Sens. Susan Collins (Maine), Mitt Romney (Utah) and Lamar Alexander (Tenn.) oppose Shelton’s nomination.
Shelton, who advised Trump’s 2016 presidential run, has been criticized by lawmakers and economists for calling for a return to the gold standard, which the nation fully abandoned in 1971. Shelton has been outspoken against the Fed as an institution. She has also drawn scrutiny for altering some of her views to appear in closer agreement with Trump’s aggressive push for lower interest rates, raising questions about her commitment to Fed independence.
Trump has struggled to fill the two vacancies on the Fed board. In 2019, two of Trump’s previous picks, Stephen Moore and Herman Cain, withdrew their bids after intense scrutiny of their past remarks and views about women jeopardized their confirmation chances. Cain died of the coronavirus in July.
Trump has put every Fed governor in his or her current post, with the exception of Democrat Lael Brainard. If Shelton’s nomination is not brought up for another vote, President-elect Joe Biden will be left with one opening on the board when he enters office in January. Left-leaning economists and lawmakers say that as other Fed seats open up over the next four years, Biden will probably fill them with people supportive of stronger Wall Street oversight and banking regulation.
At the same time, the Fed is an independent institution that is supposed to be removed from the influence of politics on Capitol Hill. Michael Strain, director of economic policy studies at the American Enterprise Institute, said the Fed functions better with policymakers who bring diverse opinions — so long as those officials meet a certain bar.
“Presidents should fill vacancies with competent people, and partisan considerations really shouldn’t factor in,” Strain said. “A diversity of views is important. We shouldn’t be thinking of the Fed as something that’s akin to the Supreme Court, where [nominees] tip the balance. It’s just not the same thing, and shouldn’t be.”