But like I said, it's easy to see how we got here. Just remember how bad things were in 2009. The banks were dying, the economy was, too, and the Obama administration was trying to fill out its basic staff. "Getting the economic team's full complement in place," former Council of Economic Advisers Chair Austan Goolsbee told me over email, "was pretty hard already" with "lots of delays." Filling the Fed's two empty spots didn't seem like "as pressing an issue as some of the others" since "[Fed Chair Ben] Bernanke wasn't getting outvoted." The world, in other words, really did look like it was about to end, and what was more likely to change that: getting a bigger majority in favor of the Fed's policies, or getting people in place to figure out how to save the banks or the auto industry or, well, you get the idea?
The only problem is that Paul Krugman was right. He warned that the stimulus was too small, that this would make people think it hadn't worked, and, as a result, make any more of it politically impossible. That left the Fed as the only game in town. But it might have been a little less of one than it could have been if Bernanke had had all the votes he could have had. Why didn't he? Well, the confirmation process takes a long enough time if you do have a filibuster-proof majority in the Senate, but if you don't, like Democrats didn't after Scott Brown won his special election in early 2010, then it can take infinitely long — that is, it can stop completely. And for a while, that's what Republicans decided to do.
Now, it's true that they did allow Janet Yellen and Sarah Bloom Raskin to fill two of what were by then the Fed's three openings in 2010, but they didn't allow anyone to fill that last one. Republican Richard Shelby claimed that Nobel Prize-winning economist Peter Diamond somehow didn't have the requisite experience to serve at the Fed, and held up his nomination not once, not twice, but three times — at which point Diamond withdrew his name from consideration. What was really going on, though, was that Republicans were imposing an ideological test on the Fed. Diamond had made the mistake of expressing the completely conventional view that the stimulus had helped the economy, which was enough for the conservative Club for Growth to whip votes against him. It got to the point that, by 2012, Obama was only able to fill the Fed's then-two open slots by nominating a Democrat, Jeremy Stein, together with a Republican, Jay Powell, neither of whom felt as strongly about the central bank's ability to help the recovery. That's continued through today.
And that brings us to the what-ifs. Although it's impossible to say how different a Fed full of Bernanke clones would have been from the one we got, it probably would have been at least a little so. Bernanke's memoir, for example, tells us that he had a hard time keeping Stein and Powell on board with the Fed's third round of bond-buying, a.k.a. QE3, which was a big part of the reason the Fed sent such mixed messages over it. That might sound like a minor point, but those bungled statements were enough to send mortgage rates up and economic growth down. And a similar dynamic might — emphasis might — be playing out now. The Fed is once again short two members, and, as my colleague Ylan Mui reports, that helped leave Fed Chair Yellen in a position where "she found herself outnumbered" by people who wanted to start increasing interest rates back in September. Yellen managed to talk them out of it, but the implication is that she can't do that anymore. Maybe she could if she had two more votes on her side. Or maybe at this point she wouldn't want to. We're in the realm of speculation here.
You can probably tell that by how many times I've used the word "might." A more dovish Fed might have moved faster in 2010 and 2011 when the recovery was stalling out. It might have done QE3 longer when budget cuts were hitting the economy. And it might have waited longer to raise rates than it looks like the Fed will now considering how low inflation is. Even if all these aren't true, at least one of them probably is. In other words, there have been real costs to not filling the Fed with people who think it should be doing more. Part of the blame for that lies with the Obama administration for not realizing this sooner, but a much larger part lies with the Republicans who have tried to keep it that way.
The lesson is pretty simple: Don't turn away Nobel Prize-winning economists when they want to work for the government.