Fed Nominees Stall; Dems Consider Gasoline Tax Break; Glimmers of Hope in Ukraine
Author: Greg Valliere
February 16, 2022
NOMINATIONS TO THE FEDERAL RESERVE hit a roadblock, as Republicans on the Senate Banking Committee refused to produce a quorum, delaying a vote. The Biden Administration is attempting to win new terms for Jerome Powell and Lael Brainard, while confirming three others: Sarah Bloom Raskin as Fed Vice Chairman for Supervision, plus economists Lisa Cook and Philip Jefferson.
RASKIN IS THE REAL TARGET: Her nomination is on thin ice, because of her past advocacy of using the Fed’s muscle to force financial institutions to adopt pro-environmental and anti-fossil fuel policies. Republicans say Raskin would violate the Fed’s mandate to only seek stable prices and full employment.
COMPLICATING RASKIN’S PROSPECTS is her involvement with a Colorado firm that won approval to get access to the Fed’s payment systems while she was a board member of that firm (after she had served as a Fed Governor and a top Treasury official). Raskin and her supporters insist that she did nothing improper, but Republicans who boycotted yesterday’s vote want more documents.
THIS COULD DRAG ON FOR A WHILE, with voting in the full Senate complicated by the absence of Sen. Ben Ray Lujan (D-N.M.) who may not return for several more weeks after suffering a stroke. Our guess is that four of the Fed nominees — including Powell — eventually will win confirmation, but Raskin is a tough call.
IF HER NOMINATION PRODUCES A STALEMATE for the other four nominees, could Raskin bow out this spring? We’re many days away from that happening, but her prospects now appear to be 50-50 at best. The financial industry, bombarded by new regulations from agencies like the SEC, would welcome her withdrawal.
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A GASOINE TAX HOLIDAY? Democrats are getting an earful from constituents over inflation, especially gasoline prices, so they have floated a trial balloon: killing the 18.4 cents per gallon tax on gasoline, possibly for the rest of this year.
DEMOCRATS RUNNING FOR RE-ELECTION like the idea, but it infuriates environmentalists, who want to discourage gasoline use. With Republicans lukewarm at best, this trial balloon was attracting heavy fire by last evening and has a slim chance of passage. “It doesn’t make sense,” said Sen. Joe Manchin, who calls most of the shots.
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WORTHY OF A P.J. O’ROURKE SATIRE, the Senate has abandoned its efforts to impose tough new sanctions on Russia. Neither party could agree on a proposal, so the Senate apparently will settle for a strongly-worded statement, as if a message from the Senate could affect the Ukrainian narrative.
ON A FAR MORE SERIOUS NOTE, yesterday’s signals from Russia — calling for more negotiations while sending some troops eastward — were encouraging. It’s possible that Vladimir Putin is now seeking an exit; he may be content to intimidate Ukraine with cyberwarfare. Putin has an off-ramp, proposed in recent days by Emmanuel Macron.
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