Some quick thoughts about yesterday’s hearing.
Transcript
Kevin Warsh, the next chairman of the Federal Reserve, is Donald Trump’s sock puppet. But we knew that. The question during yesterday’s confirmation hearing was whether he was sufficiently brave, sufficiently good at acting to pretend that he was more than that. And the answer is no.
Hi, Paul Krugman here with a Wednesday update. I didn’t watch or write about the Warsh hearing because it seemed there wasn’t really that much at stake. He’s going to be confirmed pretty much regardless and there’s a whole lot else going on in the world. But I thought I should weigh in a bit on what we actually learned from the hearing.
Now about Warsh, he is smart. He is very good at saying things that sound thoughtful and impressive, but he is also, and it’s really very clear, a partisan hack. He’s for tight money when a Democrat is in the White House and for easy money when there’s a Republican. He has managed to claim that he was part of the great economic rescue that took place after the global financial crisis. But at the time, although he was on the Federal Reserve Board, he basically trashed his colleagues for trying to do their job.
And he has made a lot of criticisms over the years, but they’re always very selective.
Often when he makes a statement, you wonder, what exactly did he say? Because there tends to be lots of complex verbiage that sounds sophisticated, but when you try and distill it down to what it was all about, it’s very hard to figure out, except that, again, it’s always tight money if there’s a Democrat in the White House, easy money if there’s a Republican.
Recently, Employ America, which is a group that I follow, wrote about Warsh. They aren’t very partisan. They do mostly inflation analyses and inflation nowcasting, trying to predict what the next number will be. But they had a scathing survey of his positions over the years, which says that he is a partisan who has chosen to align conveniently with the current president, that he is someone who abandons his principles “for whatever might suit his personal and partisan interests.” That’s not very nice, but it seems to be quite accurate.
So there was a hearing, and everybody knows pretty much who he is.There are people, sort of centrist Democrats, who claim to find some virtues in him. But I think that’s all positioning. I think everybody understands what we’re getting with Warsh. The question in the hearing was, could he put on an act? Because he is usually a pretty slick customer. He’s not someone who simply rants and raves and spouts MAGA propaganda.
And he was asked a a question which isn’t about monetary policy, but is very much exactly a kind of litmus test for, not really for who he is, but what he’s willing to say, at least in the interest of appearing to be not a complete sock puppet. He was asked who won the 2020 election. which is not a question that is remotely in doubt. This is not something about which reasonable people can disagree. There is nothing to the claims of a rigged election except the fact that Donald Trump can’t admit that he lost that election.
And Warsh evaded. He said, well, this body certified that election, which is not the question. The question is basically, are you willing to challenge Trump on a completely obvious grotesque lie? And it would have been in Warsh’s interest, you would think, to say, well, no, I believe that Joe Biden won that election. But to do that would be to show some independence, even not in action, but some independence, at least rhetorically, from Donald Trump. And he wouldn’t do that.
He was also asked about the spurious prosecution of Lisa Cook, asked about the spurious charges being brought about Jay Powell and refused to take a stand in support of people who will be his colleagues once he gets to the Fed.
So what we got was not a test of how he will behave, not a test really of his policy views. I mean, there were no interesting policy arguments going on here. There are some discussions we could have about shrinking the Fed’s balance sheet and all of these things, where I do think that Warsh’s expressed views are quite wrong. But that’s kind of not what was on trial here.
What was on trial was, can he at least pretend to be not a total hack? And the answer is no. He’s afraid to even show a little bit of verbal independence without substance when it comes to Donald Trump, which is bad.
It should be utterly disqualifying for the position because being the Fed chair is important. It requires a lot of independent judgment and requires a lot of credibility because the Fed is mostly needed in moments of crisis. And in those moments of crisis, people need to believe, markets need to believe, but the general public needs to believe that we’re talking about people who are serious experts and seriously have the interests of the nation at stake rather than their partisan political views.
He failed that test with flying colors. And he will be confirmed anyway.
