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January 26, 2005
Who will replace "The Maestro"?
Brad Setser has some insights.
Personally, I began thinking Bernanke had an inside track shortly after he was appointed to the Board. Lately, however, this has been a much harder race to handicap.
R. Glenn Hubbard has been the latest name thought by some to be a frontrunner. Martin Feldstein could face a tough fight. John Taylor appear to be out of the running according to the New York Times. (Pity.)
Setser is decidedly cool on Hubbard. I understand. I would be concerned about the appearance of this being a political appointment. (I'm a realist, I know that there's a political element, but I'd like a little effort to put some distance between the White House and the Eccles Building.) If any president appointed such a recent CEA chair, it would raise questions.
In the end, I think Hubbard would be confirmed if he were to be appointed. (Though I think the hearings would be exciting... scratch that, the hearings will be exciting no matter who gets appointed. They should sell tickets for this one.) Actually, I think any of the frontrunners would be confirmed, but Bush needs to think this one through very carefully. Like it or not, Bush's fiscal policy will be on trial at those hearings. The appointee must be able to (1) articulate that he (or she) would maintain the current level of independence at the Fed and be (2) credible when saying it.
Anyone can do the first part. It's the second part that will make all the difference.
We haven't heard the last about this.
Posted by William Polley at January 26, 2005 12:52 AM
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