The candidacy of President Donald Trump’s nominee to the Federal Reserve, Judy Shelton, suffered a setback after the Senate blocked a key procedural vote.
The Republican-controlled Senate on Tuesday was unable to muster the votes to end the debate on Shelton’s nomination—a key step before a confirmation vote—after a GOP senator said he had contracted COVID-19.
Republicans have a 53-47 majority in the Senate, but the so-called cloture vote was 47-50, with Senate Majority Leader Mitch McConnell (R-Ky.) voting “no” to preserve the option to reconsider Shelton’s nomination later. Another vote on advancing her nomination is expected when Grassley and Scott return to Congress.
Supporters have praised Shelton as an out-of-the-box thinker who they say can shake up an institution they view as being dominated by “groupthink” because of its consensus-driving decision-making style. Shelton has criticized the Fed’s power over money and financial markets as “quite unhealthy” and, during her Senate confirmation process, she called the Fed’s bond buying and zero interest rates in the last crisis “extreme.”
Her skepticism about the role of the Fed has appealed to some Republicans, with Sen. Marco Rubio (R-Fla.) saying in a statement after the vote that “the Federal Reserve plays too much of a role shaping our economy.” He added that he thinks Shelton shares his belief “that relying on the Federal Reserve to boost asset prices is no substitute for a strong American economy.”
Shelton’s nomination has been roundly opposed by Democrats, with Sen. Dick Durbin (D-Ill.), in remarks on the Senate floor, calling her “uniquely unqualified” and characterizing her economic views as “out of touch with reality.
She has come under fire for controversial views, including an embrace of the gold standard, a view that she later reversed at a Senate hearing in February. Shelton has also been criticized for shifting her stance on interest rates as control of the White House passed from Democrat President Barack Obama to Trump.
Sen. Chuck Schumer (D-N.Y.), speaking on the Senate floor, said Shelton’s views “seem to change when it’s politically convenient,” arguing that when Obama was in office, she “harangued the Fed to increase interest rates, despite the economic downturn, but in 2017, when President Trump took office, Miss Shelton abruptly switched her position and argued that the Fed should reduce rates, in her words, ‘as fast, as efficiently, as expeditiously as possible.’”
Shelton has also drawn fire for expressing skepticism over the Fed’s need to set policy independently from the president and Congress, raising concerns her nomination could jeopardize the independence of the powerful interest-rate setting institution.
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