By Nick Timiraos
A controversial nominee of President Trump for the Federal Reserve's policy-making board moved closer to confirmation Thursday after Senate Majority Leader Mitch McConnell (R., Ky.) set in motion the procedures needed to secure a final vote.
The candidacy of Judy Shelton, an economic commentator, for the Fed's board of governors had been approved by the Senate Committee on Banking, Housing, and Urban Affairs in July on a party-line vote despite objections from Democrats. With Thursday's procedural motion, Ms. Shelton could receive a full Senate vote as soon as next week.
Mr. McConnell's decision suggests a high likelihood that she has the votes needed for confirmation, according to political analysts.
Her path had appeared to be in jeopardy this summer after two Republicans said they would oppose her candidacy, citing concerns about her unorthodox policy positions and an inconsistency in those views. Senate GOP leadership had warned that her confirmation might lack support needed in the chamber, where Republicans have a 53-47 majority.
That majority could shrink later this month if Democrat Mark Kelly of Arizona, who won a special election last week for the Senate seat held by Republican Martha McSally, is seated after lawmakers return from a Thanksgiving holiday period.
Ms. Shelton would fill a vacancy on the Fed board that runs through January 2024. Mr. Trump also nominated Christopher Waller, the research director at the Federal Reserve Bank of St. Louis, for a second vacancy, and the economist has attracted backing from Republicans and Democrats. The banking committee also advanced Mr. Waller's nomination, but Mr. McConnell hasn't started the process that would bring him up for a full Senate vote.
If both seats are filled this year, President-elect Joe Biden wouldn't have any vacancies to fill on the seven-member board when he takes office in January, a situation that could last until early 2022, unless a sitting governor resigns. The Fed hasn't had a full complement of seven governors since 2013.
The Fed board has played an especially important role in combating the economic fallout from the coronavirus pandemic. The larger Federal Open Market Committee, which includes the governors plus five regional bank presidents, votes on interest-rate decisions. But it is the board that decides on the emergency programs the Fed has created to lend to companies, cities and states since the crisis began, as well as on bank regulation.
Ms. Shelton will "challenge some of the long-held and wrongheaded orthodoxies that are still prevalent" at the Fed, said Stephen Moore, an economic commentator who encouraged Mr. Trump to tap Ms. Shelton for the job after his own candidacy collapsed due to resistance from Senate Republicans last year. "Most importantly, she doesn't believe that printing dollars creates jobs."
The FOMC in August unanimously agreed to a new policy framework that calls for keeping interest rates very low to achieve periods of inflation above the Fed's 2% goal to compensate for intervals like the current one in which prices have run below that level. Ms. Shelton hasn't said whether she would favor such a policy.
Ms. Shelton has been a longtime proponent of a return to the gold standard, which would limit the Fed's ability to influence inflation and employment, and concedes that her views are outside the mainstream of economics.
Her critics have argued that her views have been inconsistent and partisan by supporting much more aggressive interest-rate increases after the 2008 financial crisis, when the economy was weaker during the Obama administration, before pivoting last year to call for much lower interest rates as Mr. Trump favored.
"Judy Shelton deserves zero votes from the Senate. The Federal Reserve Board isn't a toy," said Tony Fratto, who served in the White House and Treasury under President George W. Bush.
Fed nominees have traditionally enjoyed at least some support from lawmakers in both parties, and party-line confirmation votes have been rare.
Sens. Susan Collins (R., Maine) and Mitt Romney (R., Utah) said in July they would vote against Ms. Shelton's confirmation. On Thursday, a spokeswoman for Sen. Lisa Murkowski (R., Alaska), whom Ms. Shelton's critics had hoped to win to their side, said she would support the nomination.
Write to Nick Timiraos at nick.timiraos@wsj.com
(END) Dow Jones Newswires
11-12-20 1723ET
