The Morning Dispatch: Biden Renominates Fed Chair Jerome Powell

Happy Tuesday! Quick programming note: There will be a TMD tomorrow, but—barring any drastic and unforeseen news events—it’ll be the last one of the week.

If, like, China invades Taiwan, you’ll get an email in your inbox from us. But it’d be very rude of China to invade Taiwan on Thanksgiving.

Quick Hits: Today’s Top Stories

• President Biden announced Monday he plans to nominate Federal Reserve Chair Jerome Powell for a second term leading the central bank and elevate Lael Brainard—currently a member of the Fed’s Board of Governors—to serve as its vice chair.

• Law enforcement officials on Monday identified 39-year-old Darrell Brooks as the man suspected of being the driver who killed five and injured more than 40 in Waukesha, Wisconsin, on Sunday. Brooks faces five counts of first-degree intentional homicide, and the Milwaukee Journal Sentinel reported Monday that he had been charged with recklessly endangering the safety of others three times in the past two years—including a domestic abuse case on November 5. The Milwaukee County District Attorney’s Office admitted Monday that Brooks’ $1,000 bail in the most recent instance was “inappropriately low.”

• The January 6 select committee announced Monday it had issued subpoenas to an additional five people involved in the planning of the January 5 and 6 rallies in Washington, D.C., including Roger Stone and Alex Jones.

• Existing-home sales increased 0.8 percent from September to October as the median sales price rose 13.1 percent year-over-year, the National Association of Realtors (NAR) said Monday.

• Sean Parnell—the U.S. Senate candidate whom former President Donald Trump endorsed to replace  retiring Republican Sen. Pat Toomey—suspended his campaign on Monday, hours after losing a child custody battle in which Parnell’s estranged wife leveled accusations of physical and verbal abuse against him.

• Democratic Rep. Peter Welch of Vermont announced Monday that he will run for the U.S. Senate seat being vacated by retiring Sen. Patrick Leahy. Republican Rep. Louie Gohmert announced Monday he is running for attorney general of Texas.

• Democratic Rep. Eddie Bernice Johnson of Texas announced over the weekend she will not run for a 16th term in 2022, becoming the 17th incumbent House Democrat planning to retire or run for another office.

Biden Maintains Federal Reserve Status Quo

When a college football team is in the market for a new head coach, dedicated superfans will often track the movement of the school’s private jet to get a sense of what candidates are under consideration for the job. For several months now, Washington, D.C., has been playing a much dorkier version of the same game, with reporters and policymakers monitoring potential Federal Reserve chair nominees’ movements between the White House and Sen. Joe Manchin’s office. 

President Biden finally brought the speculation to an end on Monday, announcing just after 9 a.m. ET his plans to renominate Federal Reserve Chair Jerome (Jay) Powell for a second four-year term at the helm of the world’s most powerful central bank and name Lael Brainard—a Democrat who’s currently a member of the Fed’s Board of Governors—to serve as its vice chair. Two additional posts—vice chair for supervision and another governor’s seat—remain vacant and waiting to be filled.

The left-most flank of the Democratic Party had put pressure on the Biden administration to swap out Powell for months, arguing the Republican—who was first nominated by former President Trump in 2017—had pursued a deregulatory agenda with respect to Wall Street banks and not done enough to combat racial injustice and climate change, issues historically outside the purview of the Federal Reserve. 

Democratic Sen. Elizabeth Warren led the charge. “Your record causes me grave concern: Over and over you have acted to make our banking system less safe,” she told Powell in a September Senate hearing. “That makes you a dangerous man to head up the Fed, and that’s why I’ll oppose your renomination.”

But Warren’s fears were not widely shared—even the Democratic authors of 2010’s Dodd-Frank Wall Street Reform and Consumer Protection Act supported Powell’s renomination—and Biden opted for reliability over a symbolic nod to progressives. “Some will, no doubt, question why I am renominating Jay when he was the choice of a Republican predecessor. Why am I not picking a Democrat?” the president said Monday. “At this moment of both enormous potential and enormous uncertainty for our economy, we need stability and independence at the Federal Reserve.”

If the goal was to calm markets and ensure a smooth confirmation process, Biden’s pick hit the mark. The S&P 500 and Dow Jones Industrial Index each held more or less steady on the day, and Powell—who was confirmed in early 2018 84-13—received vocal support from the Senate Banking Committee’s top Democrat and Republican. “When the pandemic hit in 2020, Chairman Powell acted swiftly and took extraordinary and necessary steps to help stabilize financial markets and the economy,” GOP Sen. Pat Toomey said. “[His] recent comments give me confidence that he recognizes the risks of higher and more persistent inflation and is willing to act accordingly to control it.”

The Federal Reserve, of course, is tasked with a “dual mandate” to balance the competing economic goals of maximum employment and price stability. The central bank has put its thumb on the scale for the former over the course of the pandemic, cutting interest rates close to zero and injecting liquidity into the economy with tens of billions of dollars of asset purchases every month. These moves have played a pivotal role in getting the unemployment rate back down to 4.6 percent so quickly, but also in inflation reaching levels not seen since 1990. Earlier this month, the Fed announced it would finally begin to combat rising prices by slowly tapering these asset purchases and, eventually, hiking interest rates.

Powell will now have the chance to see that plan through. “We know that high inflation takes a toll on families, especially those less able to meet the higher costs of essentials, like food, housing, and transportation,” he said in remarks yesterday. “And we use our tools both to support the economy and a strong labor market, and to prevent higher inflation from becoming entrenched.”

To some market analysts, the distinction between a Powell-led Fed and a Brainard-led one is negligible—at least in the short-term. “The differences between the two would have been relatively subtle in terms of the way that markets were pricing rate hikes,” John Fagan—co-founder of Markets Policy Partners and former director of the Treasury Department’s Markets Room—told The Dispatch. “It was sort of a question of June vs. July [2022], was sort of the tipping point where futures markets we’re pivoting around. And I think that Powell looks more like June, Brainard looks more like July, if you’re going to be splitting hairs at this point.”

Norbert Michel, vice president of the Cato Institute’s Center for Monetary and Financial Alternatives, saw even less of a contrast. “You’ve got a group of people sort of moving to a consensus, and that’s kind of how they always work,” he told The Dispatch. “You have everybody on the board, the rest of the committee. You’re not going to just have one person pop up and then reverse course because of that.”

But Biden received plaudits on Monday for gesturing toward the Fed’s independence by reappointing Powell instead of installing a loyalist. “If we want to have a chance at bringing inflation back down, we need a central bank that is independent of elected politicians,” Dominic Pino noted for National Review. “It’s a widely accepted finding in economics research that central-bank policy controlled or heavily influenced by elected officials will have an inflationary bias. Keeping the Fed at arm’s length from everyday politics is vital for sound monetary policy in the long term.”

“I believe having Fed leadership with a broad, bipartisan support is important, especially now in such a politically divided nation,” the president said yesterday. “I believe we need to do everything we can to take the bitter partisanship of today’s politics out of something as important as the independence and credibility of the Federal Reserve.”

With the economic recovery still incomplete and inflation on the precipice of becoming the defining issue of Biden’s presidency, the stakes couldn’t be higher. The White House is dealing with “an incredibly empowered Fed that in some ways really holds the fate of the administration in their hands,” Fagan said. “When you look at the calendar and where rate hikes are priced in, if you’re politically minded, you can’t help but look at where the midterms are in what is supposed to be, perhaps, a Fed rate hike cycle. And we all know the history of hiking rates into an election isn’t necessarily what an executive in a polarized country is going to want.”

Christie Tries to Carve Out Early 2024 Primary Lane

If you’ve watched any TV news at all over the past few weeks, odds are you’ve seen at least one interview with former New Jersey Gov. Chris Christie—and likely more. He’s got a new book out detailing his plan to save the Republican Party from those he labels “truth deniers” and “conspiracy theorists,” and he’s sharing the proprietary formula with just about anyone who will listen—including your Morning Dispatchers.

A few of us had lunch with Christie two blocks from the White House yesterday, and between his presidential seal cufflinks and his admission that life in the private sector doesn’t “jazz” him, it’s clear the former governor still has his eyes set on 1600 Pennsylvania Ave. What follows are a few excerpts of our two-and-a-half hour conversation, edited for clarity and concision. You can read a longer version of the transcript here.

The Dispatch: You’re in the hospital with COVID-19 for seven days in 2020. It seems like you re-evaluated, re-prioritized some things in your life. Why stay involved in politics? 

Chris Christie: It’s in my blood. It’s always been what I’m most passionate about and what gets me out of bed in the morning. 

It gives you life? It doesn’t take away?

It does both. The last four years, I’ve been making money. But what I do every day doesn’t jazz me. 

What’s missing from your life?

I like making a difference. I was saying this to another governor who’s getting ready to be term limited. And he’s trying to decide what to do with his life and his career. And I said to him, “Look, one of the things you need to know is, the music stops. Like you watch your predecessor get sworn in, the troopers take you back to your house, you wake up the next morning, and they’re gone. And the cameras are gone. And the phone calls stop, and the music stops. And you got to figure out that okay, what do I substitute in for that?” So I said to him: “Before you decide whether to run for something else or not, and before you dismiss running for something else, just understand the music stops.” So I think the biggest thing is just not being able to make a difference. Not being able to get that stuff done and being at the mercy of other people to do it. You want to get back to doing that. And I also think, unfinished business from 2016.

… 

You criticized Rep. Liz Cheney’s approach a bit, saying she should’ve “put the megaphone down” after she made her point about stolen election claims and held onto her House GOP leadership seat. Are you not attempting to do the same thing with your book tour the past few weeks?

I’m trying not to make it personal to Trump, because to the extent you make it personal to Trump, you turn off a large portion of the people who vote for him to even listen. My role here is not to try to discredit, destroy Donald Trump. My goal is to get the party to live in the world we’re living in at the moment. And the world we’re living in at the moment is a world that’s being run by the Democratic Party, that is taking us in a policy direction that I fundamentally disagree with. If we keep doing the other stuff, we’re gonna have no credibility to fight them on the policy, and we’re not gonna have the time or the energy to fight them, and as a result, we will lose. I want to win. Because when you win, you get to govern. And that’s what I want to do.

Do you think you’re in the minority within the party with that mindset of needing to move on? 

I think I’m in a plurality. I think there are a lot of people who are kind of in between at the moment. I think that part of the way you get to a majority is to keep talking about it. For a long time, there was one voice [Trump’s]. That was all people heard. So I think it’s going to take some time.

…

In 2016, you were making a big case about entitlements: Medicare, social security. You talked about stuff people didn’t want to talk about.

I smell a “but” coming.

Early on you endorse Trump. That came at a time you didn’t have to. Not only was he running on different issues—but he was running opposed to the things you had said mattered most. How do you explain that? Was it a naked political move or did those issues become less important to you?

No. It was a political decision. It was a political decision driven towards making sure Hillary Clinton wouldn’t be president of the United States. It wasn’t early. 

Who else had endorsed? Sessions?

No, I was before Sessions.

So you did it first and immediately gave him this patina of establishment acceptability.

I appreciate the fact that you think my endorsement is that important. But take Trump’s name out of it for a second. Any other person on that stage who had come within winning Iowa by half a point, won New Hampshire two-to-one, and won South Carolina by ten, the media would have said that is the nominee. And they would have been right. That was the pure political calculus I made.

I’m watching the South Carolina returns and I turn to my wife and I said, ‘It’s over. He’s the nominee.’ So we got a choice to make. Do we get in and try to make him a better candidate and if he wins, a better president? Or do we just say, I can’t be for any of these guys and go back to being governor and ignore the presidential race? It’s not my personality.

I said let’s go in. We have influence over him. We have a long-term relationship. Let’s go ahead and try and make him better. A lot of other people in my orbit fundamentally disagreed with it. I get it. But Hillary Clinton isn’t gonna do anything on those issues and in fact she’s gonna make them worse.

So if you are accusing me of having disappointed you for having made what I consider to be a practical political decision, I plead guilty to that.

It seems like, by endorsing Trump early in 2016, you gave a lot of people permission to get behind him. Now, what you’re trying to do is give them permission to stop supporting him, saying ‘What happened on January 6, we can’t be doing that anymore. We have to move on.’ What do you make of that juxtaposition?

I think it’s a pretty good one. I think that it’s based upon the facts of how everything played out. And I would argue not January 6 alone, I would argue from Election Day forward. … If [Trump’s] not gonna change along with circumstances changing, well, then you can’t lead. This is not something I’m doing to him. This is something he’s doing to himself and someone has to point it out.

Worth Your Time

• Jane Coaston wrote her latest newsletter about the importance of getting outside of one’s knowledge bubble. “​​Knowledge bubbles become problematic and even dangerous when we pretend as if they don’t exist or don’t matter. Because what we don’t know—about the lives of our neighbors and fellow citizens and why they think the way they do—is almost as important as what we do know,” she argues. “Why do people who live in places we’ve never visited vote for people we can’t stand? Why are the political priorities of some people so different from ours? Why don’t these people do the things that seem so very logical to me?”

• In the Washington Post, Megan McArdle argues the outcome of the Kyle Rittenhouse trial should be embraced by advocates of criminal justice reform. “For people serious about criminal justice reform, events of the past year have offered a golden opportunity,” she writes. “With a law-and-order conservative such as Rittenhouse in the dock, and ‘lock her up’ Trump supporters suffering the indignities of the D.C. jail, the left could have turned to the right and said: ‘You see? Prison conditions in this country are inhumane. Prosecutors have too much power, overreach and wreck lives. Let’s come together to fix this.’ Instead, even as the right waxed indignant about an abusive system, the left wanted vengeance. It wasn’t just the ‘lock him up’ language that elevated one now-18-year-old defendant into a threat to the republic; they also attacked decades of hard-won defendant rights.”

Presented Without Comment

Also Presented Without Comment

Toeing the Company Line

• On Tuesday’s episode of Advisory Opinions, David and Sarah are joined by Kentucky Public Advocate Damon Preston for a conversation about self defense law, the difference between the Rittenhouse trial and the trial of Ahmaud Arbery’s killer, and the ways in which the criminal justice system could be reasonably reformed. Plus: David exults in Mississippi’s stinging defeat at the Supreme Court as the court turned back the Magnolia State’s greedy attempt to keep Tennessee from drinking water from its own wells.

• On the website today, John Gustavsson explains what’s going on at the border between Poland* and Belarus and what Alexander Lukashenko is trying to accomplish.

• Critics warned that our chaotic withdrawal would lead to a power vacuum in Afghanistan. Cliff Smith argues that Turkey, Qatar, and Pakistan are working together to fill that void not just in Afghanistan but also the wider Middle East.

Let Us Know

Do you think Chris Christie—or someone making the argument he outlines above—has any chance in the 2024 GOP primary?

Reporting by Declan Garvey (@declanpgarvey), Andrew Egger (@EggerDC), Charlotte Lawson (@lawsonreports), Audrey Fahlberg (@AudreyFahlberg), Ryan Brown (@RyanP_Brown), Harvest Prude (@HarvestPrude), and Steve Hayes (@stephenfhayes).

Correction, November 23, 2021: John Gustavsson’s piece in Toeing the Company Line is about the border between Belarus and Poland, not Portland.