Former Vice President Joe Biden is both potentially a credible pick as a candidate for the Democratic presidential nomination in 2020 and an influential figure within his party. But there is no place for him in the Democratic leadership of the Federal Reserve Board, which is up for a key vote of approval next week. That must mean Mr. Biden wants to declare early victory, or at least put on a brave face. The Fed vice chair is a key role that most U.S. senators aspire to, and although Mr. Biden held off for nearly a year after leaving office, he’s finally stepping up to the plate. However, that may not be the wisest course for Mr. Biden.
First, he should never have let this much time pass between leaving office and taking this prominent role. Is the 42-year-old Mr. Powell being over-qualified for a job that requires a breadth of expertise and strong leadership skills that he does not possess? There are plenty of qualified people who could step in and be a competent pick for a top Fed job.
Second, the Fed is deeply divided over who should or should not head the board, and with a hawk and dovish wing at odds over who should head it. So the Democrats are locked in a power struggle. Mr. Biden is a likely Trump nominee for another Cabinet position — treasury secretary or attorney general — making him an unlikely current candidate to satisfy his party and join a handful of other outspoken liberals.
Third, Mr. Biden’s own record on the Fed would seem to contradict what he is claiming. What about the Fed’s ongoing crises over the last eight years — the financial crisis, asset bubble, market interest rate target, and quantitative easing? Mr. Biden was the deputy attorney general in the Clinton administration when the crisis hit. Though he hardly championed monetary intervention to relieve the pain, the policy intervention did not alleviate the recession. If Mr. Biden wasn’t concerned about the Fed’s role in the financial crisis, why should he care about the crisis of “QE as we know it,” and why should he be worried about policies that would send interest rates higher?
A presidential adviser insisted it was natural that Mr. Biden would prefer the progressive chair now. But the Democratic Party is in deep trouble over the nomination. The stakes are being raised as early as this summer.