Trump Remains a Wild Card on Filling Seats at the Fed
Donald Trump declared his candidacy over eighteen months ago. He was elected a bit over four months ago. And we're now about 50 days into his presidency.
And he's still, after all that time, almost a complete wild card. We have no idea what he will do from day to day, on an incredibly wide range of policy questions.
Take, for example, one of the most important jobs Trump will have soon: Nominations for the two open seats, and a third upcoming vacancy, on the Federal Reserve Board of Governors. Will Trump's choices be typical Republican picks? Will they be something different, more "populist" than other Republicans might have selected? Will Trump select someone personally loyal to him, as he's apparently trying to do with some executive branch picks? Or would he be willing to pick someone who once criticized him harshly, as Energy Secretary Rick Perry did? What about a former backer of Hillary Clinton and Barack Obama, such as Treasury Secretary Steven Mnuchin?
And even if we know Trump was picking someone personally loyal to him, what would that mean on policy? Does Trump have any particular beliefs in monetary policy? Outside of some nonsense he trotted out during the campaign about conspiracies within the Fed, he hasn't had much to say about it.
Trump's pattern of appointments so far, however, suggests policy simply isn't high on his agenda when it comes to making nominations. In fact, policy preferences of his nominees may be almost random in some cases. In part, that's because Trump may still know little about government and public policy. And in part it's structural: Because he and many in his White House don't have close ties to the Republican Party, he won't just automatically serve up orthodox conservative choices on personnel or policy.
And that's before we consider Trump's "cut of the jib" test, in which he appears to select those who (in his mind) look "right out of central casting" for the job. With national security positions, that's turned out to be generals more often than not. For economic policy? It's a little harder to guess what Trump thinks a central banker should look like.
A good example of just how random things are is from national security, not economic policy (where so far Trump has put few people in place). In a normal presidency, if Michael Flynn was chosen for national security advisor it would have signaled some policy preferences. And then when he was fired for reasons having nothing to do with those preferences, one would expect -- again, in a normal administration -- a search for someone with similar preferences as a replacement. But that's not at all what happened. Instead, if news reports are correct, Trump basically cycled through a bunch of people with little in common in terms of known policy positions before settling on someone with apparently a very different agenda than Flynn on terrorism policy, Russia, and more.
In a sense, this could wind up being more like how judges were selected in the days before the partisan presidency, when presidents would routinely move back and forth from liberal to conservative judges -- and when judges generally had less of a clear ideological record anyway, since they didn't need to establish one in order to get picked. Except that many of those selections were intended to shore up shifting political coalitions, rather than just the president's whim. Of course, Trump's Supreme Court selection was a normal partisan one because he farmed out most of the selection process to Republican-aligned groups during the campaign as a way of clinching support from Christian conservatives skeptical of his judicial views. As far as we can see, he isn't doing that with his Fed picks.
The decisive moment in this whole process could even take place when one White House faction overwhelms the others -- if not choosing the nominees themselves, at least controlling the list Trump is selecting from.
But whether it's the Fed selections, or other key unfilled economic positions within the administration -- Trump still hasn't picked anyone for over two dozen positions needing Senate confirmation just at Treasury alone -- the extent to which the Trump presidency remains an almost total wild card is just very impressive. And I think still not appreciated.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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