The Obama administration saw a number of its agenda items pass through Congress in 2010, including the Democrats' landmark health care overhaul, repeal of Don't Ask, Don't Tell, despite some opposition from the right side of the ideological aisle. But among the measures President Obama failed to deliver on was the nomination of economist Peter Diamond to the Federal Reserve Board.
Led in part by ranking member Sen. Richard Shelby, R-Ala., Republicans successfully blocked Diamond's nomination this year, claiming the recently awarded Nobel prize winner lacks experience. The GOP demanded time for a full debate over Diamond's credentials, but Senate Majority Leader Harry Reid balked at dedicating limited floor time to a single executive nomination.
Diamond has been a vocal advocate for more federal stimulus initiatives to ignite a stalled economy. "We need to throw things that we find useful at this problem, the ones that seem worthwhile, and I would like to see more done," Diamond said in October as he accepted his Nobel prize. "More on the fiscal side. My favorite one is what was done before - the Federal government aiding the states - because the ability of the states to borrow is not ... there."
Diamond has also condemned the Obama administration's compromise to extend Bush-era tax cuts for the wealthiest Americans. "I think including the highest earners in this makes no sense whatsoever for anyone concerned about the long-term debt, because when you look at the ratio of the amount of stimulus you get relative to the additional amount of debt it is a very poor trade-off," Diamond recently said.
The Hill reports:
Diamond has advocated for the executive and legislative branches to put off worrying about long-term deficits and spend "vigorously" toward recovery, which could serve as a primary reason for Republicans who've become sensitive to deficits issues to oppose his nomination.
"We need a vast amount of infrastructure improvement, and this is a terrific time to be doing it because part of the resources that would be used would otherwise be idle," he said.
In addition, the economist from the Massachusetts Institute of Technology (MIT) also claims to be an authority on unemployment, Social Security, pensions and tax policies. Earlier this month, Diamond told Reuters that the "recipe" for America's struggling economy is "activism."
Fears that more fiscal and monetary stimulus could trigger runaway inflation are overblown in the face of a jobless rate that has been 9.5 percent or higher for 16 months, he said.
"My reading is that right now I don't see any signs that we should be worrying about inflation as a reason to limit our reaction to high unemployment," said Diamond.
"Right now, I worry about doing too little."
Despite opposition in 2010, the White House is now signaling that President Barack Obama intends to resubmit Diamond's nomination in 2011, even though the Nobel laureate's nomination will likely face even greater opposition from an expanded and emboldened GOP minority:
President Barack Obama will resubmit the failed nomination of a Nobel Prize-winning economist to the Federal Reserve, even though he faces even stronger opposition from the next Congress.
The nomination of Peter Diamond fizzled when the Senate adjourned Wednesday without acting on it. But the White House said Thursday that the president will press ahead on the nomination. ...
The Fed often operates with vacancies on its board. The board has seven seats but hasn't had every seat filled since 2006.
Chairman Ben Bernanke and the board's other members belong to the Fed's main policymaking group, the Federal Open Market Committee. The committee sets interest rates and makes other policies that influence economic growth, employment and inflation.