Bloomberg News
- The news: Stephen Miran will take unpaid leave from the Council of Economic Advisors, rather than resigning.
- So what?: Democrats spent the confirmation hearing attacking Miran’s conflict of interest and the decline in Fed independence.
- But: Republicans still signaled that they would vote in favor of Miran’s nomination, meaning he will be confirmed.
WASHINGTON — President Donald Trump’s pick to fill a brief stint at the Federal Reserve Board won’t resign from Trump’s key economic advisory council, where he currently serves as chairman.
Stephen Miran told the Senate Banking Committee during his confirmation hearing today that he plans to take unpaid leave from the Council of Economic Advisors, a step that could give Trump unprecedented control over the direction of interest rates for the roughly four-and-a-half months he would sit on the Fed’s interest rate-setting panel.
“I have received advice from counsel that what is required is an unpaid leave of office,” Miran said in response to a question from Sen. Jack Reed, D-R.I. “The term being nominated is a little more than four months. As long as that is the advice of counsel, I will follow the law.”
“You’re going to be an employee of the president of the United States on leave … that is absolutely ridiculous,” Reed said.
Democratic lawmakers raised concerns that Miran’s simultaneous holding of a political position in the White House and a ostensibly independent role on the Federal Reserve Board amounts to a conflict of interest since Miran will seek to return to the Council of Economic Advisors once his time on the Fed board is up. Sen. Chris Van Hollen, D-Md. argued that, should Miran make a decision that Trump doesn’t like, President Trump could refuse to take him back to his high-ranking post.
“Are you seriously telling me that if you were to vote an exercise judgement that was not consistent with what the President of the United States wants, that the President would not have you back at the Council of Economic Advisors, the job that you want to hold open for yourself?” Van Hollen asked.
“I don’t know the inside of anyone else’s mind,” Miran said.
Miran also suggested that he would hear from Trump on economic policies, a stunning admission in a time when the independence of the Fed is under question due to his appointment, along with the attempted firing of Fed Gov. Lisa Cook for unproven claims of mortgage fraud.
“If I’m confirmed to this role, I will act … based on my own personal analysis of economic data, my own personal analysis of the effects of economic policies on the economy, and act based on my judgement of the best economic policy possible,” he said. “That said, I’m always happy to hear views from every source possible. It’s important to me to hear a variety of views to make sure that I really do think that.”
Miran’s nomination comes as President Donald Trump is waging a concerted campaign to shape the central bank, which markets rely on to be politically independent, in his image. While Trump’s nominees have repeatedly said that economic policy decisions will remain independent of the president’s influence, Trump has attempted to remove one board member to secure a majority on the board that would lower interest rates — Trump’s primary goal for the central bank.
Trump has publicly pushed the Fed, notably Chairman Jerome Powell, to lower interest rates despite the board’s view to this point that risks of higher unemployment and higher inflation are more evenly matched and more data will be necessary to determine which risk is more pressing.
Democratic lawmakers pushed this point repeatedly during the hearing.
“Even if the Republicans on this Committee force through his confirmation, Dr. Miran’s tenure will be tainted. No one — not the American public, not investors here at home, not the worldwide financial markets — will trust him as an independent voice,” said Sen. Elizabeth Warren, D-Mass., the ranking member of the Senate Banking Committee. “Every claim he makes and every vote he takes will be tainted with the suspicion that he isn’t an honest broker, but that he is Donald Trump’s puppet.”
Democratic complaints notwithstanding, Miran’s nomination is expected to pass through the Senate, likely before the next meeting of the Fed’s interest rate-setting panel, which is scheduled for Sept. 16 and 17.
Republicans defended Miran’s nomination by seeking to frame the Fed under President Joe Biden as politically biased as well, pointing to climate change policy analysis and by considering diversity in the Fed’s employment mandate. The tactic suggests Republicans will vote for Miran’s nomination, but that they still see Fed independence as an important topic. In framing Biden’s Fed as not independent, they can make the case that Miran’s confirmation would represent a return to, rather than away from, the board’s independence.
Neither climate change nor diversity initiatives were undertaken by the Fed’s monetary policy arm, and the Trump team has claimed that the administration should have more control over the Fed’s other duties, such as bank regulation. And Miran himself talked about how he would account for things like Trump’s border policy when considering monetary policy decisions.
Miran also refused to answer questions about whether the president should be able to fire a board member simply because he disagrees with them on an interest rate decision.
“We’ve got to take politics out of this,” said Sen. Bill Hagerty, R-Tenn. “You’ve been very clear you want to get the Fed to get out of the political arena.”
Miran strongly suggested that Fed independence doesn’t extend in his view to bank regulation.
“I don’t believe that it was a set of non-partisan, non-political objective technocrats that decided … that the Federal Reserve should be a solution to face climate change,” Miran said in response to a question from Sen. Cynthia Lummis, R-Wyo. “I don’t believe that operation choke point was a non-political act, either. And so if confirmed [to] Federal Reserve, I intend to fully respect independence, respect the monetary policy, as you say. On regulatory work, there’s a lot of work to be done.”
