Morning Must-Read: Matthew Yglesias: Failure to Nominate: The Federal Reserve and Obama’s Biggest Economic Policy Mistake

Claims that Barack Obama is actually up to the job of being president–both when I make them and when they are made to me–have, since early 2009, run up against the problem that the low-hanging economic policy fruit is and always has been keeping the Federal Reserve Governor pipeline filled. That means (a) nominating candidates for vacant governorships and (b) doing the congressional outreach to solidify at least Democratic senators behind the candidates you intend to nominate.

Obama’s failure to do this–and the failure of his economic policy staff to yell at him every day it is not done–is and always has been totally bewildering to me…

Anybody have any explanations?

**Matthew Yglesias: Obama’s biggest economic policy mistake: “Barack Obama has not accomplished nearly as much as his most fervent supporters–or, indeed, the president himself–had hoped…. This has led… to a litany of back-biting complaints… corruption or incompetence… tactical failings or ideological betrayals. The truth is… he has accomplished an enormous amount…. But as the country waits to hear the latest announcement from the Fed about how rapidly it will end its Quantitative Easing programs, we are witnessing the biggest mistake of Obama’s presidency: the systematic neglect of the Federal Reserve… a failure that… has likely doomed millions of people to needlessly long spells of unemployment, permanently reduced the structural capacity of the American economy, and through poor macroeconomic performance reduced his political ability to drive change in environmental policy, bank regulation, and other areas….

Obama’s neglect of Federal Reserve appointments is, in some ways, mysterious. Nobody denies that the Fed is an extremely important institution…. When it comes to other important independent institutions such as the federal judiciary, it’s broadly acknowledged that the presidential appointment powers are among his most important powers…. [But[ bolstering the left flank on the FOMC so that Yellen’s consensus-building efforts would land in a more stimulative spot isn’t on the agenda…. The current vacancies are not a new phenomenon. When Obama first took office in 2009, he allowed Fed vacancies to linger for years, only putting forth candidates in 2011. When he did put two names into play, one was a Republican and the other–Jeremy Stein–is a Democrat who holds to an eccentric view that tight money is sometimes appropriate even when unemployment is high….

How much good could have been done if Obama had listened to Romer, Scott Sumner, Joseph Gagnon, or others and placed a higher priority on appointing unemployment-fighters to the Fed? Nobody can say for sure. But the experience of the United Kingdom is illustrative…. FDR’s long-term impact on American policy comes from the structural reforms of the New Deal. But as Romer showed… ‘nearly all the observed recovery of the US economy prior to 1942 was due to monetary expansion’. That recovery–driven by Roosevelt’s pursuit of aggressive monetary policy in the form of ditching the gold standard–is what gave him the political clout to pursue those structural reforms. Had Obama been as attuned to monetary matters as FDR, he could have secured a better result for the country and a firmer legacy for himself.