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Without The Filibuster, The Federal Reserve Will Never See Reform

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Astute commentators have noted: The Senate’s rejection of the filibuster for judicial and executive branch nominations throws a monkey wrench into conservative plans to link the nomination of Janet Yellen as Chair of the Federal Reserve with plans to reform that institution. In particular, Sen. Rand Paul’s threat to hold up Yellen’s approval in order to win a vote (at least) on his Audit-the-Fed bill is a show that closed out of town.

This is too bad, because the gross expansion of the Fed’s powers, on top of its zero-interest agenda (Quantitative Easing, Episodes One through Three; sequels pending), raises urgent questions on economic, legal, and constitutional fronts.

The loss of the filibuster sidelines the Audit-the-Fed plan. (This itself is only a quest for information we should have had long ago.) It also threatens to derail any effort to reform the Fed at all, or even draw public attention to the problem. This includes Rep. Kevin Brady’s proposed monetary commission (a fresh look at gold vs. fiat currencies, for one thing), effective oversight of the freelancing, hitherto unaccountable Consumer Finance Protection Board [sic], the drying up of private credit in favor of government bailouts, and much more.

How? After all, losing the filibuster wouldn’t foreclose free and open debate, and we still have two (generously counting) major political parties. What difference at this point does it make, if a few non-mainstream Senators lose the power to obstruct Senate action to make their point?

First, there isn’t much free and open debate in Harry Reid’s Senate. Any majority leadership team, of either party, could and will take lessons from him in how to fine-tune procedures to control floor debate, votes and amendments so that minority views can be expressed only by agreement with the current leadership. The salient exceptions were the Rand Paul filibuster over drone use and the Ted Cruz neo-filibuster over Obamacare. Reid sets the example for future Senates to avoid such ‘embarrassing dissent’.

The filibuster, vilified as a partisan tool (as which it could be used either way) also hasn’t so much been used by one party against the other (judicial nominees being an exception) as by dissident minorities within each party, against the mainstream. Call them principled or call them obstructionist, the issue-oriented Senators who don’t toe the party line are the real losers in the so-called filibuster reform.

And there can be no doubt that reforming the Fed, whether you focus on monetary policy or regulatory overreach or the sheer amount of power concentrated in such a politically remote institution, is a minority concern par excellence. The public doesn’t think about it that much, and the average politician sees little advantage in demanding higher interest rates or real popular accountability from regulators whose PR campaigns are all about protecting the public (except from government).

Indeed, even those who show interest in the Fed don’t seem to care about it all that much. There was no serious attempt to reconsider the gross expansion of Fed power in the wake of the financial crisis and Dodd-Frank. And the Senate Banking Committee Janet Yellen—latest champion of zero-interest big-regulation policies—won votes from three Republicans, at least two of whom (Tom Coburn and Bob Corker) are outspoken critics of the Bernanke/Yellen/Obama QE policies. Their rationale? She is qualified by experience. Yes, she is. But presumably experienced with the policies you considered failed or dangerous. And this is your only opportunity to have a say on the policies you say you despise; Yellen will be confirmed with or without your vote. With this attitude of preemptive surrender, is there any doubt we need an outsider filibustering from time to time?

Absolutely the end of nomination-filibusters takes all the juice out of minority rights in the Senate, and on all legislative matters as well. The fact that a simple majority (in this case Democrats marching in lockstep) can change the body’s rules whenever they wish, means that any minority blocking action that is inconvenient for the leadership can be overridden the same way. Nor is it too cynical to suggest that the Senate leaders of both parties find it convenient to limit opportunities for Tea Party types to steer things in their direction… which makes this look even more a bi-partisan power-grab from potential third parties that might spring from increasing discontent with the current political ways.

Still, critical issues like reforming the Fed as an institution and reexamining monetary policy from the ground up are not quite dead yet. If there is a silver lining in dumping the filibuster, it is that members can’t use the old trick of voting one way on the Yellen nomination and the opposite way on the question of filibustering said nomination. Everyone will have to stand up on one side or the other. Out-of-the-mainstream politicians (“disruptors”, when we don’t agree with their cause) will have to improvise new ways of getting attention for their issues and that includes pressuring Senate leaders who obstruct fair consideration of QE policies, the CPFB, and monetary reform. Like giving them primary opponents. But then we look at the issue of Gerrymandering and think that keeping the filibuster may be the better idea, after all.