The Warsh Confirmation Remains in Limbo
Sen. Thom Tillis (R-NC) made it clear at the Kevin Warsh confirmation hearing Tuesday that he will not allow the nomination to move forward as long as the Justice Department’s investigation of the Fed’s renovation cost overruns is continuing. And on Wednesday, at a press conference ostensibly about busting an international auto theft ring, U.S. Attorney Jeanine Pirro made it clear that the investigation will continue.
“I am in the legal lane, there are others who are in the political lane. I don’t intersect those two lanes,” Pirro said. “I am going forward…and we are continuing in this investigation.”
This raises the odds that we may not have a new Fed chairman confirmed by the time Fed Chairman Jerome Powell’s term expires on May 15. For those keeping score at home, that’s just 23 days from Wednesday, April 22. That’s just 16 business days from now.
Powell’s Persecution Complex
One of the odder things that occurred at the hearing is that Sen. Tillis appeared to directly contradict Powell’s claim that Pirro’s investigation is a pretext to pressure the Fed to lower interest rates. Powell never offered any evidence to support this idea, but it was swallowed without a hint of skepticism by establishment Republicans, Democrats, and the legacy media.
Keep in mind that Powell’s claim does not make much sense. With his term expiring in May, there was no need to use the pretext of an investigation to change policy. The Fed cut at its last three meetings last year, and there were only three meetings left in Powell’s term this year. If the administration believed Powell was the main obstacle to monetary easing, the smart move would have been to just wait a few months. What’s more, anyone who has watched Powell over the past several years knows that he is not likely to reconsider his stance on monetary policy under threat of a criminal investigation—especially one coming from the Trump administration.
Trump likes “working the refs” when it comes to policy disputes, but this always takes the form of public criticism rather than Department of Justice investigations into public officials. Hiding behind Jeanine Pirro’s grand jury is not Trump’s style.
Of course, the complete absence of sense does not typically stop official Washington from fully embracing a narrative. And in this case, it seems to have become conventional wisdom that Powell’s implausible tale is obviously true. Senators and journalists in D.C. have found a way to believe that Trump orchestrated the investigation into the overruns to harass Powell into lowering rates—even while they simultaneously believe that this could never work because Powell is a heroic defender of Fed independence.
It’s a specific form of Trump Derangement Syndrome: assigning to Trump both the capacity to hatch a secret evil-genius devious plot and the incapacity to recognize its inevitable failure. You have to think of Trump as some kind of cartoon supervillain to believe it—which, come to think of it, is how many of his critics see him.
Tillis Versus Powell
Tillis, however, said on Tuesday that he believes that Pirro was acting alone. He said that he believes neither President Trump nor “Big DOJ” knew about the investigation ahead of time. But if that’s the case, it cannot possibly be an attempt by Trump to undermine the Fed’s independence or lower interest rates. And if the Pirro probe is not some part of a conspiracy within the Trump administration to pressure Powell, there’s no reason for Tillis to hold up Warsh’s confirmation.
At this point, Tillis’s demand that the investigation be dropped amounts to an attempt to politicize the U.S. Attorney’s office. He either wants Pirro to take into account the Warsh nomination when considering whether to pursue the inquiry or wants Trump to order Pirro to drop it in order to advance Warsh. Either is inimical to the rule of law, the idea of impartial justice and would undermine the idea that prosecutors pursue justice without regards to politics.
If Tillis really does believe what he said at the hearing—that Trump isn’t behind the investigation—he should drop his objection to confirming Warsh.
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