WASHINGTON -- For the sake of the economy, President Barack Obama should nominate Janet Yellen to chair the Federal Reserve and the Senate should confirm her immediately, said Bruce Bartlett, a former top aide to presidents Ronald Reagan and George H. W. Bush.
Bartlett, a domestic policy adviser to Reagan and a Treasury official under Bush, told The Huffington Post that uncertainty over monetary policy -- including inevitable changes in leadership at the Fed -- has a major effect on businesses making investments. Moving quickly to install Yellen as the next Fed chair is "the best thing" the nation's leaders can do to provide businesses with certainty, he said, and in turn give the economic recovery a boost.
"Janet is generally considered to be among the Fed's doves and I think there is still room for monetary stimulus," Bartlett said. "Obama has made a mess of things by not making a decision and having [Larry] Summers in the running."
Bartlett expressed doubts that Summers, who was treasury secretary under President Bill Clinton and a top economic adviser to Obama, would be a good replacement for Ben Bernanke, the current Fed chairman, when his term expires at the end of January. Summers and Yellen have both been talked about as frontrunners for the post.
"Larry is a very divisive figure who carries a lot of baggage," Bartlett said. "He will have difficulty getting confirmed and difficulty getting consensus on the board. There is no reason to think he has better views on monetary policy than Janet. Even if they were equal in that regard, a hard-fought confirmation effort will not be good."
Bartlett pointed out that some Wall Street analysts have said the idea of Summers being the next Fed chair is already scaring the bond market. Under the Clinton administration, Summers helped lead the effort to deregulate Wall Street. Some Yellen supporters have said they are worried that Summers would dial back the Fed's efforts to lower unemployment in order to appease the bond market. Yellen, meanwhile, has argued that protecting bondholders is not the Fed's only job.
If Obama taps Summers for the job, "he could end up being a bull in a china shop at the Fed, as he was as president of Harvard," warned Bartlett.
The White House has already gone on defense over Summers, even though Obama has said he won't announce his Fed pick until the fall. Obama gave a full-throated defense of Summers during a private meeting with House Democrats last month. In the same meeting, he chided The Huffington Post for making Summers, in the president’s words, “a progressive whipping boy.”
Summers certainly has his critics. Some leading Democrats recently jumped on reports that Obama was leaning toward Summers for the Fed post, criticizing his role in the 1999 repeal of Glass-Steagall financial regulations and the 2000 deregulation of the derivatives market. Others have questioned Summers' record with women.
Earlier Monday, Sen. Pat Roberts (R-Kan.) became the first Republican senator to publicly say he won't support Summers for the post.
"I wouldn't want Larry Summers to mow my yard," Roberts said during an event in Wichita, Kan. "He's terribly controversial and brusque and I don't think he works well with either side of the aisle, quite frankly."