The Ben Bernanke Nomination: A Rundown, and a Warning

So far, this looks good–very good:

• Larry Kudlow’s initial thoughts: “Bernanke will also support an extension of Bush’s tax cuts for capital gains and dividends, and he has told me in the past that raising tax rates would only harm the economy.”
• Kudlow, in his Bernanke speech debriefing later in the day, liked this as he paraphrased the nominee: “The cause of inflation is excess money creation by the Fed—not rapid economic growth, nor too many people working, nor temporary oil shocks, nor hurricanes.”
• The stock market liked it a lot.
• Arnold Kling and Bryan Caplan at Econlog are very pleased.
• Nat Worden at TheStreet.com is pleased, but worried that announcing inflation targets, which Bernanke would like to do, might reduce the Fed’s flexibility.
• Jim Cramer seems more happy that Alan Greenspan is leaving than anything else, but seems pleased with his nominated successor. In a strong backhanded (and, in my opinion, largely unfair) insult to the outgoing Fed Chairman, he writes: “With Greenspan out of the picture, I believe we get rationality and reason, and with those you get price-to-earnings multiple expansion, not contraction. All good, all good.”
• The Wall Street Journal has a free rundown (something they should do more, and I say this as a subscriber) of economist opinions on the nomination, all ranging from favorable to effusive.
• Last but not least, Willisms likes him, and provides plenty of good reasons (”He’s for lower government spending before tax hikes to get the federal budget in order. He supports Social Security and Medicare reform. He believes in the power of the American economy. And he’s not quite as cryptic and ambivalent as Alan Greenspan when talking about these issues.”).

Bernanke does not get univeral praise, though. Back in August, John Tamny at National Review sounded an alarm: “For his views on money, Bernanke has the potential to be very dangerous.”

I was reassured by one source of early skepticism (scroll 2/3 of the way down link):

(Nevada Senator Harry) Reid, who has been sharply critical of Greenspan for supporting Bush’s tax cuts (AND even more critical of his support for individually controlled Social Security investment accounts–Ed.), added, “It will be important that Mr. Bernanke demonstrate that he is committed to guiding the economy to produce results for all Americans rather than promoting partisan policies that benefit special interests and an elite few.”

Back in March, Reid went ballistic when Greenspan spoke out in support of individually controlled Social Security investment accounts (I’m starting to really like that phrase), calling the Fed Chairman, who was confirmed 89-4 the last time he was nominated for another term, “one of the biggest political hacks we have in Washington.” If Harry Reid votes against Bernanke, it’s a pretty good bet that the guy will be great.

Speaking of real hacks, don’t forget that at the same time as Reid’s rant, far-left blogs like Daily Kos declared full-scale war on Greenspan, even seeking out civilian casualties (no link provided, as personal character assassins don’t merit one):

We should hunt down anything Greenspan has ever written, said or done that reflects poorly on him. This would include erroneous predictions, older statements which contradict things he’s said recently, and anything that’s just plain wrong, venal or stupid … And for those of you who want to really get down & dirty in the trenches, we can turn this into a one-degree-of-separation venture. That is, if you can find similar material for anyone who is closely linked to Greenspan, that’s fair game, too. Good examples would be Greenie’s idol, the nutbag “objectivist” Ayn Rand, and Andrea Mitchell, his NBC reporter wife.

The effort to defame Greenspan was a laughable, dismal failure that quickly disappeared. But the fact that it existed at all shows that there is a lot of pent-up anger out there in LeftyLand, and should serve as a warning to The White House of the possibility that the Bernanke nomination will be as contentious as the fights over its Supreme Court and lower court nominees have been. At this very moment, I believe the Mainstream Media is looking for some pronouncement from some speech or lecture Mr. Bernanke gave, or any offhand remark he might have made, that will set off the far-left fuse.

So I will suggest right now that I will NOT be surprised if Bernanke’s views on Social Security or some other far-left article of economic faith become a litmus test, or if the nominee ends up having to run the same personal and professional gauntlet Republican judicial nominees always face. Not, one, bit. I hope Mr. Bernanke and The White House are prepared.
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UPDATE: Don Luskin exposes another example of Paul Krugman’s non-predictive powers: “(At the) Council of Economic Advisers …. he will be expected to prove his loyalty by defending the indefensible and saying things he knows aren’t true. That might seem a tolerable price to pay for the Fed chairmanship — but a year of it might well make Mr. Bernanke damaged goods from the point of view of the markets.” HA–Luskin also notes that the markets leaped at the Bernanke announcement, and adds that they slid a bit on the day of the Greenspan nomination announcement back in 1987.