from Follow the Money

Hubbard is in pole position: the Sunday New York Time buried the lede

January 24, 2005

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Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

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Apparently the Federal Reserve is beginning to worry that the Administration is not all that serious about reducing the fiscal deficit ...

Wonder why. It seems like Martin Feldstein’s concerns about Reagan’s fiscal deficits are not exactly helping his chances of taking over the Fed. Not sufficiently loyal. If the best the White House can say about Dr. Feldstein is that he is "not out of the running," it seems to me like he is out of the running. And the White House now says that John Taylor is not even under consideration. That is sort of rude: Taylor is the Bush Administration’s top economist at the Treasury, and he has served Bush loyally.

No Taylor, and it sounds like no Feldstein. That leaves the field open for L. Glenn Hubbard -- not exactly a deficit hawk. The White House can trust Hubbard not to worry too much about big deficits that stem from the zealous pursuit neo-Republican supply-side dreams, like dismantling Social Security and exempting all investment income from taxation.

Ben Bernanke still seems to be on the short-list to replace Greenspan; The White House did not rule him out. But then again, the White House needs to convince Bernanke to accept the top job at the White House’s Council of Economic Advisors (CEA), and dangling the prospect that a successful stint might enhance his chances is one way to make the CEA job more attractive. But it hardly sounds like he is in the lead either.

Rice to State, Hubbard to the Fed. It certainly would fit the pattern of rewarding W loyalists with plum jobs ...

Old-fashioned grown-up deficits-do-matter Republicans never seem to get the ear of this White House, or become true members of Bush’s inner circle. Appointing Hubbard would be one way for the White House to signal that it thinks the Fed is too worried about deficits. I -- and many others -- will be interested to see what the latest CBO budget forecasts show when they are released tomorrow.

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