WASHINGTON — President Donald Trump’s controversial nomination of Judy Shelton to the Federal Reserve was stalled in the Senate after U.S. Sen. Susan Collins of Maine cast a crucial Republican vote against her on Tuesday.
Two other Republicans were absent because of COVID-related concerns and party leaders vowed to bring her back up for a vote. The 50-47 vote against Shelton came as the Republican-controlled Senate continues to focus its energies in the post-election lame-duck session on confirming Trump’s appointees.
Shelton is an unusually caustic critic of the Fed and was opposed by two GOP senators in Tuesday’s vote. Collins announced her opposition to Shelton in July. Kamala Harris has been focused on the transition to the Biden administration but returned to the chamber for her first vote since winning the vice presidency.
Senator-elect Mark Kelly, D-Ariz., is likely to join the Senate when the chamber returns from its Thanksgiving break. That could leave Shelton short of support for confirmation if Senate Majority Leader Mitch McConnell, R-Kentucky, seeks a revote next month.
Shelton, a conservative economics commentator, is opposed by Senate Democrats, most economists, and many former Fed officials for her past support of the gold standard and for writings that questioned the Fed’s political independence. Under the gold standard, the U.S. dollar’s value is tied to gold. Under that approach, the Fed has had less leeway to adjust interest rates, even in a severe recession.
Shelton was approved by the Senate Finance Committee on a 13-12 party-line vote in July. Senate Democrats criticized her for appearing to flip-flop on many positions, including near-zero interest rates. She opposed ultra-low rates during President Barack Obama’s presidency but supported them after President Donald Trump took office and demanded that the Fed lower its short-term benchmark rate.
As a member of the Fed’s powerful board of governors, Shelton would vote on the Fed’s rate decisions and on banking regulation. The governors also vote on whether to institute emergency measures, such as the Fed’s decisions in March to start buying corporate bonds for the first time and institute a raft of programs to bolster financial markets.
Still, on her own, it’s unlikely that Shelton would have much effect on Fed policy, economists have pointed out. The central bank operates by consensus and Fed governors rarely dissent from interest rate decisions, though Fed bank presidents do. For now, the Fed has pegged its benchmark rate to nearly zero and Fed officials have said they expect it to remain there until at least 2023. Shelton has been picked to fill a term that expires in 2024.
This story was written by Andrew Taylor and Christopher Rugaber. BDN writer Michael Shepherd contributed to this report.