what a drag

How Rand Paul could hold up Yellen’s confirmation as Federal Reserve chairwoman

October 25, 2013
October 25, 2013

CNBC reports that US senator Rand Paul (R-KY) will wage a campaign to hold up the confirmation of Federal Reserve chairwoman appointee, Janet Yellen, whose confirmation is expected to take place over the coming weeks. It’s the same message he makes in a video released this week by the Campaign for Liberty.

“Senator Rand Paul will be demanding a vote on Audit the Fed in the Senate when they consider the new nominee,” John Tate, president of Campaign for Liberty, says in the video.

“Audit the Fed” refers to a bill that both Rand and his father, former representative Ron Paul, have campaigned for heavily that would put the Federal Reserve’s decision-making under legislative scrutiny. Ron Paul believes that the Fed has manipulated the country’s currency in a way that’s damaging to the US economy, and made this a cornerstone of his failed 2012 presidential campaign. Paul (and often less vehemently, his son) is also against a whole bunch of other stuff—for example, the concept of fiat money (money not backed by a physical asset like gold), the Fed’s existence, the Internal Revenue Service (IRS) , income tax and public schools. He also believes that the government is covering up the real data on inflation.

Now that the elder Paul has retired from politics, Rand Paul has taken up his father’s mantle. He refiled his father’s “Audit the Fed” bill in February of this year, but the bill has not yet made it to the Senate floor. That’s partly because Senate majority leader Harry Reid (D-NV) hasn’t put the proposal to a vote.

Essentially, Paul is threatening to filibuster Yellen’s nomination if Senate majority leader Reid doesn’t first put his Audit the Fed to a vote.

“While the Fed has continued to inflate our currency, wreck our economy, and operate in the shadows, you and I have an opportunity,” Paul says in the video. “I say—vote NO on a new Fed chairman without a vote on my Audit the Fed bill. This will be the fight of our lives.”

Critics of the Pauls argue that auditing the Federal Reserve would be a complete disaster. Economists believe central banks work best when they’re as independent as possible from politics; central bankers should be able to make decisions based on the data they see coming out of the economy, and shouldn’t be swayed by the desires of voters. An audit of the Fed’s decision-making would subject it to scrutiny that could hamper its effectiveness in culling bubbles or boosting investment by raising and lowering interest rates, irrespective of the winners and losers.

These critics should take Rand Paul’s threat seriously. His father’s bill passed the House of Representatives 327-29 with bipartisan support in 2012, but was held up before it hit the Senate floor. Both Paul and Tate think if they can get the vote to the floor of the Senate, the bill will pass.

Yellen’s confirmation needs a simple majority—51 votes—in the Senate. But to prevent a filibuster from holding up the process, her supporters will need 60 votes. Not only would that require support from every Democrat and Independent in the Senate; it would also require six Republicans to cross party lines and approve the nomination.

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