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What an extended standoff over Kevin Warsh in the Senate could look like
Soon after he announced his pick for Federal Reserve chairman, President Trump promised that he wouldn’t be the one blinking when it comes to confronting a key roadblock that awaits Kevin Warsh in the Senate.
Trump was asked Friday in the Oval Office about a pledge from retiring GOP Sen. Thom Tillis of North Carolina to block his pick until a criminal investigation into current Fed Chair Jerome Powell is ended.
In response, Trump suggested, “If he doesn’t approve, we’ll just have to wait until somebody comes that will approve it.”
Few expect it will come to that — Tillis’s term as senator doesn’t end until January 2027, and Trump offered a different answer over the weekend — but Tillis is also not backing down.
Tillis told Politico he will only allow Warsh’s nomination to proceed when the investigation of Powell is finished with an assessment of guilt or innocence — “or they can withdraw it because they don’t have sufficient basis for a prosecution.”
Washington observers, meanwhile, are offering a variety of perspectives on how the standoff could play out.
“We think this ultimately gets resolved but we don’t know when,” is how Brian Gardner, Stifel’s chief Washington policy strategist, put it in a note to clients. “There could be some political drama along the way.”
Tillis is likely to be joined by Democrats and at least one Republican colleague — Lisa Murkowski of Alaska — in standing in the way of the pick based on the principle of Federal Reserve independence.
Trump may not have helped matters over the weekend when he reportedly joked to attendees at the closed-door Alfalfa dinner that he would sue Warsh if he didn’t lower interest rates.
The president later made light of the comments, noting, “It’s a comedy dinner.”
On Saturday, Trump took a different tack in responding to Tillis’s opposition, expressing confidence that Warsh could garner enough support in the Senate, including from Democrats.
“He should have no trouble getting through,” Trump said.
But that’s far from certain, and some market observers say a drawn-out process could be in the offing.
“Don’t expect Warsh to be confirmed until March or April,” noted Pangaea Policy’s Terry Haines in a note to clients. He predicted Trump would back down but said “it will take awhile for Trump to withdraw on Powell with a semblance of process.”
If the investigation continues and Tillis “maintains his blockade past the end of Powell’s term, things could get very messy and unclear,” said Tobin Marcus of Wolfe Research, who added he thinks that’s unlikely.
