At last week’s hearing with Federal Reserve chair Janet Yellen, Tennessee Sen. Bob Corker broke with Republican colleagues and denounced a central bank audit bill before the Senate Banking Committee. The proposal, carrying steam after sailing through the House of Representatives with 333 votes last fall, needs all 12 Republican committee votes – including Corker’s – to pass. But Corker rejected it out of hand, and it wasn’t the first time he has throttled his party’s efforts to check the Fed.
“I can’t imagine anything worse for the nation or for the free world than for Congress to get involved in monetary policy,” Corker told Bloomberg on Thursday. Of course, Article I of the Constitution says it is Congress’s job to “coin money, and regulate the value thereof,” so it is hard to imagine how Congress couldn’t get involved in monetary policy if it is following the Constitution. But Corker’s hyperbole is political rather than legal: he is defending Fed policy from a burgeoning critique within his own party.
{mosads}For Corker, this has become something of a crusade. In 2013, he defended Yellen at her nomination hearing from Republican attacks that she had an inflationary bias, even citing the number of times she voted to raise interest rates (despite the fact that the Federal Open Market Committee hasn’t voted to raise rates since 2008, and she rejoined it the following year). Yellen got record-low support in her Senate confirmation vote, but the imposition of the “nuclear option” by Sen. Harry Reid (D-Nev.) in the chamber weeks early had dashed any hope for a GOP filibuster.
Corker’s history of enabling the Fed doesn’t end there. During the negotiations over the Dodd-Frank bill – which Corker did not end up voting for – he proposed that the Consumer Financial Protection Bureau be housed within the central bank. His idea became part of the law, and the CFPB gets its funding from up to 12 percent of the Fed’s operating budget, or $632 billion next year. Given that the Fed creates money on a computer screen, this provides the agency much more financial security than if were at the mercy of Republican appropriators in Congress.
What propels Corker, the five-foot-four former mayor of Chattanooga who chairs the Senate Foreign Relations Committee, in defending the Fed when many Republicans feel it has become indefensible? It may be partly due to his career in the two industries that benefit most from low interest rates, real estate and construction.
As a construction company owner and then real estate developer, Corker saw the pain high interest rates inflicted in the 1980s and the boon that low interest rates brought in the 1990s and 2000s. Easy money was a one-way ticket to prosperity for many developers in the Sunbelt who could borrow cheaply on the reasonable expectation that prices would keep going up. Corker sold most of his real estate holdings before his first Senate campaign in 2006, near the peak of the market and before the Fed had to aggressively raise rates to contain the housing bubble.
But spending political capital on the Fed is a cause Corker may live to regret. Sen. Lamar Alexander’s (R-Tenn.) primary victory last August, in which he got under 50 percent of the vote against six challengers, showed that Republican moderate incumbents in the South carry targets on their backs. If Corker is successful in quashing Audit the Fed this year and it carries momentum into 2016, he may have to answer for it in his own primary election two years later. Then he’ll have to ask himself whose interests come first, Bob Corker’s or Janet Yellen’s?
Danker is a Washington-based political consultant. He managed the 2014 campaign of Jeff Bell, the Republican U.S. Senate nominee in New Jersey.