Does Garland Care About Decorum More Than The Planet?
Does Garland Care About Decorum More Than The Planet?
Plus: What grumbling about "politicization" of the Fed reveals about the Fed itself.
When Was The Fed Not Political?
The search is on for Lael Brainard’s replacement on the Federal Reserve Board of Governors, which means Wall Streeters and D.C. neoliberals are eagerly floating themselves in the press. We’ve been digging into the names cropping up in The Wall Street Journal and its peer outlets, and so far, are none too impressed.
There’s Morgan Stanley’s chief economist Seth Carpenter, who should be a no-go for self-evident reasons. The Fed is Morgan Stanley’s top regulator and its lender of last resort if those regulations fail to prevent a crisis. The revolving door doesn’t get much more clear-cut than a Wall Street executive moving to the Fed. Then there’s Karen Dynan, an economist made in Larry Summers’ own image. She’s called for a “softening of labor demand” (read: mass firings and pay cuts) to curb inflation. Brainard was the best defense against Fed Chair Jerome Powell’s highly unpopular, anti-worker rate hikes. Replacing Brainard with Dynan would be quite the own goal for “the most pro-union president you’ve ever seen.”
Finally, our Max Moran had a piece in The American Prospect on Monday about Janice Eberly, who was the top economist to Treasury Secretary Timothy Geithner and defended the intent behind his disastrous Home Affordable Modification Program (HAMP) in a 2014 Brookings paper. HAMP failed to keep people screwed by the banks in their homes during the Great Recession, but it did help “foam the runway” for Wall Street, in Geithner’s words. Anyone willing to justify mass evictions for the sake of the financial industry shouldn’t be going anywhere near the Fed.
We’re not the only ones asking questions about the central bank’s current and future leadership. Austan Goolsbee became President and CEO of the Federal Reserve Bank of Chicago in January, but Bloomberg reported last week that the search firm which selected him for the role includes his wife as a top executive. Moreover, some of the Chicago Fed’s directors are regular Democratic donors. Two Trump-appointed members of the Board of Governors had abstained from voting on Goolsbee’s confirmation, which in the rarefied world of the Fed is practically spitting in Goolsbee’s face.
All of this has some business reporters and opportunistic think-tankers asking whether the Fed is becoming too politicized. This question, in our view, is kind of ridiculous. For one, while Goolsbee is a more outspoken partisan than is common on the Fed, there’s nothing new at all about Fed officials flitting back and forth between politics and monetary policy: As Bloomberg’s Steve Matthews pointed out, before he became Fed Chair, Ben Bernanke was the Chair of George W. Bush’s Council of Economic Advisers, the same position Goolsbee held in Barack Obama’s administration. And Janet Yellen moved from Fed Chair to Treasury Secretary.
No, the honest argument isn’t that Goolsbee is too political to serve on the Fed. It’s that he might put the lie to the notion that the Fed is now, and can ever be, apolitical in the first place.
For centuries, the money supply was a hotly contested political issue in the United States. It drove many of Hamilton and Jefferson’s fights, and was Andrew Jackson’s signature populist issue. But over the decades since the Fed-Treasury Accord in 1951, we’ve taken a sincere and important desire for Fed independence and turned it into treating the money supply as a topic to which democratic input does not and should not apply. This has only exacerbated over the last 40 years. One of neoliberalism’s most effective rhetorical tools is making its preferences sound like scientific fact, mostly through neoclassical economists using jargon, complexity, and certainty to reframe and shut down debate over fundamentally ideological questions. The Fed is no exception.
It is only possible for the Fed to treat the money supply as apolitical because monetary policy is framed as too complicated for average people to understand. Fed governors famously speak to the public in deliberately obscurantist and boring language, which is not how they speak with each other behind closed doors — Fedspeak isn’t the only way to talk about monetary policy, it’s just the way you talk about it if you don’t want the rabble to catch on to what you’re doing. Moreover, the Fed tightly controls press access to the governors and can be harsh toward any critical questions by reporters. The media is so important to the central bank’s project that its press director is the most powerful member of the non-appointive staff.
All of this helps insulate the Fed’s decisions from democratic accountability, by making its leaders seem more like technicians and less like political actors. But this is nonsense: Fed governors aren’t wizards, they’re imperfect people making hard decisions under incomplete information, and their personal ideologies necessarily play a role in that. Moreover, Fed policies directly impact the public: the money supply is one of the single most important drivers of hiring and firing, raises and pay cuts. If Americans simply thought of the central bank in more political terms — as Americans did during much of the 19th Century — we’d have a much more honest understanding of how economic power works in the US.
This brings us back to Carpenter, Dynan, Eberly and Goolsbee. Presidential nominations and Congressional confirmations are the main forms of democratic accountability on Fed governors. It is extremely obvious to anyone who pays attention that politics, both partisan and interpersonal, play a huge part in these processes. But the Fed’s complexified rhetoric and apolitical aura in the public consciousness mean that only the politics of well-connected, usually wealthy, insiders get to be taken seriously.
Why hasn’t a purportedly pro-labor President ever nominated a labor economist to a body that does so much to determine worker bargaining power? For that matter, why does the Fed have to justify its decisions to Wall Street bankers and financial policy wonks, but not to rank-and-file union members across the country? How come one set of the Fed’s constituents get treated as smart, wealthy, and important enough to engage with, but the majority of the country does not?
The fact that Goolsbee is a partisan Democrat doesn’t disqualify him from service, but the confluence of events that led to his selection for the Chicago Fed are indicative of which segments of society get to influence monetary policy (the wealthy and well-connected), and which segments do not. Politics is how societies allocate power, and the Fed is at the epicenter of how our political-economic system chooses winners and losers. We should think about Fed governors as political actors, and think of Biden’s eventual choice of a nominee as a political decision.
A Test For DOJ De-Trumpification: State-Level Climate Liability Cases
Over halfway through Biden’s term, Attorney General Merrick Garland is maintaining the Trump Justice Department’s position in an alarming number of legal cases. Our litigation tracker documents approximately 40 such cases across education, immigration, the environment, criminal justice, transparency, agriculture and other issues. It is by no means a comprehensive list. (And so far as we know, it is unique—no other organization systematically tracks Justice Department spinelessness. Consider supporting our work here.)
While some continuity in litigation positions between administrations is the norm, the Trump administration decisively broke from normality. The former president weaponized the Justice Department as if it were his personal legal team. His ideological loyalists throughout the department flouted ethics and precedent in service of their goals. Yet Garland has maintained an institutionalist approach that may preserve extremist positions.
One of the most important examples is a series of city, county and state-led cases against oil and gas companies. Our Hannah Story Brown wrote at length about these cases for Washington Monthly last summer.
Over the past several years, dozens of local and state governments have sued fossil fuel companies, including Exxon, Chevron, Shell, BP and ConocoPhillips, under a variety of state laws. The Attorneys General of Rhode Island, Minnesota, Massachusetts, New Jersey, Delaware, Vermont, Connecticut and D.C. have brought cases against fossil fuel companies, as have cities and counties in Maryland, Colorado, Hawai'i, California and elsewhere.
Their lawsuits focus on the oil companies’ failure to warn consumers about their product’s harms; consumer protection claims of corporate deception and misrepresentation; and common law tort claims of nuisance, trespass and negligence.
The fossil fuel companies want the courts to determine that these issues are not governed by state law at all, but by federal common law—which would effectively extinguish the claims. The 2011 Supreme Court case AEP v. Connecticut determined that states and cities cannot bring federal common law claims against fossil fuel facilities for creating planet-warming emissions.
The Trump Justice Department filed several amicus briefs on the side of the oil and gas companies. Between 2018 and 2021, the Justice Department sided with Chevron against Rhode Island before the Rhode Island Superior Court; with BP against Oakland and San Francisco at the district court level and then before the Ninth Circuit; with BP against New York before the Second Circuit; and with BP against Baltimore before the Supreme Court. Much of this work was overseen by former head of the DOJ environmental division Jeff Clark, who weaponized the Justice Department in service of Trump’s scheme to discredit the 2020 election. Clark is currently under criminal investigation.
In spring 2021, several state attorneys general pushed Garland to fulfill Biden’s explicit campaign pledge to support “ongoing plaintiff-driven climate litigation against polluters.” They urged the Justice Department to reverse its positions, particularly as fossil fuel companies “continue to cite DOJ’s prior briefs as if they represent DOJ’s current positions.”
State attorneys general are not the only officials who have called on the Justice Department to do differently. As Hannah wrote for Washington Monthly, during Trump’s presidency, a group of then-former government officials filed an amicus brief in Rhode Island v. Chevron rebuking the Trump DOJ’s position as a “factual misunderstanding of U.S. climate diplomacy.” Nine of the thirteen signatories to that brief later ended up at the top of Biden’s administration:
Antony Blinken, Secretary of State
Wendy Sherman, Deputy Secretary of State
William Burns, CIA Director
Avril Haines, National Intelligence Director
Susan Rice, Director of the Domestic Policy Council
John Kerry, Special Presidential Envoy for Climate
Susan Biniaz, Deputy to the Special Presidential Envoy for Climate
Gina McCarthy, White House National Climate Adviser (2021-2022)
Jonathan Pershing, Deputy Special Envoy for Climate (2021-2022)
Yet nearly two years later, despite clear support from these state attorneys general and top-level Biden administration officials for a reversal in these cases, the Justice Department has not taken action.
SCOTUS and Suncor Energy v. Boulder County Commissioners
In October 2022, the Justice Department got its strongest push yet to finally articulate its position in these cases. The Supreme Court is deciding this term whether to grant the fossil fuel companies’ appeal in Suncor Energy v. Boulder County Commissioners, a climate liability case initially brought by two Colorado counties and a municipality in state court. The Tenth Circuit agreed that state court is where the case belongs. SCOTUS previously denied a similar petition in Chevron Corp. v. City of Oakland in 2021. While the Court weighs granting this petition, it has invited Solicitor General Elizabeth Prelogar to file a brief expressing the views of the United States in this case.
It is hard to overstate the significance of the position the Justice Department chooses to take. If the Justice Department asserts that these are state law claims which should be heard in state court — as the First Circuit, Third Circuit, Fourth Circuit, Ninth Circuit and Tenth Circuit have all held — it materially increases the likelihood that the Supreme Court will decline to grant review in this case.
Overcoming these prolonged procedural battles over jurisdiction and moving on to discovery is what oil companies most fear. The environmentally-minded plaintiffs in these cases are hoping to follow a similar roadmap to the enormously successful state-level tobacco and opioid lawsuits in recent decades, which secured billions of dollars for recovery efforts. The first case to succeed on the merits could open a floodgate of claims for relief, emboldening efforts to have major polluters foot the bill for climate mitigation and adaptation around the country.
On the other hand, if the Justice Department doubles down on its Trump-era position, it would increase the likelihood that the right-wing, corporate-friendly Supreme Court would grant review of the oil and gas companies’ petition. Best case scenario, SCOTUS review would delay progress in these cases around the country, but ultimately decisively settle jurisdiction at the state level. Worst case scenario, the Court would create a new exception in the law in order to extinguish this avenue for accountability and relief.
The ball is in the Justice Department’s court. Frankly, it would be far more radical for the Solicitor General to maintain the arguments of her Trump-era predecessors—arguments struck down again and again by appellate courts around the country—than to change course and respect state court jurisdiction. As the Center for Climate Integrity’s Richard Wiles noted for Bloomberg Law in December, “Seventeen circuit court judges and 13 district court judges nominated by every president from Ronald Reagan to Donald Trump all agreed that climate accountability lawsuits filed in state court should proceed in state court.” But after two years of conspicuous silence from Garland’s Justice Department, we do not feel assured about its intentions.
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