Stephen Miran: 'Revolving Door' Critic Poised to Join the Fed

Stephen Miran, former White House Council of Economic Advisers chair, has long criticized the so-called 'revolving door' phenomenon between the US administration and the Federal Reserve. Now, after being nominated by President Trump to the Fed's Board of Governors, Miran may find himself about to walk through the very door he sought to close, or even radically reform.

What is the 'Revolving Door'? The 'revolving door' refers to the movement of individuals between positions in the public and private sectors, a mechanism often seen as facilitating undue gains for special interest groups.

Miran's Proposals for Fed Reform

In a report co-authored last year for the Manhattan Institute, Miran proposed a series of 'gradualist' solutions to address what he saw as ailing the institution. These included:

• 'Groupthink' in monetary policy.
• Regulatory overreach.
• Lack of accountability.
• A drift away from the core mission of curbing inflation.

Miran argued that in order to regain the benefits of the Fed's independence from political control, that independence itself must be ended.

Key Proposals:

• Shorter Governor Terms: Instead of 14-year terms with protection from removal, Miran proposed 8-year terms removable at the president's discretion.
• End the 'Revolving Door': Ban movement of officials between the administration and the Fed.
• Include Fed budget in Congressional Appropriations Bill: To provide greater political oversight.
• Spin off some non-monetary policy functions: Transfer them to independent divisions within the central bank.
• Give all 12 Regional Fed Presidents a vote: (Currently only 5 do), aiming to counterbalance presidential influence.
• Subject regional bank boards to state governors: Potentially creating regional Feds leaning toward either Republican or Democratic parties.

It remains to be seen how Miran's radical proposals will affect his chances of Senate confirmation. However, it's clear that implementing these proposals would represent a seismic shift for the Federal Reserve.

Potential Impacts: Shortening governor terms and allowing presidential removal could increase political influence over monetary policy. Giving all regional bank presidents a vote, on the other hand, could counterbalance this influence. Subjecting regional banks to state governors could increase accountability, but it could also create partisan biases.

Regardless of the ultimate outcome, Miran's nomination raises important questions about the future of the Federal Reserve and its role in the American economy.