Obama's decision and his timing bear the marks of sound political and economic strategy. First, the news is big enough that, as I mention in my column on the federal deficit, it will at least temporarily draw attention away from the mammoth deficit projections released Tuesday by the White House and the Congressional Budget Office.
Second, the choice of Bernanke -- a Republican named by former President George W. Bush -- is a reminder of Obama's promise to be bipartisan. Third, it avoids a confirmation battle in Congress. Fourth, it's hard to argue that there could be anyone more qualified or experienced at this moment in history than Bernanke, an expert on the Great Depression of the 1930s.
And fifth, it keeps intact the team that averted an economic and financial collapse and seems at this point to be leading the country out of recession. This is not to say that Congress won't have questions and warnings for the Fed chief, but while Bernanke has been faulted for not picking up on clear signals that the financial and housing sectors were headed for a meltdown, he's won praise for his performance since it happened.
Sen. Bernie Sanders (I-VT):
"As a result of the greed, irresponsibility and illegal behavior of Wall Street our country has experienced the worst economic decline since the Great Depression. Mr. Bernanke was head of the Fed and the nation's chief economist as this crisis, driven by reckless speculation, developed. Tragically, like the rest of the Bush administration, he was asleep at the wheel during this period and did nothing to move our financial system onto safer grounds. As the middle class of this country continues to shrink, we need a chairman of the Federal Reserve who is more concerned about expanding the productive economy – increasing decent-paying jobs for all Americans – than continuing to fan the flames of Wall Street greed and outrageous compensation packages.”
Reappointing one of the key people A) who fell asleep at the regulatory wheel in the lead up to the financial meltdown B) who responded to the meltdown by handing over trillions of no-strings-attached taxpayer dollars to his bank industry friends and C) who has refused to let the public even know who is getting taxpayer bailout money is abominable. The idea that he showed some kind of "brilliance" or "smarts" in throwing trillions of dollars at the banking industry is positively absurd - as is the idea that his scheme has miraculously saved the economy (it ain't a shock that when you shovel trillions of dollars at banks, they will report temporary short-term profits - and those profits don't mean anything is saved for the long-term).
Generally, I’m pleased. Bernanke has done a good job in the crisis — he’s been far more aggressive and creative than almost anyone else would have been in his place, partly because he’s a scholar of the Great Depression, partly because he took Japan’s lost decade seriously and was therefore intellectually prepared for a liquidity-trap world.
...Ben Bernanke’s performance over the past year deserves praise, and there’s nobody I’d rather have in his position. Congratulation, Ben.