- The Washington Times - Tuesday, October 25, 2005

A number of stories are dominating Washington’s chattering classes these days. But, however, exciting, will they have lasting impact?

The trial of Saddam Hussein, the constitutional vote and what will soon tragically be the 2000th serviceman killed in action in Iraq are important stories. The windup of the grand jury investigation of the “outing” of CIA operative Valerie Plame and the administration campaign to discredit her husband, Ambassador Joe Wilson, and his rebuttal of the White House claim that Niger was supplying nuclear material to Iraq is another. And last the nomination of White House counsel and close associate of the president, Harriet Miers, to the Supreme Court no doubt will have consequence.

Saddam will make the trial a spectacle knowing that Johnnie Cochran, were he still alive, probably could not win him an acquittal. In two days, the term of the grand jury expires. Special Prosecutor Patrick Fitzgerald must determine if any laws were broken and whether indictments are in order. With Watergate and Bill Clinton’s impeachment as context, could this investigation reach the vice president’s chief of staff, I. Lewis “Scooter” Libby, and Bush confidante Karl Rove or beyond? To paraphrase Sen. Howard Baker some 30 years ago, what if anything did the White House know and when did it know it? If there are any linkages, buckle up.

The Miers nomination is for a lifetime job. Whether she is a “stealthy” conservative who will overturn Roe v. Wade and conform with presidential preferences while on the bench or will be a fully independent judge defines much of the inquiry that will follow in the hearings. But the stakes are considerable. Some believe there are few more important nominations, even though the influence of the other eight justices and the character of the court cannot be ignored in mitigating the impact of a single new judge.

There is another story, however, hidden in plain sight, that will prove most significant — the appointment of Ben S. Bernanke to replace the redoubtable Alan Greenspan as chairman of the Board of Governors of the Federal Reserve after Mr. Greenspan steps down in January. Mr. Greenspan, with his Eisenhower-like ability to disguise and nuance his testimony and commentary, such as “irrational exuberance,” is arguably one of the most powerful people in the world. Markets and bankers take whatever the Fed chairman says with the utmost seriousness. Mr. Bernanke must now fill those same shoes.

To most Americans, the Fed is foreboding and secret. Created by an act of Congress in 1913, its purposes include: setting monetary policy, which means adjusting the cost and availability of money and credit; regulating and supervising the banking system; and establishing margins for loans and credit. The Fed has 12 regional banks and operates in part through the Federal Open Market Committee that sets short-term interest rates and has 12 members, including all of the board of governors.

In selecting the new chairman, who will serve a four-year renewable term, the president could have followed one of two paths. He could have nominated someone with experience as a central banker on the grounds that rougher economic times lie ahead and the Fed will need a chairman with “hands on” experience in time of real financial crises. Instead, Mr. Bush chose to nominate an academic with a traditional economic background. That choice is Mr. Bernanke, who served at the Fed and is currently chairman of the Council of Economic Advisers.

Many experts, including former Fed Chairman Paul Volcker, worry about the likelihood of a financial crisis within a decade. Mr. Volcker wrote in an Op-Ed piece earlier this year “that as things stand, it is more likely than not that it will be financial crises rather than policy foresight that will force the change.” He was referring to the combination of exploding long-term debts, deficits and liabilities; the inherent fragility in China and Japan’s banking systems; and the foreign investments that in part are sustaining the American economy.

Iraq will have a constitution now or later, Saddam’s trial will eventually end, and sadly more Americans will die in action. The White House will carry on with or without Messrs. Rove and Libby. And should Miss Miers join the court, my guess is that her appointment will have less consequence than both the far right and left fear.

Whether a future financial crisis is imminent and whether the chairman-designate for the Fed is the right person to deal with that prospect are unanswerable questions now. But make no mistake. Mr. Bernanke’s appointment will have far more lasting impact on the nation and on the Bush administration’s legacy than any consequences that may arise from these other, more exciting stories.

Harlan Ullman is a columnist for The Washington Times.

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