PRESIDENT CLINTON'S nominations of two mainstream Democratic economists to serve on the seven-member Federal Reserve Board will add greater balance, in more ways than one, to this powerful arbiter of U.S. credit policies.
The choices of Alan S. Binder, 48, for vice chairman, and Janet L. Yellen, 47, are the first from a Democratic president in several years. Until these nominations, still subject to approval by the Senate, all seven board members had been chosen by Republican Presidents Ronald Reagan and George Bush. It is time for this political balancing.
Economically, too, these choices are likely to add more balance. Chaired by Alan Greenspan, the Fed has tilted heavily toward an anti-inflation emphasis in the continuing challenge of deciding between fighting inflation and spurring economic growth. Greenspan and a majority of the present board are anti-inflation hawks.
Binder and Yellen appear not only less hawkish on this issue but generally pragmat
ic rather than ideological, which isn't a bad approach to take. Binder, for example, is now a member of President Clinton's middle-of-the-road Council of Economic Advisers.
Of course it is too soon to judge how effective these new board members will be. Their specific policy views, especially those of Yellen, who is on the faculty of the University of California at Berkeley, are not yet well known. And, in any case, predictions about how members will act once they are on the Fed, like speculations about how Supreme Court justices will vote, are hazardous. Voting on complex credit policies that can hit every American wallet is different from writing an academic text.
But Binder and Yellen have earned high praise from the economic community, including Greenspan.
They are qualified for these important posts, and the balance they provide is coming at a good time.