Nominee. Bernanke is former Fed governor. (Photo courtesy of the White House and Paul Morse)

In announcing Bernanke Oct. 24, Bush called him "the right man to build on the record Alan Greenspan has established." Bernanke has chaired the White House Council of Economic Advisers since June. He’s been a Fed governor for nearly three years and is a Princeton University economics professor.

"It looks like a solid choice," says Robert Murray, McGraw-Hill Construction vice president for economic affairs. "And it would maintain the focus on keeping inflation in check." ENR is a unit of McGraw-Hill Construction.

Bernanke "seems to be a good, credible candidate," and has "a good working knowledge of the Fed," says American Institute of Architects Chief Economist Kermit Baker. "Construction, being as cyclical as it is, is very interest-rate sensitive and obviously the Fed’s chief concern is to fight inflation, or manage inflation." He says Bernanke, who has supported the idea of inflation-rate targets, seems to be "a little bit more of an inflation hawk" than Greenspan.

Associated General Contractors Chief Economist Kenneth Simonson says "he’s an extremely able economist and I know that he is aware of the cost pressures on construction." Simonson discussed the issue of cement imports from Mexico with Bernanke in a brief September meeting. But the Fed doesn’t handle trade policy. Simonson doesn’t expect Bernanke to focus directly on construction there. "His task is to keep the economy as a whole healthy, and that in turn will keep construction growing," he says.

Bernanke now faces Senate review. The top banking committee Democrat, Paul Sarbanes of Maryland, says Bernanke must be viewed as "independent and not part and parcel of any administration." Banking Chairman Richard Shelby (R-Ala.) says Bernanke "will be thoroughly questioned but also well-received" by the committee. David Wyss, chief economist of McGraw-Hill’s Standard & Poor’s unit, notes that Bernanke was confirmed to his CEA post only months ago and is likely to have "clear sailing" in the Senate this time.

Defense: Congress Is Expected To Let Base Closures Stand
It appears likely that Congress won’t block the Defense Base Closure and Realignment Commission’s plan to shut 21 major Dept. of Defense posts and close or make changes at many other ones. The House was expected to vote Oct. 26 to reject a measure to halt the BRAC panel plan, an Armed Services Committee spokesman says. The Senate has been silent on the issue. If Congress doesn’t turn down the commission blueprint by about Nov. 9, the closures will proceed.

The BRAC commission approved in full 119 of DOD’s 190 closure and realignment recommendations and accepted another 45 with changes. It says the plan will require $21 billion in up-front costs, including construction at bases slated to gain personnel.

DOT: Senate Passes Road, Transit Hikes
The Senate has delivered generally good fiscal year 2006 appropriations news to the Dept. of Transportation. Funding levels in the Senate measure, approved Oct. 20, next must be reconciled with those in the House-passed bill.

The Senate included $38.7 billion in budget resources for federal highways, up 8% from 2005. The House bill had $37 billion for highways. The Senate bill lifts the Federal Transit Administration budget 7%, to $8.2 billion, and the Federal Aviation Administration airport grant program 1%, to $3.5 billion. The House allotted $8.5 billion for FTA and $3.6 billion for airport grants in 2006.

The Senate bill also covers the General Services Administration public buildings program, providing $829 million for new construction, up 17% from 2005, and $961 million for renovations, down 2%.

Energy: Drilling in Arctic Reserve Advances in Senate
The Senate energy committee has given a boost to oil and gas drilling in Alaska’s Arctic National Wildlife Refuge. On Oct. 19 the panel approved language to be part of a broad budget resolution to raise $2.4 billion over five years from oil and gas leases in ANWR. "We think the ANWR portion of this [budget] bill is safe...," says Committee Chairman Pete Domenici (R-N.M.) But he says it’s a close call whether there are the 51 Senate votes to pass the overall budget package.

resident Bush’s nomination of Ben S. Bernanke to be Federal Reserve chairman won praise inside and outside the construction industry. If confirmed, Bernanke said he would "maintain continuity with the policies and policy strategies" at the Fed under current Chairman Alan Greenspan, who is expected to leave in January. Observers say Bernanke will continue to try to hold down inflation. But a change atop the Fed won’t mean direct relief for construction from painful cost spikes in materials such as steel and cement, because their causes lie outside the central bank’s purview.