Because if tragedy struck, he’d make the best available President the next day. I’m prompted to write that by Matt Yglesias' article in Vox, succinctly making the case for selecting a VP nominee on that basis. Or more succinctly, as the fictional President Josiah Bartlet wrote to explain why he picked the fictional John Hoynes: “Because I might die.”
Nothing in the Constitution, 22nd amendment included, prohibits a Vice President from serving more than two terms. I don’t know what Mr. Biden has said about his willingness to stay on, but I’d disregard it anyway — I think he’d dutifully answer a call by his party’s nominee and the call of protecting the Obama-Biden legacy, and denying they want the job is what all VP candidates are expected to do. He’s already ably carrying out the duties of a VP and ready to be President if necessary. He’s not too old to serve four more years, and there’s no need now to nominate a VP for more than that next term. (In fact, my preferred variant of this scenario would include an announcement up front that he’ll retire after 2020, turning the next four years into an audition for the next VP nominee and likely 2024 Democratic Presidential nominee. By then Elizabeth Warren could establish foreign policy credentials, Xavier Becerra could establish a national reputation, Julian Castro could deepen his resume, etc.)
Oh, and the politics? If there’s a weak spot in Hillary Clinton’s demographics, it’s working-class white males. Joe Biden has as much appeal to them as any prominent Democrat. If Donald Trump has any path to an electoral college majority, it runs through Pennsylvania, where Biden has longstanding ties. It’s already inevitable that this election will in substantial part be a referendum on President Obama’s two terms, to which nominating Biden would provide the proper response: “Bring it on, we’ll run on that record.”
(Edited to respond to some of the comments and add some explanation of my thinking.)
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