Those decades of free-market machinations are now paying off, as a quintet of Ronald Reagan administration alumni — Kudlow, Laffer, Forbes, Moore and David Malpass—united by undying affection for each other and for laissez-faire economics, have the run of Washington once more. Members of the tight-knit group have shaped Trump’s signature tax cut, helped install each other in posts with vast influence over the global economy, and are working to channel Trump’s mercantilist instincts into pro-trade policies. Blasted by their critics as charlatans and lauded by their acolytes as tireless champions of prosperity, there’s no denying that the quintet has had an enduring impact on decades of economic policy.
Most recently, in late March, and partly at Kudlow’s urging, Trump announced his intention to nominate Moore to one of two open seats on the Federal Reserve Board of Governors, the body that sets the tempo of the global financial system.
The announcement prompted protests from economists across the ideological spectrum—George W. Bush’s top economist, Harvard’s Gregory Mankiw, said Moore lacked the “intellectual gravitas” for the job—who warned that appointing Moore, a think-tanker with no Ph.D., would politicize the Fed. Soon, it emerged that Moore had made a mistake on a 2014 tax return that led the IRS to place a disputed $75,000 lien against him, and CNN dug up scathing comments Moore had made about Trump during the presidential primary.
Whether Moore can survive the scrutiny and pass muster with the Senate will be a test of the supply-siders’ renewed cachet. They believe they can pull it off.
“I understand there are imperfections,” Kudlow told POLITICO. “I think it can be worked out.”
Moore described some of his recent conversations with Trump, which often turn to Fed Chairman Jerome Powell.
“I think his criticism of Powell is excessive and could be counterproductive,” Moore said, because it could actually provoke Powell to prove his independence by defying Trump’s wishes. Generally speaking, Trump wants Powell to keep interest rates low to decrease the chances of any economic slump before the president faces voters again next November.
Moore also recounted how he and Laffer, who began advising Trump in 2016, helped place Kudlow in his current posting.
Roughly a year into Trump’s term, as Trump’s first NEC director, Gary Cohn, prepared to depart the post, the duo sprang into action. Moore said that during this period, whenever he and Laffer engaged in their semiregular consultations with Trump, they would have some version of the following exchange:
“You know, Mr. President, you’re missing one thing,” Laffer or Moore would say.
“What is that?” Trump would ask.
“Larry Kudlow,” Laffer or Moore would tell him.
“We just drilled the message over and over,” Moore recalled. “‘Larry, Larry, Larry, Larry.’”
During that same period, following the 1974 midterms, Laffer first drewhis famous Laffer Curve — a representation of the idea that at a certain level of taxation, lowering taxes would theoretically spur enough growth that government revenue would actually rise—at a meeting near the White House with Wanniski, Dick Cheney, then an aide to President Gerald Ford, and Grace-Marie Arnett, another free marketeer active in Republican politics.
Reagan would go on to fully embrace supply-side theory, a shift from the party’s traditional emphasis on fiscal discipline, appointing Laffer to his Economic Policy Advisory Board.
Then as now, supply-side economics was criticized for favoring the rich and derided by critics as unrealistic “Voodoo Economics.” The critics got an early boost from a 1981 Atlantic cover story in which Reagan’s budget director, David Stockman, aired his doubts that this novel theory was working in practice.
The piece ruined Stockman’s standing with Reagan—Laffer calls him “the traitor of all traitors”—but Stockman’s young aide, Kudlow, now 71, remained a loyal supply-sider and struck up a relationship with Laffer.
Reagan would go on to appoint Forbes as the head of the Board of International Broadcasting, which oversaw Radio Liberty and Radio Free Europe, and Moore worked as the research director for Reagan’s privatization commission. Malpass, meanwhile, worked in Reagan’s Treasury department. Representatives for Forbes and Malpass said they were not available for interviews.
In the 1988 presidential primary, another supply-sider, the late New York congressman Jack Kemp, lost out to George H.W. Bush, curtailing the crew’s influence within the party.
But they stuck together. Moore, now 59, first became close with Laffer and Kudlow in 1991, after he recruited them to participate in an event celebrating the 10-year anniversary of Reagan’s first tax cuts for the libertarian Cato Institute.
In 1993, Kudlow and Forbes teamed up to craft a tax cut plan for New Jersey gubernatorial candidate Christine Todd Whitman, who went on to unseat incumbent Democrat James Florio.
Meanwhile, Kudlow hired Malpass to work for him at Bear Stearns, where he had been flying high as the investment bank’s chief economist.
The next year, Kudlow crashed to earth—he left the bank and entered rehab for alcohol and cocaine addiction. Laffer stuck by Kudlow, hiring the investment banker to work for his consulting firm in California when he emerged.
In 1996, Forbes, backed by Moore, entered the Republican primary and lost out to Bob Dole, but the group takes credit for getting Kemp picked for the bottom half of that year’s ticket, which lost to incumbent Bill Clinton.
And they have not stopped partying since. Members of the group have continued to actively socialize with each other over the decades, with some spending New Year’s eves together. At one birthday party for Laffer in New York, they presented the aging economist with a signed poster of the Jedi master Yoda. “I’m short, a little bit fat. I’ve got big, green ears,” Laffer explained. “I look sort of like Yoda.”
In 2015, Forbes, Laffer, Kudlow and Moore created the Committee to Unleash Prosperity, a group intended in part to counter the emergence of the “Reformicons,” a rival gang of Republican eggheads who felt the party had gone too far in the direction of laissez-faire policies favoring the rich.
Among the other 29 committee members listed in a press release were both Malpasses, Kevin Hassett, now chairman of Trump’s Council of Economic Advisers, and Andy Puzder, who was Trump’s initial pick for labor secretary until allegations of domestic abuse unearthed by POLITICO derailed his nomination.
The group sought, with considerable success, to vet Republican presidential candidates for their supply-side credentials and to influence their platforms, holding large private dinners at Manhattan venues such as the Four Seasons and the 21 Club, so that committee members and other notable invitees—like Rudy Giuliani and Roger Ailes—could feel out the candidates.
Before meeting with the larger group, candidates would huddle with the committee’s founders to receive economic tutorials. Or in the case of Ohio Governor John Kasich, to give one. “We were all sitting there, and he would talk for an hour,” Moore recalled. “We’re like, ‘No, we’re supposed to be talking to you,’ and he’s talking to us.” Moore called the episode “Classic John Kasich.”
Though the events were supposed to be off the record, journalists often attended, and an otherwise lackluster February 2015 dinner for Wisconsin Governor Scott Walker made headlines when Giuliani barged in, proclaimed he did not believe that President Barack Obama “loves America,” and insisted a POLITICO reporter could print the quote.
The next big change came in 1992 with the nomination and election of Bill Clinton. His moderate platform was similar to his peers’, but his political style was a departure. The concept of a permanent campaign came to the White House. Every move was measured against its short-term political value to the president. The Clinton team launched personal attacks against policy dissenters and against women who brought charges of sexual misconduct against the president. In 1996, Mr. Clinton accused Republican nominee Bob Dole of “trying to destroy Social Security and Medicare” through his support of a bipartisan entitlement-reform effort Mr. Clinton himself had previously praised. By 2001, when Mr. Clinton left the scene, say-anything attack politics had become the normal order of the day in the Democratic Party.
President Obama brought hope of a more tolerant, less deeply partisan politics. But he was surrounded by Clinton alumni who, for the most part, kept on as before. His signature legislation, the Affordable Care Act, was introduced and passed only by Democrats—a sharp contrast to the bipartisan approaches taken by Johnson with his Medicare and Medicaid proposals, and by Ted Kennedy with his Medicare prescription-drug legislation. To pass ObamaCare, the White House and its allies launched a full-court press against all House Democrats, including moderates with doubts about its cost and coverage. The legislation passed narrowly, but 63 House Democrats lost their seats in the 2010 midterm elections. That left the body sharply divided between Republican and Democratic partisans, stalling the administration’s legislative agenda for the remaining six years of Mr. Obama’s presidency.
Paul Manafort made a career out of stealthily reinventing the world’s nastiest tyrants as noble defenders of freedom. Getting Donald Trump elected will be a cinch.
Mar-a-Lago, Donald Trump’s palace, is impressive by the standards of Palm Beach—less so when judged against the abodes of the world’s autocrats. It doesn’t, for instance, quite compare with Mezhyhirya, the gilded estate of deposed Ukrainian President Victor Yanukovych. Trump may have 33 bathrooms and three bomb shelters, but his mansion lacks a herd of ostrich, a galleon parked in a pond, and a set of golden golf clubs. Yet the two properties are linked, not just in ostentatious spirit, but by the presence of one man. Trump and Yanukovych have shared the same political brain, an operative named Paul Manafort.
.. “Manafort is a person who doesn’t necessarily show himself. There’s nothing egotistical about him,”
.. The late Washington Post columnist Mary McGrorydescribed him as having a “smooth, noncommittal manner, ” though she also noted his “aggrieved brown eyes.” Despite his decades of amassing influence in Washington and other global capitals, he’s never been the subject of a full magazine profile.
.. As Roger Stone has boasted about their now-disbanded firm: “Black, Manafort, Stone, and Kelly, lined up most of the dictators of the world we could find. … Dictators are in the eye of the beholder.” Manafort had a special gift for changing how dictators are beheld by American eyes. He would recast them as noble heroes—venerated by Washington think tanks, deluged with money from Congress.
.. he remade Ukrainian politics and helped shift the country into Vladimir Putin’s sphere of influence.It
.. The genesis of Donald Trump’s relationship with Paul Manafort begins with Roy Cohn. That Roy Cohn: Joe McCarthy’s heavy-lidded henchman, lawyer to the Genovese family.
.. It was Roy Cohn who introduced Stone and Manafort to Trump.
.. Dirty tricks came naturally to Stone. He assumed a pseudonym and made contributions on behalf of the Young Socialist Alliance to one of Nixon’s potential challengers. He hired spies to infiltrate the McGovern campaign.
.. Manafort had a very different mentor. He studied under the future secretary of state, James A. Baker III, who wielded his knife with the discipline of a Marine and the polish of a Princetonian.
.. “Paul modeled himself after Baker,”
.. Despite his Yankee stock, Manafort ran Reagan’s Southern operation, the racially tinged appeal that infamously began in Philadelphia, Mississippi, the hamlet where civil rights activists were murdered in 1964.
.. Manafort and Stone pioneered a new style of firm, what K Street would come to call a double-breasted operation. One wing of the shop managed campaigns, electing a generation of Republicans, from Phil Gramm to Arlen Spector. The other wing lobbied the officials they helped to victory on behalf of its corporate clients.
.. he began with his rote protestations of friendship. “Nobody likes Indians as much as Donald Trump.” He then proceeded to worry that the tribes would prove unable to fend off gangsters. “There is no way Indians are going to protect themselves from the mob … It will be the biggest scandal ever, the biggest since Al Capone … An Indian chief is going to tell Joey Killer to please get off his reservation? It’s unbelievable to me.”
.. Trump poured money into a shell group called the New York Institute for Law and Society. The group existed solely to publish ads smearing his potential Indian competition. Under dark photos of needles and other junkie paraphernalia, the group asserted, “The St. Regis Mohawk Indian record of criminal activity is well documented.” (It wasn’t.) “Are these the new neighbors we want?”
.. Later, they lured Lee Atwater, the evil genius who would devise the Willie Horton gambit for George H.W. Bush.
.. Black would later boast that the firm had schemed to gain cartel-like control of the 1988 Republican presidential primary. They managed all of the major campaigns.
- Atwater took Bush;
- Black ran Dole;
- Stone handled Jack Kemp.
A congressional staffer joked to a reporter from Time, “Why have primaries for the nomination? Why not have the candidates go over to Black, Manafort and Stone and argue it out?”
.. He took on clients and causes that even most of his colleagues on K Street considered outside the usual bounds. Black, Manafort, and Stone hired alumni of the Department of Housing and Urban Development then used those connections to win $43 million in “moderate rehabilitation funds” for a renovation project in Upper Deerfield, New Jersey.
.. Local officials had no interest in the grants, as they considered the shamble of cinder blocks long past the point of repair.
.. Two years later, rents doubled without any sign of improvement. Conditions remained, in Mary McGrory’s words, “strictly Third World.” It was such an outrageous scam that congressmen flocked to make a spectacle of it. Manafort calmly took his flaying. “You might call it influence-peddling. I call it lobbying,” he explained in one hearing. “That’s a definitional debate.”.. Strangely, the HUD scandal proved a marketing boon for the firm. An aide to Mobutu Sese Seko told the journalist Art Levine, “That only shows how important they are!”.. Indeed, Manafort enticed the African dictator to hire the firm. Many of the world’s dictators eventually became his clients. “Name a dictator and Black, Manafort will name the account,.. The client list included
- Philippine strongman Ferdinand Marcos (with a $900,000 yearly contract) and the despots of the
- Dominican Republic,
- Equatorial Guinea, and
- Somalia.When the Center for Public Integrity detailed the firm’s work, it titled the report “The Torturers’ Lobby.”.. Manafort understood the mindset of the dictator wasn’t so different from his corporate clients.. Despite his client’s Maoist background, Manafort reinvented him as a freedom fighter. He knew all the tricks for manipulating right-wing opinion. Savimbi was sent to a seminar at the American Enterprise Institute, hosted by the anticommunist stalwart Jeanne Kirkpatrick, a reception thrown by the Heritage Foundation, and another confab at Freedom House. (Kirkpatrick introduced Savimbi, who conscripted soldiers, burned enemies, and indiscriminately laid land mines, as a “linguist, philosopher, poet, politician, warrior … one of the few authentic heroes of our time.”).. His lobbying helped convince Congress to send Savimbi hundreds of millions in covert aid. Indeed, every time Angola stood on the precipice of peace talks, Manafort, Black worked to generate a fresh round of arms—shipments that many experts believe extended the conflict... “So the war lasted another two more years and claimed a few thousand more lives! So what? What counts to a Washington lobbyist is the ability to deliver a tangible victory and spruce up his client’s image.”.. Like Henry Kissinger, Manafort can claim that he merely “consults” with foreign governments, relieving him of the legal burden of announcing his benefactors.
Storm Clouds in the East
Chinese officials earlier played down Mr. Trump’s precedent-breaking phone call with Taiwan President Tsai Ing-wen, which a transition official said had been arranged by Bob Dole, the former Republican senator and presidential nominee
.. About 30% of all the companies in Japan’s three main equity indexes now count the country’s central bank as one of their top 10 shareholders.
.. Traders say the buying distorts stock values as investors build strategies around government actions rather than company fundamentals.