The position of director of national intelligence was created after the 9/11 terror attacks to prevent another such assault on the American homeland. The DNI, as the director is known, must oversee 17 intelligence agencies with a total budget of about $60 billion. There are few jobs more important in the federal government — or the entire country. Yet President Trump treated the selection of a DNI with less care and forethought than he would give to picking an interior designer for Mar-a-Lago.
When Dan Coats decided last month that he had suffered enough as Trump’s DNI, Trump reportedly called Sen. Richard Burr (R-N.C.), chairman of the Senate Intelligence Committee, to ask what he thought about Rep. John Ratcliffe (R-Tex.) as a replacement. “Burr responded that he didn’t know much about the lawmaker but would consult with a few people,” Politico reported. “But less than a half hour later, Trump tweeted that Ratcliffe was his choice.”
Trump picked Ratcliffe, it seems, because he liked the congressman’s obnoxious questioning of former special counsel Robert S. Mueller III in July hearings and his role in spreading cuckoo conspiracy theories about a nonexistent “secret society” of FBI agents supposedly out to get the president. But it soon emerged that Trump didn’t know much about his new nominee.
In the days after Trump impetuously announced Ratcliffe’s nomination on July 28, The Post and other news organizations discovered that the three-term congressman from Texas had greatly embellished his résumé. He had boasted that he had “arrested over 300 illegal immigrants in a single day” and had “firsthand experience combating terrorism. When serving by special appointment in U.S. v. Holy Land Foundation, he convicted individuals who were funneling money to Hamas behind the front of a charitable organization.” Turns out that Ratcliffe had played only a small role in a sweep of undocumented immigrants and an even smaller role in the Holy Land case; an aide told the New York Times that Ratcliffe only “investigated side issues related to an initial mistrial.”
With Senate opposition growing, Trump withdrew Ratcliffe’s nomination on Friday just five days after putting him forward. He had lasted less than half a Scaramucci. In pulling the plug, Trump both credited and blamed the media, saying, “You are part of the vetting process. I give out a name to the press and you vet for me, we save a lot of money that way. But in the case of John [Ratcliffe], I really believe that he was being treated very harshly and very unfairly.”
Ratcliffe was treated “very harshly and very unfairly” — but by Trump, not the news media. There’s a reason presidents normally vet nominees before, not after, they’re announced. It’s better both for the prospective appointee and for the president to have any skeletons uncovered before swinging the closet door wide open.
By ignoring the traditional way of doing things, Trump subjected his personal physician, Rear Adm. Ronny L. Jackson, to considerable embarrassment in 2018 by nominating him to become secretary of veterans affairs and then having to withdraw the nomination after stories emerged accusing Jackson of “freely dispensing medication, drinking on the job and creating a hostile workplace.” The Defense Department inspector general even launched an investigation of Jackson. Learning nothing, Trump repeated the same mistake this year when he nominated Herman Cain and Stephen Moore to the Federal Reserve Board of Governors — posts for which they were utterly unqualified. Facing Senate resistance, Trump had to withdraw their names — but not before unflattering details of Moore’s divorce became public.
And those are the good-news stories: the nominees who never took office. Much more common for Trump has been his discovery, after the fact, that his appointments were terrible mistakes. His clunkers have included a secretary of state
- (Rex Tillerson) who devastated morale at the State Department; a national security adviser
- (Michael Flynn) who was convicted of lying to the FBI; three Cabinet officers (Interior Secretary
- Ryan Zinke, Veterans Affairs Secretary David Shulkin, Health and Human Services Secretary
- Tom Price) who were forced out for improper travel expenses and other ethical improprieties; a secretary of labor
- (Alexander Acosta) who had given a sweetheart deal to a wealthy sex offender; and of course a communications director
- (Anthony Scaramucci) who was fired after 11 days for giving a profanity-filled, on-the-record interview to a reporter.
Coats is the 10th Cabinet member to leave the Trump administration. In President Barack Obama’s first two years in office, not a single Cabinet member departed. Trump also has a record-setting rate of 75 percent turnover among senior, non-Cabinet officials. The cost of this constant churn and chaos is high: It becomes nearly impossible to develop or pursue coherent policies.Trump is a president straight out of “The Great Gatsby.” F. Scott Fitzgerald wrote of his protagonists: “They were careless people, Tom and Daisy — they smashed up things and creatures and then retreated back into their money or their vast carelessness or whatever it was that kept them together, and let other people clean up the mess they had made.” In Trump’s case, the thing that he has smashed up is America’s government, and the cleanup cannot begin until January 2021 at the earliest.
The bigger problem is Mr. Trump’s public assault on the Fed. Mr. Trump has made Mr. Cain’s nomination look like an attempt to undermine Fed independence rather than an attempt to put some fresh monetary thinking on the board. The same is true for our former colleague Stephen Moore, who is also on the receiving end of the left’s politics of personal destruction.
Real income for America’s bottom 90% reached an all-time high in 1999, and at the time Pew Research found that 81% of Americans agreed that free enterprise was a major reason for the country’s success in the 20th century. By June 2015, however, Gallup reported 47% would vote for a socialist.
What happened? Real income for the bottom 90%, as measured for the World Top Incomes Database, declined after 1999 and never rebounded. Two terms each of Republican and Democratic administrations failed to end this stagnation, which says all you need to know about why Donald Trump was elected president. Now wages are rising at robust rates—above 3% a year—thanks to cuts in taxes and regulation, with the largest wage increases going to low-wage workers. And the Federal Reserve has been itching to raise interest rates.
The Fed still operates on the “professor standard,” enshrined with Bill Clinton’s nominations of pure academics. Their textbooks say strong economic growth, particularly strong wage growth, causes inflation, which Fed policy should temper. Both the Bush and Obama administrations perpetuated the professor standard, and both presided over incom
Ending that stagnation is one goal that unites the political spectrum. But do we really expect that to happen under the professor standard? The academics’ favorite tool, the Phillips curve, tells them wage growth that is too strong can cause an outbreak of 1970s-style inflation, as former Fed Chair Janet Yellen alluded in her 2010 Senate confirmation hearing.
I have a different perspective. The professor standard doesn’t work, and the Fed needs new voices to argue for an approach that does.
The 1980s and 1990s brought prosperity across the board. This success was driven by a voting bloc of Fed governors, such as Wayne Angell and Manley Johnson, who favored a stable dollar and were able to swing the consensus. The dollar is a unit of measure—like the foot or the ounce—and keeping units of measure stable is critical to the functioning of a complex economy. The result of their stable-dollar policy was prosperity.
.. Since the Federal Reserve Act of 1913, there have been three distinct periods of sustained dollar stability:
- 1947-70 and
During these periods, real growth of gross domestic product averaged 3.9% a year and real income growth for the bottom 90% averaged 2.2%, according to calculations done by Rich Lowrie, senior economic adviser to my 2012 presidential campaign. During distinct periods of sustained dollar volatility—in 1913-21, 1930-46, 1971-82 and 2000-15, real GDP growth averaged only 1.9% and real income for the bottom 90% declined by an average of 1.3% annually.
The prosperity of the 1980s and 1990s gave way to stagnation precisely because dollar stability gave way to volatility. Blame the professor standard. Demand for dollars is determined globally on a real-time basis, but the Fed has preferred to look largely at domestic lagging indicators in determining supply. The frequent resulting mismatches cause dollar volatility, which the professor standard then dismisses as transitory.
America’s future prosperity, and especially the end to income stagnation, depends on getting this distinction right. The Fed has the tools to stabilize the dollar. The open-market desk can buy bonds to counter a downward trend in commodity prices and sell bonds to arrest an upward trend, resulting in ongoing stability in the dollar’s commodity value. The only thing missing are voices like Messrs. Angell’s and Johnson’s to advocate for it. If confirmed by the Senate as a Fed governor, I will speak up for dollar stability.
Last September the professor standard led Fed governors to pick up the pace of quantitative tightening and stick to its plan of rate hikes. Never mind that commodity prices were falling, meaning the dollar’s commodity value was rising, a market signal of deflationary pressure. Meanwhile, the forward outlook for industrial production and retail sales indicated signs of slowing rates of growth. This combination of slowing growth and a rising dollar is a deflationary slowdown. These are the worst conditions under which to raise interest rates, yet that’s what happened, not once but twice, presumably because wage growth was deemed “too strong.”
Markets rightly sent the Fed a strong signal to back off, prompting three subsequent dovish pivots. If the Fed listens to markets after the fact, why not listen to them before?
This mistake is not new. Had the Fed responded appropriately to the dollar’s commodity value at the turn of this century, it wouldn’t have tightened the U.S. economy into the 2000 deflationary slowdown, and technology speculation would have resolved itself without taking down the entire economy.
Had the Fed reacted to the dollar’s commodity value coming out of that recession, it wouldn’t have inflated the real-estate bubble, which led to the 2008 financial crisis. After June 2008, the dollar’s skyrocketing commodity value was screaming that there was a sudden, huge, global scramble for dollar-based liquidity. Unfortunately, the market’s cry fell on deaf ears, apparently because the signal hadn’t yet registered in the Fed’s lagging employment and consumer-price indicators. This deflationary pressure ignited the financial inferno that began in September 2008, yet the Fed didn’t begin quantitative easing to put out their fire until that December.
Senate Republicans are warning the White House that the 2012 presidential candidate will face one of the most difficult confirmation fights of Donald Trump’s presidency and are making a behind-the-scenes play to get the president to back off, two GOP senators said.
.. Republican senators have generally waved through Trump’s nominees over the past two years, but they are reluctant to do the same for the Fed, amid fears that Trump’s push to install interest-rate slashing allies will politicize the central bank.
The resistance comes as Senate Republicans also actively are pressing Trump to halt his purge at the Department of Homeland Security and reconsider economy-damaging auto tariffs.
Some GOP senators said that Cain’s difficult path might have eased Stephen Moore’s confirmation to the Fed, despite Moore’s own problems with unpaid taxes and his partisan reputation. After all, Republicans might be hard-pressed to revolt against both of Trump’s nominees.
..“I think the chances of getting both through, I would say at the moment, are pretty steep,” Thune said.
Neither Moore nor Cain has been officially nominated. A senator familiar with the nominations said Trump is “full speed” ahead on Cain even though FBI background checks and documentations of sexual harassment allegations have not yet been submitted to the Senate. A person familiar with the process expects the background check to raise more questions about Cain.
With that in mind, Republicans are trying to dissuade Trump from a brutal political fight that would highlight intraparty divisions; the nominations need a simple majority and no Democratic support can be counted on.
Trump’s intent to nominate Cain marks one of his most brazen moves yet to take on his own party, coming on the heels of his emergency declaration at the southern border that went against the wishes of GOP senators who stood by Trump during the shutdown.
And once again, Republicans are sending the president clear signals: Pick someone with less partisan credentials and less baggage. While Cain did serve on the Kansas City Federal Reserve Board, Senate Republicans say he now largely appears to be a Trump surrogate.
“I don’t think Herman Cain will be on the Federal Reserve Board, no. I’m reviewing [Moore’s] writings and I’ll make a determination when I have done so,” said Sen. Mitt Romney (R-Utah), who ran against Cain in the 2012 presidential race and seems confident Cain will either be derailed or not officially nominated.
“I feel that we can’t turn the Federal Reserve into a more partisan entity,” Romney added. “I think that would be the wrong course.”
.. Cain later endorsed Romney in 2012, but one of Romney’s colleagues said the Utah senator “is not fond of Herman.” Cain also challenged Sen. Johnny Isakson (R-Ga.) in a 2004 Senate primary race.
But more troubling to some in the Senate is that Cain founded pro-Trump group America Fighting Back.
“Do you seriously want a guy on the Fed that has a whole organization, the only purpose of it is to encourage Republicans to do whatever the president says he’d like you to do?” said one Republican senator distressed about the nomination. The senator said confirming Cain would be “hard,” but his nomination alone “might confirm Stephen Moore.”
Cain’s group recently said in a fundraising request that Republicans who opposed the president’s emergency declaration were “traitors.”
The rosier reception for Moore comes in part because Republicans will be reluctant to reject two of Trump’s Fed nominees, given their desire to protect their already shaky relationship with the president. In addition to their opposition to Trump’s tariff threats and his shake-up at the Homeland Security Department, Republicans also recently forced him to back off his demand for a new GOP health care bill.
Yet it’s not clear at all that the president is keeping in mind the fact that he will need to get 50 of 53 Senate Republicans to vote for these nominees. Asked about Cain, Sen. Pat Roberts (R-Kan.) said only: “I was not aware it was that serious of a consideration.”
Stressing that he was not singling out Cain, Sen. John Cornyn (R-Texas), a whip for six years, said the White House must simply do more to consult with Capitol Hill.
“It’s really important for the White House to work with us as they’re contemplating nominees to make sure that both the White House has reasonable expectations about confirmations. We can also communicate with the White House about what the challenges of a confirmation may be,” Cornyn said.
.. It’s not clear the president quite realizes the scale of the potential task ahead to confirm his two Fed picks. A half-dozen GOP senators are bracing for competitive races next year and do not want to be seen as Trump’s lackeys. Voting against those nominees could help them assert their independence in their voting record.
Then there are senators like Romney and Isakson who have shown little fear in confronting Trump of late. Romney voted against Trump’s national emergency declaration, while Isakson stepped into a void of Senate Republicans to defend the late Sen. John McCain (R-Ariz.) from Trump’s attacks.
They won’t be alone in scrutinizing these nominees.
“Mr. Cain did serve on the regional Federal Reserves, so that is good experience. His wanting to return to the gold standard is something that is very controversial. And I don’t know the details at this point about the sexual harassment allegations against him,” said Sen. Susan Collins (R-Maine). “Stephen Moore appears to have a host of financial and other issues that are going to need to be explored, as well as the fact that he is a very unconventional choice.”
For a $50K household, married couple, two kids, all income from earnings and standard deductions, the current tax burden is $8.3K. Under 9-9-9, that would grow to $13.5K, an increase of over $5,000 (hat tip: CCH, BS). The WaPo fact checker came to a similar conclusion. E Klein too.
(I expect that any minute now the Tax Policy Center will release a slew of data supporting these points with their much more detailed tax model.)
But Lowrie wouldn’t accept that conclusion. In fact, he asserted that their federal tax would be lower because they’d move from a 15% payroll tax to a 9% income tax. This, as I said on air, is “patently wrong.”
First of all, assuming they plan to exist, they’ll need to consume stuff, and thus they’ll also face the 9% sales tax. That already makes their tax rate 18%, higher than the 15%.
But as Michael Linden points out, and this is widely agreed upon by tax economists, the incidence of the 9% tax on business income (which denies businesses a deduction for wages paid) also hits them, which is why former Joint Tax Committee chief of staff Ed Kleinbard described the tax as a 27% payroll tax for families whose incomes derive from earnings (note that Lowrie is perfectly comfortable with the standard assumption assigning the incidence of the employers side of the payroll tax to the family—this one re the business tax is equally standard).
For a family with $500K, same assumptions as above, their tax bill would fall by $44K.
But where this plan really gets regressive is when you get up into the families who derive their income from non-labor sources. While the details of the plan are fuzzy when it comes to capital gains and dividends, it seems clear that those earning thousands or even millions of dollars in these types of non-labor income would enjoy a massive tax cut. And that would further widen the disparity between the highly preferential treatment of capital gains and dividends on the one hand, and the taxation of “ordinary” wage and salary income on the other.
We’ve got enough income and wealth inequality coming from the pretax distribution—we don’t need to exacerbate it through the tax code.
Middle class families that depend on earnings will pay more taxes under the Cain tax plan. High income families will pay a lot less. His advisors who say otherwise are misleading the electorate and that must not stand.
Herman Cain was born on December 13, 1945, in Memphis, Tennessee, to Lenora Davis Cain, a cleaning woman and domestic worker, and Luther Cain, who was raised on a farm and worked as a barber and janitor, as well as a chauffeur for The Coca-Cola Company President Robert W. Woodruff.
.. In 2006 Cain was diagnosed with Stage IV cancer in his colon and metastases to his liver and given a 30 percent chance of survival. Cain underwent surgery and chemotherapy following the diagnosis, and has since reported that he is in remission.
Disclosures filed during his campaign in 2011 categorized Cain’s wealth at that time as being between $2.9 and $6.6 million, with Cain’s combined income for both 2010 and 2011 being between $1.1 and $2.1 million.
Cain also serves as an associate minister at Antioch Baptist Church North in Atlanta, which he joined at the age of 10. The church is part of the National Baptist Convention and is politically liberal and theologically conservative; the church’s senior pastor, Rev. Cameron M. Alexander, did not share Cain’s political philosophy.
.. After completing his master’s degree from Purdue, Cain left the Department of the Navy and began working for The Coca-Cola Company in Atlanta as a computer systems analyst. In 1977, he moved to Minneapolis to join Pillsbury, soon becoming director of business analysis in its restaurant and foods group in 1978.
.. At age 36, Cain was assigned in the 1980s to analyze and manage 400 Burger King stores in the Philadelphia area. At the time, Burger King was a Pillsbury subsidiary. Under Cain, his region posted strong improvement in three years. According to a 1987 account in the Minneapolis Star Tribune, Pillsbury’s then-president Win Wallin said, “He was an excellent bet. Herman always seemed to have his act together.” At Burger King, Cain “established the BEAMER program, which taught our employees, mostly teenagers, how to make our patrons smile” by smiling themselves. It was a success: “Within three months of the program’s initiation, the sales trend was moving steadily higher.”
Cain’s success at Burger King prompted Pillsbury to appoint him president and CEO of another subsidiary, Godfather’s Pizza. On his arrival on April 1, 1986, Cain told employees, “I’m Herman Cain and this ain’t no April Fool’s joke. We are not dead. Our objective is to prove to Pillsbury and everyone else that we will survive.” Godfather’s Pizza was performing poorly, having slipped in ranks of pizza chains from third in 1985 to fifth in 1988. Under Cain’s leadership, Godfather’s closed approximately 200 restaurants and eliminated several thousand jobs, and by doing so returned to profitability. In a leveraged buyout in 1988, Cain, executive vice president and COO Ronald B. Gartlan, and a group of investors bought Godfather’s from Pillsbury.
.. Cain left Godfather’s Pizza in 1996 and moved to Washington, D.C. From 1996 to 1999 he served as CEO of the National Restaurant Association, a trade group and lobbying organization for the restaurant industry, on whose board of directors he had previously served. Cain’s lobbying work for the association led to a number of connections to Republican lawmakers and politicians. Under Cain’s leadership, the Association lobbied against increases to the minimum wage, mandatory health care benefits, regulations against smoking, and lowering the blood alcohol limit that determines whether one is driving under the influence.
.. Cain’s senior economic advisor during his 2012 presidential campaign, Rich Lowrie, who helped devise Cain’s 9–9–9 tax plan ..
.. Cain’s addresses to conservative groups were well received, and in late September and early October 2011, Cain won the straw polls of the Florida Republican Party, TeaCon, and the National Federation of Republican Women‘s Convention. “My focus groups have consistently picked Herman Cain as the most likeable candidate in the debates,” said GOP pollster Frank Luntz. “Don’t underestimate the power of likability, even in a Republican primary. The more likeable the candidate, the greater the electoral potential.”
.. Although Mitt Romney was endorsed by Cain on May 15, 2012, he would eventually lose the general election to President Obama. Cain then told Bryan Fischer that the Republican Party no longer represented the interests of conservatives in the United States and that it did not have “the ability to rebrand itself.” He believed that “a legitimate third party” would be needed to replace it.
Some Republicans are actively opposing his consideration for the Federal Reserve Board, while others are standing by the president.
Several Republicans, too, have voiced their opposition, and Majority Leader Mitch McConnell has even gone so far as to urge members of the caucus to reach out to the White House and clue the administration into their concerns before the nomination is official, CNN reports. Yet, while some Republicans have taken issue with Cain’s nomination, others — at least publicly — say they’re plenty open to considering him.
“I think he’s very qualified, he’s a business guy, he’s got experience on the board … out there in Kansas City, so I think he’s a great choice,” said Sen. David Perdue (R-GA), one of Trump’s reliable allies on the Hill who also sits on the Senate Banking Committee, which would oversee Cain’s confirmation hearing.
.. “I think sexual misconduct is wrong,” said Sen. Chuck Grassley (R-IA), while adding, “if it’s a barrier to people being in public office, the president wouldn’t be president.”.. Sen. Mitt Romney (R-UT) was among one of the earliest Republicans to come out against Cain, and Romney has said he worries Cain’s presence would make the Fed a more partisan body, given the former executive’s longstanding political support for Trump. Romney argued last week that Cain would likely help Trump fulfill his plans to slash interest rates and harm the independence of the institution guiding America’s monetary policy.
.. Growing blowback against Cain’s nomination has led Senate Republicans to stage a behind-the-scenes effort to prevent his selection from being formalized by the White House, Politico reports.
“It’s hard for me to imagine that he would be confirmed,” said Sen. Kevin Cramer (R-ND).
Still, there are lawmakers within the Republican Party who remain bullish on Cain’s chances. Supporting Cain could also be a means to align themselves more closely with Trump, especially ahead of 2020.
“I think he’d probably be confirmed,” said Sen. John Cornyn (R-TX), who noted that he did not see Republicans as divided on the matter.
But Cornyn, a top Senate Republican who recently pushed back at Trump’s staffing changes at the Department of Homeland Security, added that he’d like to see more consultation from the White House on nominees down the road.
“I don’t think it’s a given that everybody whose name gets floated, without vetting and without consultation, could get confirmed,” he said.
Republican seem less worried about Stephen Moore
Moore, the second person Trump has said he intends to appoint to the Fed, appears to be getting a warmer reception from Senate Republicans, even though he also faces challenges of his own.
Democrats also view Moore, a current fellow at conservative think tank the Heritage Foundation, as a baldly political choice — and pointedly wonder whether someone who’s encountered personal finance issues in the past is qualified to help run the US’s central bank
.. As Amanda Sakuma wrote for Vox, Moore was previously held in contempt of court for failing to pay child support and alimony to his ex-wife in the wake of their divorce settlement. He also owes more than $75,000 in taxes to the IRS, which he says he’s been paying back in the aftermath of what he claimed was a paperwork-related mishap, according to the Guardian.
Those issues, however, aren’t necessarily disqualifying for all Senate Republicans; multiple lawmakers mentioned that they were familiar with Moore and spoke positively of his consideration.
“I know Stephen Moore, he’s a smart man, he’s the head of Club for Growth,” said Sen. Richard Shelby (R-AL). “We have to do this in regular order, but I think he would probably be a good voice on the Fed. One, he’s got to be nominated first. Second, he’s got to be confirmed.”
“I said, ‘Pay your taxes; pay your support!’” Shelby said, when asked about Moore’s financial problems.
“Stephen is a solid guy, I know Stephen pretty well. I think Stephen has been right about a few things, with regard to the Fed’s treatment of interest rates, especially,” Cramer said. “I want to hear more about the specific issues surrounding some of his financial situations.”
The North Dakota senator added that he did not see Moore’s run-in with the IRS or the divorce settlement being disqualifying for his nomination if he had cleared up both issues.
Some Republicans said they’d be open to vetting both Moore and Cain further as part of the confirmation process, and making a decision after more steps had been taken. The Senate confirmation process is typically used to scrutinize potential concerns about nominees, though these lawmakers could be trying to diplomatically dodge the question of where they actually stand on the latest of Trump’s controversial nominees.
“They’re unconventional picks, and I want to see what the banking committee hearings reveal,” said Sen. Susan Collins (R-ME). “I’m sure there will be many, many questions about both nominees.”