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.
Confining Trump to a Trappist monastery for three months might help a bit. But it might not: much of the damage has already been done.
.. Balderson probably owes his win to a late endorsement ad cut by GOP Gov. John Kasich, not a late rally by President Trump,
.. Trump’s support among white voters without a college degree fell from fifty-seven per cent in June to forty-nine per cent in July.
And his disapproval rating went from thirty-six per cent to forty-seven per cent.
.. But there is no such doubt about how Trump turns off many affluent, college-educated Republicans.
.. “This is all of a piece with the intuition nationally that college-educated whites are turning away from the Republican Party in reaction to Donald Trump’s presidency,”
.. White House aides are now “mapping out plans for the fall that would offer a variety of options to Republican candidates, including visits by the president’s daughter Ivanka Trump to blue states and presidential tweets to bolster red-state allies.”
.. the thinking is to use Trump to boost turnout in areas where he is popular, but to keep him away from latte-sipping Republicans in the ’burbs
.. It’s fanciful to imagine that he could spend September and October whipping up his diehard supporters at rallies in places such as Charleston, West Virginia, and Bismarck, North Dakota, without entering the consciousness of Republican voters in the areas surrounding Chicago, Columbus, and Philadelphia.
.. it’s looking like House Speaker Paul Ryan and roughly three dozen other House Republicans knew what they were doing when they announced that they would retire instead of seek reëlection this year.
Tackling the growing costs of entitlements doesn’t mean Americans must turn their backs on those who have fallen on hard times and need help. As governor of Ohio, I oversaw an effort that reformed our Medicaid program dramatically. Without denying coverage to those who relied on it, we cut annual growth from a 9% yearly average in 2009-11 to an average of less than 2% since 2016. Success is possible.
.. Remember the example of 1997, when a bipartisan coalition in Congress worked with a Democratic president to reform the welfare system, rein in military spending, and balance the federal budget.
But just because Trump seems dominant today doesn’t mean that anti-Trump principles — family values, for instance, or suspicion toward Russia, or deficit reduction, or simple decorum — can’t find an audience in a 2020 primary.
.. Most Republicans like the state of Trump’s GOP just fine; there is no groundswell for a #NeverTrump-er to rescue the party. In the most recent CNN/SSRS poll, the president’s approval rating among Republicans was 86 percent.
.. The GOP may or may not face danger at the ballot box in 2018 and 2020, but it is doomed in the long run if no Republican stands for the principles that the party has for so long said it defends: governmental restraint and individual liberty.
.. since 1968, serious primary challengers to incumbent presidents have been one of the more effective vehicles to push a party to change its ideas, rethink its core constituencies and remake its platform.
.. Eugene McCarthy, Ronald Reagan, Edward Kennedy and Pat Buchanan helped sink the incumbent’s reelection chances and alter their parties’ direction over the long term.
.. Reagan’s spirited 1976 challenge to President Gerald Ford pivoted the GOP toward the former California governor’s anti-big-government, hawkish views.
.. Kennedy ran on the idea that Carter had abandoned Democratic principles of using government to lessen income inequality and fight for the underdog. “It’s time to have a real Democrat in the White House again,” he declared in 1979.
.. By defeating Carter in New York and Connecticut, Kennedy shifted the party template to one that fit with Northeastern liberalism and further weakened the Democrats in the South.
.. In the long run, Kennedy’s campaign cemented Democrats as the party of traditionally disenfranchised minorities, helped give it an electoral advantage among women and sought (with mixed success) to put economic inequality at the center of its platform.
.. Buchanan used his 1992 race against President George H.W. Bush to keep an alternate tradition alive within the GOP. Buchanan’s bid, in retrospect, was a marker on the road to Trumpism.
.. should someone like Kasich mount a third-party bid, he could split the anti-Trump general-election vote and hand Trump another term.
The ships are leaving the sinking rat.
That’s the moral of Paul Ryan’s unexpected but not surprising announcement this week that he will give up the speakership
.. Many of these Republicans once believed that Donald Trump alone possessed the kind of political virility needed to vanquish Hillary Clinton and make America great again. Only belatedly have they figured out that the virility comes with a case of syphilis.
.. “The litmus test for being a Republican these days is not about any given set of ideals or principles; it’s about loyalty to the man, and I think that’s challenging.”
.. The world will little note nor long remember that in 2017 Republicans cut the top marginal rate to 37 percent from 39.6 percent and otherwise tried but failed to kill Obamacare
.. A conservative rejoinder to this critique is that the speaker had no choice; that Trump was the lemon with which he had to make lemonade. Nonsense. Congress and the White House are coequals, and Ryan and other Republicans who saw Trump for what he is never owed him obeisance. They owed the country an alternative political vision, untainted by Trumpism, which could emerge from the debacle of this presidency with clean hands. Ryan’s failure to deliver one will be remembered as the central fact of his once-bright career.
.. Is there an alternative?
Among Republicans, Ohio’s John Kasich, Nebraska’s Ben Sasse, and Arizona’s Jeff Flake and John McCain have sought in different ways to offer one, without immediate success but with integrity, honor and a sense of the long view.
.. “The center-right and center-left are still joined by a broad set of common values, including respect for free speech and dissent, a belief in the benefits of international trade and immigration, respect for law and procedural legitimacy, a suspicion of cults of personality, and an understanding that free societies require protection from authoritarians promising easy fixes to complex problems.”
Republican politicians throughout the age of Trump, and again and again they have chosen to die in the dark.
This was true of Trump’s strongest primary-season rivals, who fought him directly and concertedly during exactly one of the umpteen debates and then, finding open war hard going, chose to lose and bow out as though Trump were a normal rival rather than the fundamentally unfit figure they had described just a few short weeks before.
It was true of the party functionaries, the hapless Reince Priebus above all, who denied the residual Republican forces resisting Trump the chance to fight him one last time in the light of the convention floor.
.. It was true of Paul Ryan; it was true even of John McCain... It was not true of everyone. Mitt Romney and John Kasich declined to fall on the sword of party unity; so did George W. Bush and his father; so did some governors and a few junior senators, Mike Lee and Ben Sasse and Jeff Flake... while they refused to make the quietus, to strangle their own convictions in Trump’s ample shadow, they declined many chances to keep up the fight openly as well... The nomination of a figure like Trump, a clear threat to both the professed beliefs of his party’s leaders and to basic competence in presidential government, is the sort of shattering event that in the past would have prompted a real schism or independent candidacy... But Romney couldn’t talk Kasich into being that independent candidate, all the other possibilities demurred.. Now, almost a year into the Trump presidency, a similar dynamic is playing out. There is a small but significant Republican opposition to Trump, but its leading figures still don’t want to go to war with him directly, preferring philosophical attacks and tactical withdrawal to confrontation and probable defeat... To the extent that there’s a plausible theory behind all of these halfhearted efforts, it’s that resisting Trump too vigorously only strengthens his hold on the party’s base, by vindicating his claim to have all the establishment arrayed against him... In the end, if you want Republican voters to reject Trumpism, you need to give them clear electoral opportunities to do so — even if you expect defeat.. an anti-Trump movement that gives high-minded speeches but never mounts candidates confirms Trump’s claim to face establishment opposition while also confirming his judgment of the establishment’s guts and stamina — proving that they’re all low-energy, all “liddle” men, all unwilling to fight him man to man... If Corker really means what he keeps saying about the danger posed by Trump’s effective incapacity, he should call openly for impeachment or for 25th Amendment proceedings.. If Flake really means what he said in his impassioned speech, and he doesn’t want to waste time and energy on a foredoomed Senate primary campaign, then he should choose a different hopeless-seeming cause and primary Trump in 2020. George W. Bush should endorse him. So should McCain, and Corker, and Romney, and Kasich, and Sasse, and the rest of the anti-Trump list... They should expect to lose, and badly, but they should make Trump actually defeat them, instead of just clearing the field for his second nomination... And not only for the sake of their honor. The president’s G.O.P. critics should engage in electoral battle because the act of campaigning, the work of actually trying to persuade voters, is the only way anti-Trump Republicans will come to grips with the legitimate reasons that their ideas had become so unpopular that voters opted for demagoguery instead... A speechifying anti-Trumpism, distant from the fray, will always be self-regarding and self-deceiving — unwilling to see how the Iraq War discredited both the Bushist and McCainian styles of right-wing internationalism, incapable of addressing the economic disappointments that turned voters against Flake’s Goldwaterite libertarianism and Romney’s “trust me, I’m a businessman” promises... Only in actual political competition can the Republican elite reckon with why it lost its party, and how it might win again.. I think the G.O.P. is more likely to be renewed by someone who currently supports Trump or someone not yet active in politics than it is by the men resisting the president today.