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.
When the history of the Trump administration is written, one moment in mid-2017 may be seen as decisive—a moment when a staff member saved the president from himself.
On June 17, according to the report by special counsel Robert Mueller released last week, the president called White House Counsel Don McGahn at home and ordered him to tell the Justice Department to fire Mr. Mueller, just as the special counsel’s investigation into Russian meddling in the 2016 presidential election was getting under way. Mr. McGahn declined to carry out the order.
Then, about six months later, when word of the president’s attempt to fire the special counsel leaked out, Mr. Trump met with Mr. McGahn in the Oval Office and pressured him to deny the account publicly. Again, Mr. McGahn refused.
Had Mr. McGahn agreed to do what Mr. Trump wanted—to have Mr. Mueller fired and later create a false narrative about the effort—the case that the president had attempted to obstruct justice would have been much stronger. As it is, Mr. Mueller declined to say whether the president had or hadn’t obstructed justice; the Justice Department has decided there wasn’t sufficient evidence to show he did so; and Democratic leaders in Congress, much as they are under pressure from activists in the party to impeach Mr. Trump, are skeptical they have a case for doing so.
The Trump-McGahn exchanges point to an important, larger truth: Presidents need people around them who aren’t simply yes-men and yes-women who will blindly do their bidding. They need aides willing to take the tough step of challenging the leader of the free world. One key question is whether Mr. Trump still has enough of them around him.
Anybody who manages an organization recognizes—or should recognize—the need to have subordinates who can walk the fine line between being loyal and being willing to tell the president he or she is making a mistake. Playing that role as a staff member is particularly tough in the rarified air of the White House—and especially in this White House, where the boss has shown a penchant for lashing out at anyone seen as disloyal.
Yet history is replete with examples of the need to have White House aides willing to stand up to the boss. “That lesson cries out” from the Mueller report, says presidential historian Michael Beschloss.
President Richard Nixon, a mercurial man, was self-aware enough to recognize his need for such staff work. When he was preparing to take office, he wrote a memo to his chief of staff, H.R. Haldeman, specifically authorizing him to ignore orders that seemed impetuous or ordered in anger. “There may be times when you or others may determine that the action I have requested should not be taken,” Nixon wrote, according to a definitive biography by John A. Farrell. “I will accept such decisions but I must know about them.”
Mr. Haldeman and others acted accordingly, a practice that proved crucial as Nixon descended into depression amidst the Watergate crisis that ended his presidency. One Nixon aide recalled years later that the president, apparently drunk, encountered him in a White House hallway late at night during the opening phases of the 1973 Arab-Israeli war and seemed to order him to unleash an American bombing attack on Syria. The order was ignored, and apparently forgotten by the president the next day.
Aides to President Ronald Reagan were frequently excoriated by conservatives for failing to “let Reagan be Reagan” when they pushed back against presidential instincts. Yet Mr. Reagan always defended his staff’s right to do so, and disputed the idea that he was being badly served by strong aides.
In his memoir, former Defense Secretary Robert Gates recounts a bitter argument with President Obama over implementation of the “don’t ask, don’t tell” policy that compelled military commanders to discharge or separate gays and lesbians from other troops if their sexual orientation became known. That policy was being disputed in the courts, and there was a movement in Congress to change the law. Mr. Obama wanted his defense chief to suspend implementation of the policy in the meantime.
Though he supported changing the law, Mr. Gates refused, arguing that existing law couldn’t simply be disregarded. Congress soon passed legislation changing the practice, which included a period to certify that a new policy could be implemented smoothly. It’s likely the change went down better with commanders because Mr. Gates had shown the need to abide strictly by law.
The year was 1980, the location was Houston and the question came from the crowd at a presidential primary debate between Ronald Reagan and George H.W. Bush — two bellwether conservatives who would eventually serve together as president and vice president.
Should “illegal aliens,” the crowd member asked, be allowed to attend U.S. public schools?
Bush said immigration policy needed to be “sensitive” and “understanding” toward the “really honorable, decent, family-loving people” that had crossed the U.S.-Mexico border without documentation.
Reagan echoed that sentiment.
“Rather than talking about putting up a fence, why don’t we work out some recognition of our mutual problems, make it possible for them to come here legally with a work permit,” he said. “And then while they’re working and earning here, they pay taxes here. And when they want to go back they can go back.”
.. Reagan’s words that night, and his stance in countless other public and private statements as president, contrast starkly with the false history lesson President Trump offered Friday in an early-morning tweet, hours before a potential government shutdown over funding for the president’s border wall.
.. In fact, Reagan signed a sweeping immigration reform bill into law in 1986, which made any immigrant who entered the country before 1982 eligible for amnesty.
.. “The memorable thing about Reagan is that he was a Californian,” Meissner said. “He was not anti-immigration.”
.. “God made Mexico and the United States neighbors, but it is our duty and the duty of generations yet to come to make sure that we remain friends,” Reagan said during a 1981 welcoming ceremony for Mexican President Jose Lopez Portillo. “Our very proximity is an opportunity to demonstrate to the world how two nations, talking together as equals, as partners, as friends, can solve their problems and deepen their mutual respect.”
.. U.S. Border Control didn’t begin building physical barriers on the southern border until 1990, the year after Reagan left office, in which a 14-mile long “primary fence” was erected in San Diego. It wasn’t completed until 1993.
With the closing of the Weekly Standard, an influential publication that many considered a respectable, center-right, alternative to more pro-Trump outlets such as Breitbart and Fox News, and the continued ostracization of “Never-Trump conservatives” from the Republican Party, many wonder who, if anyone, will carry the torch of prudential conservatism while President Trump occupies the White House.
Just last week, a group of prominent intellectuals and political figures including Maryland Gov.
- Larry Hogan,
- Bill Kristol and
- David Frum
gathered for a conference at Washington’s Niskanen Center titled “Starting Over: The Center-Right After Trump.” The underlying assumption of the conference: It’s time for moderate conservatives to regroup and reconsider their relationship to a Republican Party that has been overrun by populists, nationalists and demagogues.
As someone who runs an organization founded at the time of the Iraq War with the aim of changing the direction of American conservatism, I can sympathize with their efforts, but I fundamentally disagree on their diagnosis of the problem. In the long run, both the conservative movement and Republican Party will be better off for having had Donald Trump shatter the combination of neoconservatism and Reaganism that held the political right captive and blinded since the end of the Cold War. Ronald Reagan was the statesman that America needed for his time, but the clock had run out on many of his policy prescriptions and it took a “hurricane,” as the Niskanen Center conference described it, like Trump to wake up conservatism — and America.
.. I need not provide an exhaustive list, as Time magazine’s October cover story by Sam Tanenhaus, “How Trumpism Will Outlast Trump,” did a good job surveying the landscape that includes thinkers such as
- Julius Krein at American Affairs,
- Daniel McCarthy at Modern Age,
- Yuval Levin at National Affairs,
- Michael Anton at Hillsdale College and
- David Azerrad at the Heritage Foundation.
.. What does this new program for the right entail if not a return to the neoconservatism of the George W. Bush years? It’s time for Republicans to embrace a “Main Street” conservatism that prizes solidarity over individualism and culture over efficiency. America needs a foreign policy that serves our vital national interests by securing the safety and happiness of the American people. This means putting an end to the regime-change and nation-building experiments that have devastated Afghanistan, Iraq, Syria and Libya; ending U.S. support for the Saudis’ involvement in the Yemeni civil war; reclaiming our national sovereignty; and prioritizing diplomacy over intervention
.. On domestic issues, especially when our country is bitterly divided along partisan lines, we must decentralize both political and economic power to bring it closer to the people. This would allow local and state governments greater flexibility to address their unique problems, letting California be California and Texas be Texas.
.. Regarding the problem of economic concentration, conservatives should stand up to the crony capitalism that has protected big banks and defense contractors, and revisit antitrust enforcement to prevent corporate monopolies from stamping out competition and entrepreneurship. And finally, conservatives should adopt a cultural platform with a renewed focus on civic education; implementing economic and social policies that strengthen families, such as paid family leave and an increase in the child tax credit; promoting vocational training as a dignified alternative to traditional universities; and working toward an immigration policy that better balances economic and cultural concerns.
.. When searching for a prudential conservatism today, it’s best to ignore the advice of those who brought us the Iraq War, the hollowing out of our industrial base and our broken immigration system. The future belongs to conservatives who take Middle America seriously and actually care about the systemic problems that drove the Rust Belt into the arms of then-candidate Trump.