President Donald Trump’s Fed appointments so far have represented a modest shift away from rule-by-economists. Chairman Jerome Powell and Vice Chairman for Supervision Randal Quarles are both lawyers with a mix of government and private-sector experience. Trump also nominated two economics Ph.D.s with Fed backgrounds, but the Republican Senate never got around to confirming either. Now, of course, he has made known that he wants to nominate Stephen Moore, who has a master’s degree in economics but is known mainly for his political activism — he co-founded and was first president of the Club for Growth, which pushes, often successfully, to elect anti-tax candidates, and was a Trump adviser in the 2016 campaign — and his punditry.
Moore’s punditry, it must be said, gets some pretty dire reviews, even from people who share many of his political views. He “does not have the intellectual gravitas for this important job,” prominent Republican economist N. Gregory Mankiw opined. “The consensus in conservative academic think tank land is that Moore is an enormous hack,” conservative New York Times columnist Ross Douthat wrote on Twitter.
I have followed Moore’s opinion journalism on taxes for many years and have been similarly unimpressed. His less voluminous output on monetary policy seems, if anything, even worse. On taxes, Moore has espoused the consistent and often correct view that cutting them can bring higher economic growth; the problem is that the arguments and data he marshals to support this view are often dodgy. On monetary policy, Moore’s factual claims have been at least as unreliable — the Cato Institute’s George Selgin and the Washington Post’s Catherine Rampell both have detailed accounts of his bizarre (and false) claim that former Federal Reserve chairman Paul Volcker swore by a “Volcker rule” of targeting commodity prices at the Fed — and he also has no coherent ideology, seeming instead to favor tight money when a Democrat is in the White House and easy money when a Republican is. Not just an enormous hack, then, but a transparently partisan hack.
Republicans press Trump to drop Herman Cain’s Fed nomination
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.”
Herman Cain is the latest test of Senate Republicans’ loyalty to Trump
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.”
It’s Up To the Senate Whether the Fed Is Politicized
How the Federal Reserve could become a partisan weapon
For more than a generation, the Federal Reserve has floated above politics, even as partisan conflict has consumed other public institutions. Republican chairmen, including incumbent Jerome Powell, have run the Fed for 28 of the last 32 years, yet you’d struggle to find a trace of monetary favoritism when Republicans occupied the White House.
That political appointees have behaved so apolitically is not a law but a norm taken for granted by both parties—until now. At first, President Trump observed that norm: His Fed appointments were praised as qualified, competent and apolitical, including Mr. Powell, at the time a sitting governor. But he is now breaking from that norm. He has publicly attacked Mr. Powell for raising interest rates and has proposed naming to the Fed two loyalists who share his views.
It takes more than just a president to politicize the Fed: Its chairman and Congress must also acquiesce. For now, Mr. Powell and his current colleagues seem unlikely to be swayed. The real test is whether Congress is prepared to let Fed appointments become, as they are with the Supreme Court, a tool of partisan advantage.
.. Mr. Trump’s two proposed nominees have drawn criticism over their qualifications. Stephen Moore has a degree in economics, and Herman Cain was a successful businessman, but neither has worked in finance, or has a deep grasp of monetary policy. (While Mr. Cain chaired the board of one of the Fed’s 12 reserve banks, that position carries no monetary responsibility.) Their main qualification is that they are vocal advocates for Mr. Trump. Mr. Moore this week said the Fed may be endangering Mr. Trump’s re-election prospects with tight monetary policy... If they don’t agree, they’ll be just two votes on the seven-member board of governors that, along with five of the 12 reserve bank presidents, decides monetary policy, usually by consensus. Two dissidents can make life hard for the chairman, with critical speeches and media appearances. But if their arguments aren’t credible, they won’t sway any other members. Indeed, other officials may draw closer to Mr. Powell out of solidarity… Historically, only the Fed chairman can bend policy to a president’s wishes. Arthur Burns did so for Richard Nixon in the early 1970s because he saw himself as part of Mr. Nixon’s team. Ronald Reagan appointed four governors who in 1986 briefly approved a rate cut over the opposition of then-chairman Paul Volcker. When Mr. Volcker stepped down the next year, Mr. Reagan named Alan Greenspan, a longtime Republican insider, to succeed him. But Mr. Greenspan proved as independent as Mr. Volcker, repeatedly defying White House pressure to keep rates down. From 1993 until last year, presidents stopped trying.