A Trump Man for the Fed
Terry H. Schwadron
April 2, 2019
Another flawed nomination is expected by President Trump, one that will once again seek party-line confirmation in the Republican-majority Senate. This one involves conservative financial loyalist Stephen Moore for a vacancy at the Fed board of governors.
Even Moore says he is not an economist, but he has a strong interest in the same types of government policies towards business that President Trump wants — tax cuts, low-cost lending and anything that pushes growth. Mostly, however, he is a friend of economic adviser Larry Kudlow and one who called last December for the ouster of Fed Chair Jerome H. Powell because the Fed was, well, doing its job and raising interest rates by the tiniest bit. Since then, Moore has said he regretted for Powell’s ouster.
There are two open slots on the Fed’s politically independent, seven-seat board of governors, and these officials vote on interest rate policy as well as bank regulatory decisions. Once nominated, the Senate Banking Committee will vote on whether to advance the appointment, and later it will come before the full Senate.
Basically, the Fed has argued that as the economy heats, it has been necessary to make money lending slightly more expensive, to balance against inflation. The Fed does its job by monitoring a wide array of financial measures, using monetary policies to protect the balance between growth and inflation or deflation and incentive, particularly in comparison with global trends.
In backgrounding Moore, the Washington Post said Moore was one of the founders of the Club for Growth, an organization created in 1999 that advocated for tax cuts and other free-market policies. He also has written for the Wall Street Journal’s editorial page and worked at the Heritage Foundation, among other things.
He’s a well-known media pundit and played a significant role in messaging the 2017 tax cut law in the media, and aides said he’s remained close to Trump during the presidency. Past presidents have selected Fed governors with political backgrounds before, but there is little precedent for picking someone who had recently called for the ouster of the central bank chief.
Trump’s attacks against Powell and the Fed have startled a number of lawmakers, particularly Republicans. Many have stressed that the central bank needs to be immune from political influence. Still, support for Moore seems to be growing among the Republicans, who, as a party, agree with the belief that lower taxes will lead to large-scale economic growth.
It’s not unanimous, however. He was N. Gregory Mankiw, a former top economic adviser during the George W. Bush administration, in a recent blog post: “Steve is a perfectly amiable guy, but he does not have the intellectual gravitas for this important job,” wrote Mankiw, who is an economics professor at Harvard University. Mankiw write a critical review of a recent book Moore co-wrote with economist Arthur Laffer called “Trumponomics,” alleging it was “rah-rah partisan.” “The book’s over-the-top enthusiasm for U.S. President Donald Trump’s sketchy economic agenda is not likely to convince anyone not already sporting a ‘Make America Great Again’ hat,” the review said.
Moore wrote an op-ed in the Wall Street Journal this month titled “The Fed is a threat to growth.” He also has said Trump deserved the 2018 Nobel Prize in economics.
This is the same Stephen Moore who was found in contempt of court for failing to pay his ex-wife over $300,000 in alimony, child support and other costs, The Guardian reported over the weekend. A judge reprimanded talking head Stephen Moore for neglecting these debts in 2012, according to court documents.
And Bloomberg reported this week that Moore also owes over $75,000 to the IRS for unpaid taxes.
Vanity Fair,in writing about Moore, suggested that the Fed was the next in the long line of institutions for Trump to seek to undermine, to move it from being a fact-based, independent assessor of the national economy to a partisan board that would rubber-stamp Trump’s own policies.
Moore has called for the United States to return to the gold standard, where every dollar has to be backed by a certain amount of gold. The nation began to abandon this policy in the 1930s and fully dropped it in 1971, making it easier for the Fed to pump more money into the economy during times of financial duress. Moore also has insisted that the problem now is the United States is experiencing deflation, when prices fall. That’s not true, according to the government’s inflation metrics, which show that the cost of living is rising about 1.5 percent a year.
“Steve Moore is amiable, but he’s been outrageously wrong on his monetary policy prescriptions in the past and on factual points of history of what the Fed has done,” said Tony Fratto, former deputy press secretary to Bush.
In interviews with major media outlets, Moore has tried to backpedal on some of his ideas, saying he needs to “study up” on Fed policies. But when speaking with conservative radio recently, he doubled down on his argument that the United States is experiencing deflation. “If you look at many of the areas of the economy, especially agricultural products, oil and gas, they’ve actually been falling in price. That’s a sign of deflation. I know that’s a controversial position,” Moore said. “I believe we don’t have price stability right now.”
Once again, we should be asking whether Moore is the best person for the job.