Despite the setback, Trump is not planning to back away from his plan to name allies to the two remaining openings on the Fed, according to a person familiar with the situation who was not authorized to comment publicly and spoke on the condition of anonymity.
Cain’s withdrawal is a setback in Trump’s effort to install political allies on the Fed board, part of a broader tug of war between the central bank’s leaders and the president over the Fed’s stewardship of the economy.
Cain called the White House on Monday morning to say he did not want to be considered for the position anymore, according to Cain and a person familiar with the call. Cain expressed concern that he would be taking a pay cut — Fed governors are paid $183,100 a year — and that he would not be as free to speak publicly as he is on his radio show.
Last week, Cain insisted that he would continue to vie for the role, saying it was “not in my DNA” to drop out, but he said in an online column Monday that he prayed about it over the weekend and “felt God was giving me my answer.”
“It was an honor to be considered,” he wrote.
The White House is considering a number of other candidates to fill the final opening on the seven-member board. While Fed and White House leaders continue to speak on a regular basis, as is typical, the Fed is no longer being consulted on nominations, according to two people familiar with the matter.
Cain would have needed near-unanimous Republican backing in the Senate for confirmation. But four Republicans have said they would not vote for the nominee, effectively killing his chances because Republicans hold 53 seats in the Senate and no Democrats were expected to support him.
With Cain out, the focus now shifts to Stephen Moore, Trump’s other planned nominee for the board. Moore was an adviser to the Trump campaign and has been a prominent supporter of the president.
Democratic leaders see Moore as an equally problematic and unqualified nominee, but Republicans remain open to him, with none saying they would vote against him.
“Herman Cain was woefully unqualified to be on the Federal Reserve and his failure to garner adequate support should not be used as a pathway by Senate Republicans to approve Stephen Moore, who is equally unqualified, and perhaps more political,” Senate Minority Leader Charles E. Schumer (D-N.Y.) said in a statement Monday. “Mr. Moore, like Mr. Cain, poses a danger to the economic stability of our country.”
Moore is still going through the vetting process and has not been formally nominated yet by the White House, which continues to advocate for Moore.
“We back Moore wholeheartedly,” said Larry Kudlow, Trump’s top economic adviser.
Trump was irate after the Fed raised interest rates multiple times in 2018, hikes that wound down the central bank’s decade-long effort to boost economic growth and fight unemployment after the Great Recession. The increases were aimed at guarding against inflation and preserving the Fed’s ability to fight a future downturn, but Trump accused the central bank of constraining growth and triggering the stock market sell-off late last year.
Cain and Moore said they support lowering interest rates, a move that would boost growth in the run-up to the president’s reelection campaign. Fed Chair Jerome H. Powell has said the bank has no plans to raise rates again this year, citing uncertainty about the pace of future growth.
Some lawmakers, economists and Wall Street investors questioned Cain’s qualifications for the central bank and noted the allegations of sexual harassment and misconduct that derailed his 2012 presidential campaign. Cain has denied the allegations, casting them as old news, but one of the accusers said she would testify at his confirmation hearing if given the chance.
Many also had concerns that the nomination of a close political ally of the president who has raised hundreds of thousands of dollars for Trump and lashed out at his critics would threaten the bank’s independence.
Typically, nominees undergo an extensive vetting process before the president announces them, but Trump appears to have announced Cain as his planned nominee without fully coordinating with GOP leaders.
That approach appeared to come up short when Sen. Kevin Cramer (N.D.) on April 11 joined three other Republicans — Sens. Mitt Romney (Utah), Lisa Murkowski (Alaska) and Cory Gardner (Colo.) — in announcing opposition to Cain’s nomination.
“I don’t think Herman Cain would be confirmed by the Senate, and I think the president would be wise to find someone who is less partisan and more experienced in the world of economics,” Romney said in explaining why he did not support the nominee.
Cain has taken an adversarial stance against some GOP incumbents. The chairman of Cain's America Fighting Back PAC in March sent an email saying 12 GOP senators — including Romney and Murkowski — were "traitors" for voting against Trump's declaration of a national emergency at the southern border. He also said the Senate Banking Committee, which would have handled his nomination, was full of "yahoos."
As for Moore, Democratic senator and presidential candidate Elizabeth Warren (Mass.) sent him a scathing letter this month accusing him of lacking a good grasp on “basic mathematical and economic concepts.” The letter included nine questions for Moore that attempt to clarify whether he still holds some of his more iconoclastic views.
In a CNN appearance, Moore claimed he had never been in favor of the gold standard, for which every dollar is backed by some gold. The network proceeded to play clips from three speeches in which Moore clearly expressed support for the policy, which Cain also endorses.
Moore also called for interest rates to rise in the midst of the financial crisis, a policy that many say would have caused the country more harm. Moore started calling for a cut in interest rates once Trump took office. Recently, Moore has said there is deflation in the United States, even though government statistics and the White House Council of Economic Advisers all say inflation is rising at about 2 percent a year.
This is not the first time Trump has opted to publicize a pick before a full vetting has been completed. He named Rear Adm. Ronny L. Jackson, the presidential physician, to be secretary of the Department of Veterans Affairs last year, only to watch the nomination fall apart as allegations of misconduct surfaced. His original choice for labor secretary, Andrew Puzder, withdrew after it surfaced that he had an undocumented housekeeper.
In the 1990s, Cain served on the Federal Reserve Bank of Kansas City’s board of directors, a group of business and community leaders who advise the head of the Kansas City Fed on how the economy is doing. The Fed has often had business leaders on its board in addition to PhD economists and Wall Street bankers, but Cain’s views are seen as outside the mainstream.
Among the ideas Cain has supported is the return to the gold standard system the United States abandoned nearly a half-century ago. The system would have made it almost impossible for the central bank to undertake many of the rescue measures it did during and after the 2008-2009 financial crisis.
“Trump’s other nominees for the Fed were eminently qualified people, but all of a sudden, Trump has gone off the rails with Stephen Moore and Herman Cain,” said Robert Brusca, chief economist at the consulting firm Fact and Opinion Economics.
A number of Republicans, however, have expressed interest in having a wider variety of views on the Fed board, such as those of Moore, who has been a big proponent of tax cuts.
Ron Paul, a Republican ex-congressman from Texas and former presidential candidate, called Cain and Moore a “basic improvement” over many of the people who have served in the Fed in recent years.
“It’s a good idea to have Cain and Moore at the Fed. They at least have knowledge and respect for a different way of doing things,” said Paul, a libertarian and advocate for a return to the gold standard.
The Fed plays a large role in steering the economy and overseeing banks. The central bank is tasked with making the best long-term decisions for the economy, steering clear of political calls to make short-term moves that favor certain constituencies.
“We are an organization devoted to public service. We are professional. We make decisions based on facts and evidence and analysis, and we stay out of politics,” former Fed chair Janet L. Yellen said this month at a forum at the Dallas Fed. “Nothing we do is political.”