President Trump’s effort to reshape the Federal Reserve and accelerate economic growth hit a setback Tuesday as multiple Republican senators criticized or outright rejected the president’s plans to nominate political supporter Stephen Moore.
Ernst said she didn’t think Moore would be confirmed, adding that “several” senators agree with her on Moore’s unsuitability for one of the nation’s top positions steering the economy. A simple majority is needed to confirm Moore to the Fed board, but with Democrats controlling 47 Senate seats, he can lose precious few Republicans.
At least seven GOP senators have taken issue with Moore’s provocative past columns and statements that have come to light since his name began to circulate publicly as a potential Fed nominee in March.
Moore’s quickly declining chances of winning Senate approval show the risks of a president determined to reshape the government by whatever means.
Trump has grown increasingly angry with the Fed as he has complained that Fed Chair Jerome H. Powell, whom he picked, has raised interest rates too quickly. Trump says that those decisions have slowed the economy unnecessarily and he’s expressed to aides that could harm his reelection chances, according to current and former advisers who spoke on the condition of anonymity.
Amid that frustration, Trump turned to Moore and another outspoken supporter, former GOP presidential candidate Herman Cain, to fill two open seats on the Fed’s board of governors, which sets interest rate policy. Trump indicated he supported the men, although he did not formally nominate either.
Cain’s candidacy was short-lived amid opposition from Senate Republicans concerned about his economic record and allegations of sexual harassment that had previously doomed his presidential bid.
White House officials say Trump is inclined to stick with Moore, even as some of his advisers increasingly question whether that’s the best path. The White House also signaled support for Cain until shortly before he dropped out.
“The president stands behind him,” Kellyanne Conway, counselor to the president, said Tuesday of Moore. “He’s somebody that gets the economy and I guess we’ll continue to focus on that.”
Moore said Tuesday that he talked to the White House and they are “full steam ahead” on his nomination and that he is filling out papers for his background check. Moore said he wants to meet with senators about his record.
“If it’s about the economy and my record as an economist, I’ll probably get confirmed,” he said. “If it becomes about my writings from 25 years ago, I might not. That’s why I am trying to turn it back to the economy.”
The Fed is designed to be independent of politics, but Trump has broken with the precedent set by recent presidents by forcefully urging the Fed to cut rates and bring back “quantitative easing,” a policy of bond purchases used to stimulate economic growth that was adopted in the aftermath of the financial crisis.
Powell and the rest of the Fed leaders have been pushing to withdraw stimulus, given the economy’s strength, although the Fed recently decided to pause. The economy grew at a 3.2 percent annualized rate in the first quarter of 2019, according to data released Friday, continuing a strong run of recent years.
“Moore has been clear that his agenda at the Fed would be to further the president’s agenda,” said Diane Swonk, chief economist at Grant Thornton and a longtime Fed adviser. “It’s a dangerous precedent to politicize the Fed with the poison that has already affected our political system.”
Unlike most potential nominees for the Fed, Moore has been outspoken in defending his record in media interviews since his name was floated. He also has met with donors to praise Trump in recent weeks — even giving out charts that emphasize how well the economy has been performing under Trump.
“He had a PowerPoint presentation about how Trump was good and Democrats were bad,” said Dan Eberhart, a Trump donor who attended a FreedomWorks conference with Moore. “He was praising Trump’s economic policies extensively. He was being very vocal in his support of Trump.”
Eberhart and Swonk both said they were surprised that Moore was so vocal while under consideration for a position.
“Normally people stay quiet and try not to make mistakes, but he didn’t seem to be following that message,” Eberhart said.
Trump routinely cites the growth and low unemployment the economy has been enjoying since he took office. If the economy keeps growing through July, which appears almost certain, this expansion will become the longest in U.S. history.
“Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening. We have the potential to go up like a rocket if we did some lowering of rates, like one point, and some quantitative easing,” Trump tweeted Tuesday.
Trump has attacked Powell and told aides he regrets appointing him. He has offered near-constant criticism of Powell to lawmakers, supporters and almost anyone he comes in contact with.
“Politicians do think shorter term. They want to get reelected. The central bank needs to think long-term. Monetary policy takes a long time to have an effect,” said Frederic Mishkin, a former Fed governor appointed by President George W. Bush.
After Powell raised interest rates a full percentage point last year — to just shy of 2.5 percent — Trump decided he would nominate Moore, a longtime conservative commentator, and Cain, both of whom publicly said that interest rates need to come down.
While Republican senators didn’t say with full confidence Moore wouldn’t be confirmed, they sent strong signs that his nomination was imperiled.
“I think he’s probably down to the high water mark now of 50 or 51,” said Sen. Tim Scott (R-S.C.), who declined to say how he would vote and said he wanted to review Moore’s record as a whole.
Trump is being egged on by his supporters, who say the president should pick officials at the Fed whom he trusts, not someone whose qualifications line up neatly with past central bank appointees, who are typically PhD economists or Wall Street bankers.
At a gathering with supporters in Florida recently, Trump said he needed to get some of his own people on the board, according to attendees.
Before September, Trump rarely talked about the Fed and ceded almost all decision-making over Fed personnel to Treasury Secretary Steven Mnuchin and other economic advisers, but he has since wrested the process away. The Fed used to be in close contact with the White House on nominations, but that has stopped.
Trump has blamed Mnuchin at least six times in recent weeks for the selection of Powell, according to interviews with lawmakers, supporters and aides who have spoken to the president and spoke on the condition of anonymity.
“You give him something bad and he never forgets,” said a Trump adviser who frequently speaks with him, describing his animus toward Mnuchin.
Two spots remain on the Fed’s seven-seat board of governors. Trump has appointed four of the current Fed governors.
Moore, 59, has a master’s degree in economics and has spent most of his career advocating for tax cuts as a fellow at the conservative Heritage Foundation, a Wall Street Journal editorial board member and president of the Club for Growth.
Moore apologized over the weekend for past comments about women, but three other female Republican senators — Susan Collins (Maine), Marsha Blackburn (Tenn.) and Shelley Moore Capito (W. Va.) — expressed concerns. They cited his comments saying there could be societal problems if men were not the breadwinners in the family, denouncing coed student sports and saying female athletes do “inferior work” to men.
“It’s hard to look past some of those [comments],” Capito said.
Blackburn said she was troubled by what he said as recently as 2014, when he wrote a column questioning whether women outearning men would cause societal unrest.
“Of course his comments are something that are not good and you can guarantee — be guaranteed absolutely without fail — if I visit with him that would be a topic of discussion,” Blackburn said.
Collins, another GOP swing vote, said that she wasn’t just concerned about Moore’s comments on women but also whether he would maintain the Fed’s independence from politics.
“Obviously some of his past writings are of concern. I feel strongly about the independence of the Federal Reserve. I would also want to explore that issue with him,” said Collins.
Damian Paletta, Erica Werner and Seung Min Kim contributed to this report.