For the second time in 10 days, one of President Trump’s picks for the Federal Reserve has pulled out of consideration because Republican senators said they wouldn’t confirm him. First it was Herman Cain. Now it’s Stephen Moore.
It’s easy to see this as a White House vetting problem. Cain dropped out of the 2012 GOP presidential primary because of sexual harassment allegations, and Moore’s history of controversial commentary on gender and race were right there for anybody with a LexisNexis login — or even just Google — to find. (CNN’s K-File unearthed a veritable trove of Moore’s not-so-greatest hits.)
The more significant takeaway, though, may be this: Trump is trying to install political allies willing to do his bidding in jobs that are supposed to be insulated from partisan politics. To do that, Trump has take some fliers on damaged-goods nominees — that wound up blowing up in his face.
Moore and Cain don’t just share messy paper trails. They also happen to have taken a position that was out of step with most top economists but very much in step with Trump: They both talked about cutting the Fed’s interest rates. Those rates have been intermittently rising, and Trump has routinely attacked Fed Chairman Jerome H. Powell for the hikes, suggesting it has hampered the progress of Trump’s economy. Economists generally say the hikes are good because they prevent inflation and signify a strengthening economy.
Moore has recently called for Powell to resign — though he later backed off that — and pushed for a half a percentage point rate cut. He’s also the very definition of a political ideologue, having run the conservative Club for Growth and generally focused on pushing for tax cuts, rather than studied monetary policy.
Cain has also criticized the Fed’s rate hikes, after previously suggesting they were good things. And like Moore, his background is out of step with your usual Fed nominee. He did serve on the Federal Reserve Bank of Kansas City’s board of directors, but he did that as a business leader who advised on the strength of the economy, not as an expert on monetary policy.
Robert Brusca, the chief economist at the consulting firm Fact and Opinion Economics, put it this way: “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.”
Why might that be? Did Trump just happen to pick two nontraditional nominees with loads of baggage for the same position? Or did he find two people who advocated for something few others would, both with histories as partisan political figures, and deduce that they would help bring Powell to heel?
The story of Cain’s and Moore’s effective defeats will likely be understood as one about their foibles rising to the surface, but we shouldn’t underestimate the role that their interest-rate views and partisan pasts played.
Moore tried to combat this perception, telling the New York Times he wouldn’t be a “sycophant” for Trump. But it lingered for some senators.
“I would like to see nominees that are economists first and not partisans,” Sen. Mitt Romney (R-Utah) told Politico recently. “I think it’s important that the Fed be a nonpartisan entity.”
Trump rather clearly was trying to change that, and he used the tools he had available to address the meddling Fed. Unfortunately for him, they were damaged tools with whom the GOP-controlled Senate wanted nothing to do.
The question from here is whether Trump can find another nominee who both wants lower rates and is confirmable. If he nominates yet another candidate who advocates for lower raters — when most economists won’t — it’ll be pretty clear what game he’s playing.