Commentary

Stephen Moore Does Not Lack Independence, Is Best Pick for Fed

By Phil Kerpen | April 24, 2019 | 2:10pm EDT
Economist Stephen Moore and President Donald Trump (Screenshots)

The Democrats and their media allies are firing the smear machine back up with gutter attacks on President Trump's potential Fed nominee, Stephen Moore.  The dishonest criticisms of Moore's qualifications and independence are almost as bad as the desperate personal attacks.

To be fair, other than the president himself, nobody has been a more effective public spokesman for Trumponomics – Moore wrote the book, after all – and some supporters of the president are privately worried about losing Moore's strong voice from the public sphere ahead of the 2020 election.  But Moore's effectiveness as an advocate for Trump should not be mistaken for a lack of independence.  Moore's decades of consistent advocacy of pro-growth fiscal, regulatory, trade, and monetary policy have continued in the Trump era – and on those rare issues on which the president deviates from the pro-growth track, Moore does not.

Regarding qualifications, Moore's three decades of policy analysis and advocacy have of course left him making occasional mistakes and bad predictions – a pitfall of being a bold, independent thinker.  But on the biggest, most important questions Moore has broken with the pack and been proven exactly right, time and again.

Moore was dead right on the December Fed interest rate hikes when conventional wisdom was wrong.  “The Fed is what’s going to put us in the next recession if they keep raising rates,” he said before the December meeting.  Commodity prices were flashing deflationary warning signs and the economy was losing momentum.  The Fed hiked anyway and triggered a stock market meltdown before doing an abrupt 180 and signaling an end to rate hikes at their January meeting.  In effect, they admitted they were wrong, and Moore was right.

Moore has also been broadly right about the Trump economic agenda, while many economists have been epically, comically wrong.

On election night 2016 Moore-antagonist Paul Krugman of The New York Times famously wrote: “markets are plunging. When might we expect them to recover?  A first-pass answer is never … So, we are very probably looking at a global recession, with no end in sight.”

As Moore noted in an IBD op-ed that served as a well-deserved victory lap, Krugman was far from alone, with similar doom-and-gloom predictions of financial and economic collapse coming from chief economist at the IMF Eric Zitzewitz, Obama chief economist Larry Summers, MIT economist Simon Johnson, and MSNBC economics guru Steve Rattner.  A pre-election Washington Post headline blared: “A President Trump Could Destroy the World Economy.”

Now, the same so-called experts who got Trump completely wrong are attacking Moore's integrity, falsely claiming that because Moore supports the president's core economic policies he cannot exercise independence as a Fed governor.

But Moore has always been an independent thinker.  He has defended free trade and been sharply critical of Trump's potential auto tariffs.  On antitrust, he took to the pages of The New York Times to break with the president over the DOJ lawsuit against the AT&T/Time Warner merger, calling it “one of the flimsiest assaults against a corporate merger in recent memory.”

On immigration, Moore has taken the view, rejected by some Trump supporters, that we need more work-based legal immigration to meet the demands of the labor market and keep the economy growing.  In fact, last year he said on CNN that economic growth “would be stronger if there were more workers available ... that's really the biggest problem in terms on restraining growth right now.”

And while Moore was perhaps unduly sanguine about President Bush's second term – critics have pointed to his book “Bullish on Bush,” which focused on the potential benefits of Bush's ownership society agenda – he was more than willing to harshly criticize Bush.  Moore told liberal Mother Jones that Bush “is worse than any president since Johnson on spending.”

And while many in the economics profession gushed over President Obama and his big government, hyper-regulatory policy responses to the financial crisis, Moore and his coauthor Art Laffer correctly diagnosed the low-growth trajectory those policies would put the economy on in their prophetic book “The End of Prosperity.”

While detractors point to comments Moore made about hyperinflation in response to a Glenn Beck hypothetical and responses to activist questions about the gold standard, Moore has long advocated that the Fed should focus on maintaining a stable dollar by looking at commodity prices as a real-time, forward-looking inflation indicator.  That is an important departure from the model that led to the Fed's December rate hike blunder, but is also less radical than many assume; previous Fed governors Wayne Angell and Manley Johnson indicated that, at times, the Fed has followed that approach.

The real reason for the vehement opposition to Moore's nomination to the Fed from the economic and political establishment is the opposite of their claim that he would lack independence.  They fear that Moore would be too independent.  Too independent of their groupthink, even though it often led to major policy error.  Too independent of their dedication to secrecy, of keeping their input and models opaque and projecting an aura of mystery to the public.

As John Fund put it: “worst of all in the eyes of Beltway guild members is that Moore would be an ‘independent’ voice challenging the Fed bureaucracy. He has certainly not kowtowed to it in the past, as so many bankers have.”

Stephen Moore would bring to the Fed decades of original economic thinking and an impressive track record of getting it right when so many others got it wrong.  That's why he's the most qualified person for the job.  And the most independent, too.

Phil Kerpen is the President of American Commitment and a leading free-market policy analyst and advocate in Washington, D.C.

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