Solving Trump’s Federal Reserve Problem
The White House is reviewing past writings by Stephen Moore,
the conservative commentator whom President Trump may nominate to the Fed.
Tom Williams/CQ Roll Call, via Associated Press
The drama of Stephen Moore, Donald Trump’s controversial not-yet-nominee for a seat on the Federal Reserve, is a nice microcosm of the larger drama of conservatism in a Trumpian age. In the monetary policy debate that lurks behind the Fed battle, you can see some of the reasons for Trump’s political success. In the Moore appointment itself you can see the limits of Trumpism as an ideological program. And in the reaction to the appointment from Republican politicians you can see why the party may be destined to repeat its Trump-era experience, and also how it might avoid that fate.
First, the policy. Our president’s past views on monetary policy range all over the map; he has been both an inflation hawk and an inflation dove, and he obviously has no definite and deeply held views on monetary issues, as he has no definite and deeply held views on many other topics.
But as on other issues, that lack of ideological mooring has enabled him to break loose from the stale formulas, the always-1979 assumptions, that defined a lot of conservative thinking in the last 10 years.
Shaped by the battles of the inflationary 1970s, much of the right reacted to the financial crisis and its aftermath by critiquing Ben Bernanke’s Fed for its interventionism and warning about imminent inflation. A few conservative journalists and economists dissented, arguing that the situation was very different, the ’70s weren’t returning, and if anything the Fed’s policy had been too hawkish. But you had to listen hard to hear them; for the most part institutional conservatism and Republican politicians kept up a steady “inflation is coming” beat.
Actual economic trends, however, vindicated the dissidents. And now Trump himself, for instinctive and opportunistic reasons, has taken up a crude version of their argument, jawboning Jerome Powell to discourage rate increases (a self-interested position, but also the correct one) and trying to elevate Moore in part because he currently shares the White House’s dovish line.
But a lot hangs on that “currently.” Historically Moore has not been an inflation dove; indeed when it counted he was a predictable inflation hawk, calling for monetary tightening in the teeth of the Great Recession. So it’s hard to escape the impression that his newfound dovishness is simply a hack’s adaptation to whatever Trump demands. Especially because — let’s be completely blunt here — Moore’s entire record of writings and arguments are hackish, his prominence a testament to cable-television’s appetite for partisans with think-tank titles, and those titles a testament to conservatism’s decadence.
So while Trump’s embrace of dovishness is moving the Republican Party in a sensible direction on the issue, his personnel moves aren’t rewarding the dissidents who were correct ahead of time. Instead, after making some respectable but uncreative picks, he’s trying to bring in yes-men and conservative-entertainment personalities (like his other, since-withdrawn choice for the Fed, Herman Cain) and relying on their loyalty rather than their ideas to make the policy he favors.
The desire to reward loyalists rather than intellectuals is common to politicians, and many dissident-conservative intellectuals were cool to Trump during the 2016 campaign. But most presidents make some effort to instantiate their governing ideology by elevating figures who actually believe it, rather than relying exclusively on toadies and ring-kissers and guys who look the part when you turn on Fox or CNN.
Not so Trump: All instinct and solipsism, he simply doesn’t care enough about Trumpism to find people who might carry his impulses forward once he’s gone. And so he’s bidding to do for monetary policy what he’s done in domestic policy and foreign policy already: Pursue a somewhat heterodox and populist agenda, but leave its implementation — and therefore to some extent its future — in the hands of men like Moore or John Bolton or Mick Mulvaney who represent the consensus that he once campaigned against.
And it’s telling, in envisioning the possible future of Trumpism, that until the latest round of embarrassment Senate Republicans seemed inclined to go along with the Moore nomination. They drew the line at Cain, but Moore’s hackishness and acknowledged ignorance of monetary policy are forgiven because he’s an old familiar movement-conservative face, and in many Republican breasts there beats the desire to return, after Trump, to the old familiar conservatism, the forever-1979 consensus.
That desire suggests a very plausible post-Trump scenario — especially if a liberal Democrat occupies the White House next — in which the Republican Party simply abandons his heterodoxies and returns to all its Obama-era positioning, all its reflexive policy clichés. Which in turn would set the stage for yet another Trump-like populist rebellion against this orthodoxy five or 10 years down the line.
In fairness, some Republican lawmakers appear to want to avoid this kind of pointless cycle. A younger cohort in the Senate, including Marco Rubio and Tom Cotton and Mike Lee and lately Josh Hawley of Missouri, appears interested in sustaining a conservative populism after Trump has exited the stage. And as Ramesh Ponnuru noted in a recent Bloomberg column, judging by how they questioned Powell in February, some Republican lawmakers seem to be “shopping” for a different monetary policy, one that actually learns something coherent from the last 10 years.
If those shoppers are serious, they should reject Moore on the basis of his empty intellectual portfolio, not just his dumber experiments in punditry, and they should encourage Trump to make a different kind of outside-the-box pick. I have suggested Ponnuru as a possibility before; as a journalist he has a long paper trail of rigorous, mostly vindicated takes on monetary policy, and as a representative of the right’s intelligentsia he’s everything that Moore is not.
Another clever choice would be Karl Smith, another Bloomberg columnist, a former economics professor and a prolific economics blogger, who has also defended Trump’s much-criticized tax reform (in case that matters to anyone in the White House!). Alternatively, if Trump prefers someone with a current academic title, then he should tap Scott Sumner or David Beckworth from George Mason University, both of whom were elaborating the more dovish case back when Moore was still pitching the gold standard.
Of course because they’re serious people, that “dovish” case is far more sophisticated than the White House’s palpable desire for rate cuts as re-election stimulus. Also, Sumner recently called for Trump’s impeachment … so, yeah, he’s probably off the table.
But so long as Moore’s nomination is in trouble, there is an opportunity here for some entrepreneurial senator to push the White House in a new direction — toward the actual institutionalization of the president’s better instincts, rather than just the appointment of hacks who flatter him. For it will have profited conservatism nothing to have surrendered to Trump’s rebellion, if all it gains in the end is another decade submitting to the imaginary “expertise” of hacks like Stephen Moore.