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Swift Pushback on Stephen Moore, Trump's Latest Pick for the Fed

Brendan Murray

(Bloomberg) -- Stephen Moore drew swift and unusually pointed criticism after President Donald Trump picked him to be a governor of the U.S. Federal Reserve, with at least one prominent Republican economist calling on the Senate to block the appointment.

“He does not have the intellectual gravitas for this important job,” Greg Mankiw, a Harvard professor who was chairman of the White House Council of Economic Advisers under President George W. Bush, wrote in a blog post on Friday. “It is time for senators to do their job. Mr. Moore should not be confirmed.”

Moore’s selection is subject to Senate approval. He’s Trump’s sixth nomination to the nation’s monetary authority, which has a seven-seat board of governors that typically is filled with trained economists, former financial-industry executives and bank regulators. There are currently two vacant seats.

Two previous Trump nominees, Nellie Liang and Marvin Goodfriend, failed to advance in the Senate in 2018. Unlike Moore, neither faced accusations that they were unqualified.

Puzzling Pick

Some private-sector economists who’ve generally supported Trump’s efforts to accelerate growth with lower taxes, less regulation and fairer trade deals were nonplussed by the selection of Moore, an official at the conservative Heritage Foundation think-tank and an economic adviser to Trump’s 2016 campaign.

“The fact that Stephen Moore gets nominated and has a plausible path to confirmation but Peter Diamond didn’t is truly detestable,” said Neil Dutta, head of economics at Renaissance Macro Research. He was referring to Diamond, a Nobel Prize-winning economist whom President Barack Obama nominated to the Fed but ended up withdrawing from consideration in June 2011 in the face of Republican opposition.

“The upshot is that Stephen Moore will not have much influence if he sat around the table,” Dutta said.

While most presidential nominees keep a low public profile until they’re considered by the Senate, out of respect for the democratic process, Moore took to the airwaves hours after Trump announced his nomination two days ago. In a Bloomberg Television interview he called the Fed’s December rate increase, which was approved in a unanimous vote, “a very substantial mistake.”

Moore acknowledged he has a “long road ahead” that included Senate confirmation. Known along with Arthur Laffer as a supply-side supporter of tax cuts to unleash faster economic growth, he also said he has a lot to learn about monetary policy.

‘Steep Learning Curve’

“I’m kind of new to this game, frankly, so I’m going to be on a steep learning curve myself about how the Fed operates, how the Federal Reserve makes its decisions,” Moore, 59, said on BTV. “It’s hard for me to say even what my role will be there, assuming I get confirmed.”

He also tweeted on Friday, thanking Trump “for the opportunity to serve & for your zealous commitment to freeing the American economic engine from government overreach & oppressive taxation!”

It’s not unheard-of for a U.S. president to pick a like-minded adviser, or even a political donor, to serve on the Fed Board.

Alice Rivlin, a director of President Bill Clinton’s Office of Management and Budget, was his nominee to be Fed vice chairman in 1996. Ben Bernanke led the White House Council of Economic Advisers before Bush chose him to be chairman of the central bank in 2006. And current Fed Governor Lael Brainard, selected by Obama in 2014, donated to Hillary Clinton’s 2016 election campaign and to Obama’s before that.

Read more: Trump Escalates Feud With Fed by Picking Moore for Board

Janet Yellen had an opposite trajectory, serving as a Fed governor from 1994 to 1997 before joining the Clinton administration as CEA chair. She returned to Washington as Fed vice-chair after a stint as San Francisco Fed president, and was later appointed by Obama as the Fed’s first woman chair.

The difference is they’re all respected Ph.D. economists, so concerns about politicizing the Fed didn’t become a much of a factor in their Senate confirmation hearings.

Moore, who has a master of arts in economics from George Mason University in Virginia, is better known for helping promote a fiscal agenda than he is for monetary-policy expertise. He co-wrote, with Laffer, a 2018 book on Trump’s economic strategy entitled “Trumponomics: Inside the America First Plan to Revive Our Economy.”

He also formerly wrote on the economy and public policy for the Wall Street Journal and is on his second stint at the Heritage Foundation.

Response to Mankiw

“Moore focuses on advancing public policies that increase the rate of economic growth to help the United States retain its position as the global economic superpower,” according to his biography on the Heritage Foundation website. “He also works on budget, fiscal and monetary policy and showcases states that get fiscal houses in order.”

Moore didn’t pull punches when asked about the criticism from Mankiw.

“I don’t know why Greg Mankiw is attacking me,” he said in an email on Saturday. “One possible reason is that in his textbook he calls supply-siders like Laffer ‘charlatans and cranks.’ He then removed that section from the book -- because he got so much flak for it when he went into the Bush administration.”

Asked for a response, Mankiw said he doesn’t believe Moore’s “background makes him a good fit for the job of Fed governor.” The professor also disputed Moore’s facts. “The passage he refers to was removed in the second edition of my book,” Mankiw said. “That edition was completed in July 2000, four months before President Bush was elected and 2 1/2 years before I joined the administration.”

--With assistance from Steve Matthews, Jeanna Smialek and Christopher Condon.

To contact the reporter on this story: Brendan Murray in Washington at brmurray@bloomberg.net

To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Alister Bull, Ros Krasny

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