President Trump is facing a backlash from across the political spectrum over his decision to nominate conservative economist Stephen Moore to the Federal Reserve Board.
Critics call Moore an unabashed partisan, whose close ties to Trump, controversial past economic claims and fierce criticism of the Fed’s current leaders disqualify him from serving on the central bank.
{mosads}Trump on Friday announced his decision to nominate Moore, who is also an opinion contributor to The Hill, to one of the two open seats on the Fed’s board of governors.
The president called Moore a “very respected” and “outstanding choice” to serve on the board, which guides the central bank’s actions on interest rates and financial regulations.
Moore himself is no stranger to controversy. He’s spent three decades advocating conservative economic policies as a researcher and commentator, regularly appearing on the airwaves to tout his views. He served as a policy adviser to Trump’s 2016 presidential campaign and has been one of the most prolific defenders of the president’s economic agenda on taxes and deregulation.
But the pushback against Moore was quick and fierce, including from some in Republican circles.
“Steve is a perfectly amiable guy, but he does not have the intellectual gravitas for this important job,” wrote Greg Mankiw, a Harvard economics professor who chaired the Council of Economic Advisers for former President George W. Bush.
“It is time for Senators to do their job. Mr. Moore should not be confirmed,” Mankiw added.
Opponents of his nomination see it as an effort from Trump to shake up the independence of the Federal Reserve. They worry Moore would be a crucial ally for the president inside the Fed, one who could challenge the central bank’s consensus-oriented approach and reliance on predictive economic models.
{mosads}“Steve is not the carefully groomed former Republican Treasury official, well respected economist that has so far characterized the president’s appointees,” said Karen Petrou, managing partner at Federal Financial Analytics. “He is a bomb thrower.”
Moore could not be reached for comment Monday.
Moore, though, does have many supporters, who note that Trump often selects outsiders to reform institutions he believes are in need of a shake-up.
Trump has had a rocky relationship with the Fed. Even though he has appointed four of the five sitting Fed governors to their current positions, he’s frequently blasted the central bank for raising interest rates while inflation has remained below its 2-percent target.
Leaders of conservative nonprofits and right-leaning analysts praised Trump’s selection of Moore, touting him as a crucial voice for free-market policies.
They noted that Trump has already added a cadre of establishment-friendly moderate Republicans with extensive academic or government experience in monetary or regulatory policy.
Moore, though, would represent a sharp break from Trump’s prior Fed nominees who have won confirmation. He has spent little time in government but several decades pushing for tax cuts and deregulation with conservative think tanks, nonprofits and through his editorials.
Moore, like Trump, has been fiercely critical of the Fed’s decision to raise interest rates eight times since 2017, arguing that the central bank should keep rates steady in the absence of rising inflation.
Moore told The Wall Street Journal that the Fed’s January decision to hold off on further rate hikes justified his criticism, but tamped down the tone of his December remarks.
“They made a mistake. Nobody’s perfect. They’ve admitted they made a mistake,” Moore told the Journal. “Was I harsh? Yes, and I wish I hadn’t been.”
J.W. Verrett, a law professor at George Mason University, praised Moore’s support for rules-based monetary policy and for pushing broader financial deregulation.
“The Fed is like a weatherman that’s really bad at predicting weather … but decides they want to manipulate the weather,” said Verrett, a former chief economist and senior counsel for the House Financial Services Committee. “A natural suspicion of the power of predictive models is a healthy thing.”
But Moore’s critics say his perspectives on monetary policy reflect a lack of necessary expertise to join the Fed.
After Trump announced that he was tapping Moore on Friday, his critics took to Twitter to revisit many of Moore’s prior statements or economic claims.
Moore said in December that the Fed’s leadership should be “fired for economic malpractice” if they raised rates the following day and argued that Chairman Jerome Powell could be canned for “wrecking our economy.”
He also claimed in December that the Fed had been “sucking the oxygen out of the
economy” and triggered deflation. Federal data, though, showed prices rising by just under 2 percent throughout the year.
“If I asked ‘What were the effects of the Fed’s latest rate hikes?’ on a test and a student answered that it ‘has created an economically debilitating deflation,’ I would fail the student,” tweeted Justin Wolfers, a senior fellow at the left-leaning Brookings Institution, on Friday. “So would ANY economics professor in the country.”
Petrou said that Moore’s skepticism of the Fed “is not a bad thing,” but expressed concerns about what she saw as a combative style.
“My concern is that there’s a difference between rattling the cage, which I think the Fed really needs, and breaking it apart to let the wild things in,” she said.
Moore is likely to be confirmed by the Senate, and his nomination comes as Trump is under pressure to fill the vacant seats on the Fed board. Republicans have stalled two of Trump’s previous Fed picks, but Moore’s close ties to conservatives could help assuage concerns about his style.
Moore will be under heavy scrutiny during the confirmation process. But how much he will shake up the bank remains to be seen.
Moore for his part has also tried to calm the storm.
“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,” he said in an interview on Bloomberg TV.
“He’s going to be a dissenter, which the Fed would rather avoid, but can live with,” wrote Ian Katz, an analyst at Capital Alpha Partners, in a research note. “He will make speeches, and probably interesting ones, which will make headlines. But his impact on policy will probably be limited as a governor.”