Professor: ‘Hard to imagine’ two worse candidates than Moore and Cain
President Donald Trump said Thursday he will nominate Herman Cain, the former Republican presidential candidate, to a seat on the Federal Reserve Board, a move surprising Capitol Hill and alarming Fed watchers.
“I’ve recommended Herman Cain. He’s a terrific man,” Trump told reporters in the Oval Office.
“I think he would do very well” at the Fed, the president added. “He’s a very good guy.”
A report that Trump planned to nominate Cain was reported early Thursday morning by Axios.
Trump has previously said he will appoint former Wall Street Journal editorial writer Stephen Moore to the Fed, but the White House has yet to send the nomination to the Senate. Moore and Cain would fill the two remaining vacancies on the Fed’s seven-member board. Trump’s interest in selecting Cain for the Fed was first reported in January. The president remains sharply critical of the Fed’s interest-rate policy even thought the central bank has shifted in a dovish direction.
Trump said he was not trying to send a message to the Fed with the pick of Moore and Cain.
Trump has already filled four of the five seats at the central bank. But he has said he’s deeply unhappy that the central bank raised interest rates last year, which he alluded to with a tweet on Thursday morning, calling the Fed’s 2018 rate hikes “unnecessary and destructive.”
Mark Gertler, one of the most cited researchers in macroeconomics who teaches at New York University, said it was “hard to imagine any two worse candidates for Fed positions than Stephen Moore and Herman Cain. I guess not even the Fed can escape this ‘up-is-down’ world.” Gertler said both candidates lack relevant qualifications and experience and have made past statements that “display ignorance about monetary policy.”
Tim Duy, a professor at the University of Oregon who blogs about the Fed, said that Cain and Moore appeal to the hawkish elements of the right wing.
“One possible outcome is that the net result is a Fed that invites a repeat of the 1970s through excessively easy policy. Another is a Fed that works to ensure the dominance of one political party. Would Moore or Cain suddenly turn hawkish again if a Democrat were in the White House?” Duy said.
On Capitol Hill, the reaction was cautious, with Sen. Richard Shelby, an Alabama Republican, remaining non-committal.
Sen. Sherrod Brown, the ranking Democrat on the Senate Banking Committee, told CNN that “he found a nominee worse than Stephen Moore” and that neither is level-headed or fair-minded.
Cain, 73, has prior Fed experience, having served as a director on the board of the Kansas City Fed from 1992 to 1996, ultimately becoming the board’s chairman. That role has little bearing however on setting monetary policy.
Cain is known for being the chairman and CEO of Godfather’s Pizza and for his run for president as a Republican in 2012. He had a memorable tax plan called 9-9-9. It would have eliminated the tax system and replaced it with a 9% personal income tax, a 9% corporate income tax and a 9% sales tax.
Cain’s campaign ended after Politico reported that two female employees complained about alleged inappropriate behavior while he was the head of the National Restaurant Association.
Cain also backed Trump’s presidential campaign and presidency, including launching a Super PAC last year to support the president’s agenda.
Cain recently suggested he was now in the camp of lower rates.
“If I were offered the job, I would try to encourage the Fed not to make inflation a fear factor because deflation…is more of a fear factor than inflation,” Cain said in an interview this year.
That wasn’t always his position.
In an article in Atlantic Magazine in 2011, Drue Jennings, a lawyer who served with Cain on the Kansas City Fed board and succeeded him as chairman, said Cain “was in lock step” with the Fed policies of then-chairman Alan Greenspan and called him “an inflation hawk.”
Cain wrote an op-ed for the Wall Street Journal advocating a return to the gold standard.
“A gold standard is to the moochers and looters in government what sunlight and garlic are to vampires,” he wrote. The gold GCM9, -0.08% standard has often been touted by Republicans during presidential primaries as a way to seek support from the party’s base.
The White House did send to the Senate the nomination of Fed Governor Michelle Bowman to a full 14-year term on the central bank. Her current term is set to expire early next year. Bowman, a former community banker and state bank regulator, joined the Fed in November. She represents the interest of community banks on the Fed board.