To: Website fans, browsers, clients
From: Jude Wanniski
Re: The passing of Bill Simon
What a jolt it was to find headlines in the local papers saying Bill Simon was dead at 72. Yes, my contemporaries increasingly are making the obituary page as the years roll by. It was a genuine shock to read of Simon’s death, though. In the years I knew him, he seemed a granite block that had been brought to life and would survive most of us -- not only because of his flinty personality. If asked to name the people in public life with the most volcanic tempers, I automatically would have nominated Bill the clear winner. When he was President Nixon’s Treasury Secretary in 1974, his office was on the fifth floor of Treasury, and it was no joke that you could hear him on the third floor yelling at someone who displeased him.
He never yelled at ME because I helped him get the appointment as Treasury Secretary. I was a Wall Street Journal editorialist in the years 1972-78, and by 1974 I knew that the energy “crisis” was caused by Nixon formally cutting the dollar/gold link in 1973 which sent the gold price soaring. It was not the fiendishly clever “Arabs,” who had no control over the dollar. When in 1974 Simon was named director of the Federal Energy Administration -- the “energy” czar -- I wrote a lead WSJ editorial headlined: “William Simon Is Incompetent,” (January 11, 1974). Here is how it opened:
Bill Simon, the energy czar, is a brilliant fellow, a bold decision-maker, a leader of persons. He’s probably the best man for the job. But at allocating all the energy supplies in the nation, he’s incompetent. Anyone one else would be too, as we’re sure Mr. Simon realizes. Still, he will have to live through the criticisms of those who believe that really smart allocators should be able to outperform the marketplace.
Bill later told me he almost had cardiac arrest when he read the headline, before realizing I was giving him a boost. I made it a little easier for him to accept that criticism two months later, when George Shultz resigned as Treasury Secretary. President Nixon, his hands full with Watergate, had to find a replacement. Simon, a New Jersey boy who made a small fortune at Saloman Brothers selling bonds after starting in the mail room at $75 a week, had come to Washington as deputy to Shultz at Treasury, but as I’d warned in January, an army of critics opposed his elevation to Secretary on the grounds that he had done a bad job allocating energy while concentrating on public relations. The lead editorial I wrote on March 28 cinched the job for Simon: “William Simon Is Competent.” Here is how it concluded:
Throughout the crisis period, Mr. Simon’s flackery -- turning away charges of conspiracies, contrived shortages and oil tankers sitting in New York harbor waiting for prices to go up -- kept the heat off the industry so it could work without demoralization. We shudder to think of the chaos that would have ensued had Mr. Simon chosen to whop the industry with demagoguery and it had responded by going by the book. This assessment of Mr. Simon’s performance does not mean we think he’s just the right man to run Treasury, although he may well be. It’s simply to make clear our considered belief that as messy as things got at the peak of the crisis, it would have been much worse had it not been for his competence.
As it turned out, Simon really was not a very good Treasury Secretary in those troubled times. Nixon, who appointed him, resigned a few months later and Simon found himself working for President Gerald R. Ford. In his first several months at Treasury, the Dow Jones Industrial Average steadily went downhill and hit bottom around 585. I’d been completely converted to supply-side economics when I met Robert Mundell in May 1974, but in several meetings and telephone calls with Simon, I could not scratch the surface in getting him to understand there had to be a supply-side tax cut to prevent the recession Mundell was alone in predicting. A rampant inflation was underfoot and all his friends and the staff economists at Treasury were telling him a tax increase was necessary to fight inflation.
Going into the 1974 congressional elections, President Ford promised just such a tax increase and Republicans got smashed at the polls. It was not until after the elections, December 1974, that Art Laffer drew the famous curve on the back of a cocktail napkin in the bar at the Washington Hotel, a picture I realized was just what was needed to be able to get people like Bill Simon to see the merits of tax cuts. Alas, when the orders were sent from Ford’s chief of staff, Don Rumsfeld, to Simon to cut taxes, not raise them, Simon’s crew came up with a $50 tax rebate for all taxpayers, the worst kind of Keynesian tax cut designed simply to put money into people’s pockets and hope it would be spent. If Ford had a more adroit Treasury Secretary, he might have been re-elected, but I never faulted Simon that much, considering the fact that the chairman of the Council of Economic Advisors, Alan Greenspan, gave bad advice to the White House every step of the way.
I cherish the memory of Bill Simon for something he did after he left government service. It happened in early 1978 that my friend Jeff Bell was running for the GOP nomination for the Senate seat held by five-term Republican Clifford Case. Jeff, as the 33-year-old research director on the Reagan campaign team, had tried to sell it on supply-side tax cuts in its 1976 run for the GOP nomination, hoping to displace President Ford. When Reagan came up short, Jeff moved to New Jersey with his $8,000 in life savings and made his plans to run against Case, a liberal with no taste for the kind of tax cuts Jack Kemp was pushing in Congress. In February 1978, Jeff was getting nowhere, had run out of money and was borrowing from his mother, when Kemp finally agreed to endorse Jeff and speak at a fundraiser. The problem was that nobody would buy tickets. If the fundraiser were a bust, Jeff’s staff, which had not been paid, was ready to disband. The New Jersey Eagleton poll showed Jeff at about 5%.
I don’t remember who thought of asking Bill Simon to be finance chairman for the Bell campaign at this low point, although Jeff probably said “We need someone like Bill Simon.” I almost went crazy trying to figure out how to do this, to the point where Bob Bartley, editor the WSJ editorial page, wanted me to see a shrink. I told him I didn’t need a shrink, I needed someone like Bill Simon to be Jeff Bell’s finance chairman. If the Bell campaign failed, supply-side economics would be laughed at. If it succeeded, the supply-side revolution would be underway. On the spot, Bartley put in a call to Simon and simply told him that I wanted to talk to him. He handed me the telephone and I launched into an exposition on how the Bell campaign was pivotal to saving Western Civilization as we know it. Bartley, who put on his hat and coat and went home, was not there at the end of that half-hour telephone discussion, when Simon told me he would do it, and immediately gave me a list of things he wanted done, letters written, press releases written, to go forward.
Happy ending. All the tickets were sold. The press corps, which had written off Jeff, assumed he must be alive if Simon had associated himself with the campaign. Clifford Case, who would never have agreed to debates with Jeff at 5% in the polls, laughingly agreed to televised debates once the campaign had Simon’s weight. On June 6, 22 years ago, Bell defeated Case on the same day that Californians approved Proposition 13, Howard Jarvis’ initiative to cut property taxes by one-third in the state. It was a coast-to-coast TAX REVOLT, the news magazines proclaimed.
Bell subsequently lost the general election to Democrat neophyte Bill Bradley, but Reagan’s campaign manager, John Sears, ordered a post-election poll and found 75% of all New Jersey voters approved of Bell’s position on taxes although a majority opposed him on his hard-line positions on social policy. It was enough to persuade Sears to position Reagan in 1980 as a supply-sider, and to bring Kemp and me and Laffer into the campaign. The rest is history. And I’ve often thought how much different that history would have been if Bill Simon had turned down the idea of helping Jeff Bell. I thought about it again when I got that jolt seeing Simon had died of cardiac arrest. Rest in peace, Bill.