Memo To: George W. Bush
From: Jude Wanniski
Re: Forbes at Treasury
My congratulations, George, on your nomination as the Republican presidential candidate, your choice of Dick Cheney as running mate, and the terrific acceptance speech you gave in Philadelphia. Please don’t pay any attention to the focus groups that complained you were too negative in making fun of Vice President Al Gore’s aversion to “risky schemes,” a la Thomas Edison’s invention of the light bulb. The reason I believe you will have a hard time losing the race at this point is that the country does want change -- which requires risk-taking -- and the Veep is locked into the status quo. Worse than that, he is so worried about “global warming” that he would like us to go back to candles, which produce fewer greenhouse gases than electric power plants. To have chosen Joe Lieberman as his running mate, one of the wimpiest of Democrats, it is hard to see how Al Gore gets back into the game.
I also was extremely pleased that you not only invited General Colin Powell to speak to the convention, but also have let it be known that he would make a good Secretary of State in a Bush Administration. With Cheney and Powell at your side, all you need now is the right person as Treasury Secretary and your team will be firmly anchored. Yes, the other Cabinet posts are important, but if you have the right Secretary of State to conduct diplomacy in a world at peace -- or the right Secretary of Defense in a nation at war -- then you can have a successful administration if you have the right person at Treasury. Look at what Alexander Hamilton did for George Washington! I know you personally think Dick Darman spoiled your father’s administration by persuading him to break his promise of “Read my lips, no new taxes.” But I think the real culprit was Nick Brady at Treasury. Brady was your father’s best friend on Wall Street, but he openly boasted that he never took any risks -- and you will note that under his tenure, Dillon, Read went from a premiere investment bank to a has-been. If you are not in motion in this political universe, you are standing still or worse, retreating. How can you dispel any doubts about your intent to have this economy grow rapidly without inflation, and not squander the opportunity by mismanaging the surplus? Promising a Steve Forbes at Treasury would be the best promise you might make.
In picking a Treasury Secretary, you simply have to find the best man for the job, which means at this particular time. Steve might not have been my first choice if the Dole/Kemp ticket somehow had won in 1996. The political and economic picture then suggested someone like Ted Forstmann, the financial entrepreneur who built a world-class fortune from a standing start. I wouldn’t rule him out today, although I’d first think of him now in Education, where he now devotes his considerable talents and energies. The world today, though, has turned to a point where it is ripe for global economic reforms, and there is nobody who knows the world political economy and all its corners better than Steve Forbes. He twice persuaded the electorate that he should not be President of the United States, but I believe that is because a President needs skills in choosing a team that eluded Steve in his run for the GOP nomination. At Treasury, you need a mind that is focused on public finance, at home and abroad, and knows the dynamics of political economics. Just as he is not suited to be President but would make an outstanding Treasury Secretary, you would make a poor Treasury Secretary, but could make a great President. That became clear when you chose Dick Cheney as your running mate -- a perfect fit for Vice President and a man who could be President, although he also would stumble at Treasury.
If you have not followed Steve’s work over the last 20 years, since he began taking over the Forbes empire from his father, Malcolm Sr., you might identify him exclusively with the flat tax when it comes to economics. We met in the 1970s when he first became attracted to supply-side economics, then sprouting under the guidance of Jack Kemp, finally blossoming under the leadership of Ronald Reagan, a man who got his economics degree in 1932, from Eureka College, Ill., when the supply-side economics of production still dominated the curriculum. In the years since, Steve has mastered the interaction of economic theory and business practice at every level of world commerce. The Democratic political establishment may believe that Bob Rubin was a successful Treasury Secretary, but to tell you the truth, Rubin scarcely knew what he was doing from one day to the next. Alan Greenspan carried the economy through Clinton’s first term and the GOP Congress forced tax cuts on capital formation down Rubin’s throat in 1997. This has been the foundation of the current prosperity.
In your first term, you almost certainly will face difficulties in the monetary realm, because of errors made recently by the Greenspan Fed and by errors they will continue to make unless your Treasury Secretary knows the problem at its core and is able to weigh in. Small mistakes that the United States makes in the management of the dollar can have catastrophic global effects. The poverty and debt in the developing world also is going to show up at the White House steps in the next year or two, and there is nobody at the top of any of the banks or brokerage firms who can deal with this as ably as could Steve. Think about him, at least. There is no hurry, but as November approaches and Treasury topics surface for debate, you would do well to keep his counsel.