Stephen Moore withdraws from Fed nomination

Conservative economist Stephen Moore withdrew from consideration Thursday for a seat on the Federal Reserve Board, abruptly ending President Trump’s second bid to reshape the central bank in a clash over rising interest rates, monetary policy and economic growth entering the 2020 election cycle.

After weeks of growing criticism over Mr. Moore’s writings about women, the co-founder of the influential Club for Growth notified the president in a letter that he was pulling out of a possible nomination to the central bank’s governing board.

“The unrelenting attacks on my character have become untenable for me and my family and three more months of this would be too hard on us,” Mr. Moore told the president.

But there were indications that the White House pulled the plug first. Just before his withdrawal became public, Mr. Moore told Bloomberg and other news outlets Thursday morning that he was “all in” for the post. He defended his economic views and predicted that skeptical senators would come around to support him over the next three months.

Mr. Trump still has two seats to fill on the board, and the move likely fuels his anger that the Fed’s four interest rate hikes in 2018 were keeping the U.S. economy from even faster growth. Businessman Herman Cain, a onetime Federal Reserve official and briefly a Republican presidential candidate in 2012, pulled himself out of the running for a board seat April 22.

Mr. Trump called Mr. Moore, who served as an economic adviser on the president’s 2016 campaign, a “great pro-growth economist and a truly fine person.”

The president tweeted that Mr. Moore “won the battle of ideas including tax cuts” and deregulation that have helped spur more than two years of strong economic growth.

But it was increasingly clear to the White House that Mr. Moore couldn’t win a confirmation battle in the Senate. Sen. Joni Ernst, Iowa Republican, announced this week that she likely wouldn’t vote to confirm Mr. Moore if nominated.

A visiting fellow at The Heritage Foundation, Mr. Moore was criticized for a $75,000 IRS tax lien and remarks that ridiculed women. In a C-SPAN interview in 2000, he said, “The male needs to be the breadwinner of the family.” Mr. Moore apologized last weekend for similar comments over the years.

He said he felt “sorrowful” about his withdrawal. In an interview on Fox Business Network, Mr. Moore said he would have alerted the White House about his writings if he had any inkling that 20-year-old commentary would come back to haunt him.

“The floodgates just opened up,” he said of the criticism.

Sen. Shelley Moore Capito, West Virginia Republican, said Mr. Moore’s withdrawal “was a good move, and I look forward to the next nominee.”

Asked whether the White House should learn a lesson on vetting nominees for government posts, Ms. Moore Capito replied, “Read people’s articles that they write would be a good start.”

Fed frustration

The president chose Mr. Moore and Mr. Cain as potential allies at the central bank after he expressed deep frustration that Fed Chairman Jerome Powell, another Trump nominee, and the rest of the central bank’s leadership board were weighing down the economy with interest rate hikes. Mr. Trump has called on the Fed to cut interest rates by 1 percentage point.

The stock market, in particular, took a sharp nosedive in December. The S&P 500 posted its worst December since the Great Depression, but markets have recovered to near all-time records.

Critics said they hoped the failure of the nominations would temper Mr. Trump’s tendency to wade into Fed decisions.

Presidents have historically seethed over the independent Fed’s monetary moves but rarely made their frustration so public out of fear of sparking market and currency reactions.

Senate Minority Leader Charles E. Schumer, New York Democrat, said Mr. Trump must nominate “two serious candidates who will strengthen our economy.”

“First, Cain. Now, Moore. Thank goodness neither were actually nominated,” Mr. Schumer said. “The only thing less funny than some of Mr. Moore’s tasteless, offensive, sexist ’jokes’ was the idea that President Trump would even consider him for a seat on the Federal Reserve.”

Mr. Moore responded, “This is kind of a victory lap for the left because they took me down with a smear campaign. They knew they couldn’t beat me on economic ideas.”

Mr. Trump said he has “asked Steve to work with me toward future economic growth in our country.” He could return to a role as an economic adviser on the president’s reelection campaign.

“Whatever the president wants me to do,” he said.

Mr. Moore is a columnist for The Washington Times, was a member of The Wall Street Journal’s editorial board and has written for numerous other publications, leaving a long paper trail on a range of subjects that his opponents exploited.

He also said he was targeted because he largely agreed with Mr. Trump’s tax, trade and regulatory policies, which he said helped spark the record economic boom.

Echoing the president, Mr. Moore said the Fed made a mistake by raising rates in December and wrote that the central bank posed the biggest risk to the U.S. economy.

“I think they should have canceled the December rate increase,” Mr. Moore said Thursday. “We want 3 to 4% real economic growth.”

Mr. Trump showed no signs. “Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening. We have the potential to go up like a rocket if we did some lowering of rates, like one point, and some quantitative easing. Yes, we are doing very well at 3.2% GDP, but with our wonderfully low inflation, we could be setting major records &, at the same time, make our National Debt start to look small!”

The president’s choices were also motivated, in part, by the belief that the Fed’s seven-member board is dominated by academics and that its decisions would benefit from more diverse backgrounds. More than 100 economists supported Mr. Moore’s candidacy, and many of them endorsed that view.

Timothy Loughran, professor of finance at the University of Notre Dame, said two weeks ago that Mr. Moore would bring a needed “new perspective” to the Fed.

“There are seven seats,” Mr. Loughran said at the time. “This is one vote. It’s really adding to the diversity of opinion and perspective.”

It’s not clear how quickly the president will move now to fill the two Fed seats. White House economic adviser Larry Kudlow said even before Mr. Cain and Mr. Moore withdrew that the president was considering other candidates.

Some conservatives, and Mr. Moore, floated the name Thursday of economist Judy Shelton, director of the Sound Money Project at the Atlas Network. Mr. Trump named her as an economic adviser during his 2016 campaign.