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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
current 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 was also extremely pleased that you not only invited Gen. Colin Powell
to speak to the convention, but have also 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,
If there are any doubts about your intent to have this economy grow
rapidly without inflation, and not squander the opportunity you would have
to do so by mismanaging the surplus, promising a Steve Forbes at Treasury
would be far better than any promise you might shout out.
In picking 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 had somehow 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 today
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’s because a president needs skills in
choosing a team that eluded Steve in his run for the GOP nomination. At
Treasury, you need a find 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
would also 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
first 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 will almost certainly 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 is also 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 these 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 him in