Regardless of who wins the presidential election on November 4 -- whether Bob Barr, John McCain, or Barack Obama -- when the new president takes office in January 2009, he could do much worse than to name magazine publisher Steve Forbes as his Secretary of the Treasury.
While the political world is full of Chicken Littles warning that our economy -- which is in a period of growth about equal to the average since World War II, and which sees unemployment at a level lower than the average since World War II -- is ready to collapse, Forbes offers a voice of sanity. His optimistic message about the economy has hardly changed at all since his presidential run in 1996, and for good reason: the U.S. economy has been, and continues to be, in good shape -- especially when compared to our trading partners in Europe and elsewhere around the world.
According to an article published in Thursday's Washington Times:
Quoting extensively from Forbes' speech at the Ad Club, correspondent Kara Rowland reports:
Publishing tycoon and former Republican presidential candidate Steve Forbes on Wednesday urged people to put the crisis on Wall Street in perspective, saying it "will quickly pass" so long as the Bush administration and financial regulators strengthen the dollar and enforce rules on the short-selling of securities.
"Put things in perspective: We will get over it," Mr. Forbes said in a speech hosted by the Ad Club of Metropolitan Washington on Wednesday morning. "But if we continue doing dumb things like make monetary mistakes, raise taxes, do crazy things on the regulatory side, you can get a real disaster on your hands."
Far from panicking -- which, unfortunately, is the attitude of both major-party presidential candidates, including the normally hands-off McCain as well as the central-planner Obama -- Forbes suggests we should look at the current situation more calmly and intelligently. Writes Rowland:
"Long story short, in 2004 the Federal Reserve, then headed by Alan Greenspan, made a fatal miscalculation," he said. "They underestimated the U.S. economy. They printed a lot of money because they thought the economy needed it, and the engine flooded."
As a result, Mr. Forbes said, commodity prices shot up and the domestic economy became distorted. Housing prices were already going up, and the influx of money led people to build and buy more houses, lending standards eroded and a subprime-mortgage crisis erupted, he said.
"It just went berserk; a classic bubble, and thanks to high technology, global economy, securitization, it took on proportions it had never done before in history," he said. "So how did the Fed respond? Having gone on one drinking binge, it went on another: It cranked up the money press again."
The Treasury Department should have told regulators to "back off" at that time, but instead praised the move, said Mr. Forbes, who called the country's "weak-dollar policy" the "biggest mistake of the Bush administration."
"If cheapening your money was the way to wealth, then Zimbabwe and Argentina would own the world," he said.
I wrote my first article about Steve Forbes for the Metro Herald back in September 1995, shortly after he announced his bid for the Republican presidential nomination. This is what it said:
Moreover, recent losses may seem big, but people should put them in perspective, Mr. Forbes stressed.
"If you look at median net worth in the United States in the last 10 years, it's gone up over 30 percent," he said. "What's happened in recent years is unprecedented in human history; never before in so many parts of the world have so many people advanced economically as happened in recent years. Each year, 50 [million] to 70 million people around the world join the middle class."
The U.S. has weathered economic storms in the past and will make its way through the current crisis, he predicted, if the Fed redefines its mission as "focusing on a stable currency and dealing with panics." It should start to soak up some of the excess money it created and the Treasury Department should announce a strong-dollar policy, he said, adding that financial regulators should try to standardize "these exotic instruments" that have been created by Wall Street.
"Make the dollar stable. It's not that hard to do. Maybe I should write a book, 'Central Banking for Dummies,'" he joked.
In the meantime, Mr. Forbes said, investors should stay calm.
"This is precisely the time [you] don't give into your emotions. Your emotions are your enemy."
Does Steve Forbes Have the Right Stuff?
Richard E. Sincere, Jr.
The Republican presidential horse race just got a thoroughbred entry -- a 25-to-1 shot with a $25 million purse. But can millionaire magazine owner Malcolm S. "Steve" Forbes, Jr., break away from the pack to win the race? Pundits are skeptical.
Forbes is the son of the late publisher Malcolm S. Forbes, a former correspondent and now the editor-in-chief of the magazine that bears his father's name. There are reports he plans to spend $25 million of his own money to win the Republican nomination and to go on to defeat President Bill Clinton in November 1996.
Announcing his candidacy formally at the National Press Club in Washington on September 22, Forbes described himself as fundamentally different from the rest of the GOP candidates. He said "their vision of what we can do is narrow, cramped, and constricted." He noted that all of them "have been in Washington, or in politics, or both, all of their adult lives. They haven't been at the center of the entrepreneurial economy. I have, both as a reporter traveling the world and as a businessman, running a company. That," he said, "has been my life."
Indeed, if vision is what elects candidates, Forbes stands head and shoulders above the rest. He has a consistent vision lacking in Bob Dole, for instance, who after 35 years in Washington is known best as a "compromiser" with no overarching political or economic philosophy. Forbes has a focus absent from Bob Dornan, whose public speeches ramble and roam with no coherent direction, except to attack gay and lesbian taxpayers. He has a certainty superior to Phil Gramm, who has lurched to the right in recent weeks to appease religious conservatives, who make him fidget nervously. Forbes has a coherence unseen in the campaign of Pat Buchanan, who calls for freedom except for immigrants, and international trade, and minorities, and political dissenters, and (pick a favorite category here).
Of course, vision alone does not elect candidates. Forbes may have a lot of money, and a clear message, but he doesn't have a lot of political operatives around the country. Like it or not, politics is still largely a game of machine-based politicians. Without the ability to call in his chits, Forbes is unlikely to build the support he needs among local activists who select delegates to the big show -- the Presidential Nominating Convention.
That aside, Forbes' message is compelling. He demands scrapping the current income tax code. "Don't fiddle with it. Junk it. Throw it out. Bury it." In its place, he calls for a "pro-growth, pro-family tax cut that lowers tax rates to 17 percent across the board." This flat tax would have exemptions that ensure that a family of four earning $36,000 or less will pay no taxes.
He really parts company with the Republicans in his firm, unmitigated support for term limits. In an article he wrote for the September 25, 1995, edition of Forbes (the magazine), the new presidential candidate noted correctly: "Public support for term limits remains unwaveringly strong, regardless of race, party, income, or gender. People agree with Thomas Jefferson, who said that the Constitution should have mandated the rotation of elected officeholders."
At his campaign kick-off, Forbes said:
"I want to change the culture of Washington by changing the rules of the game. And to change the rules of the game, you have to do two things: You have to take away the politicians' power to manipulate the tax code. . . . And you have to limit their terms."
In addressing "values," Forbes acknowledged a truth that the so-called Christian Right is unwilling to admit. The real reason for the breakdown of family values, and of families themselves, is the breakdown of the economy caused by the growing intrusiveness of government. By deregulating the economy, by cutting taxes, by offering parents the right to choose any school for their children, by focusing the energies of police and prosecutors in violent crimes, we can restore values to their proper place in our communities. Forbes is on the right track -- though his announcement speech lacks specifics. (That, of course, might be its attraction: By letting the other Republicans fight over the title of "most righteous," Forbes might win "most likely to succeed.")
Some say Steve Forbes is a stand-in for Jack Kemp in the 1996 presidential stakes. Some call him "Kemp Lite." Indeed, his campaign staff is made up of many former Kemp associates. Forbes, however, does not seem to be as squishy on welfare and regulatory issues as Kemp is. Kemp is a big-government Republican. Forbes, if his actions match his words, genuinely believes in shrinking the size and scope of government. We'll see.
Steve Forbes brings new interest and new experience into the Republican presidential race. Can he go the distance?* * * * * * * * * * * * * * * * * * * * * * * * * *
Richard Sincere is author of The Politics of Sentiment: Churches and Foreign Investment in South Africa, and other works.
Comparing the quotations from my 1995 article and Kara Rowland's piece in yesterday's Washington Times, one can see that Steve Forbes has lost neither his idiosyncratically staccato speaking style nor his overarching vision of free-market economic policies.
Can we start a write-in campaign for "Steve Forbes for Treasury Secretary"?