MAJOR GARRETT:
00:01:55
And then what happened? He made a series of decisions, none of which I think are the right way to go. I didn't love what they did with the reconciliation, the one big, beautiful bill. That was unlike the '17 bill, which was a real tax reform-- treat income equally, get rates down. Now we're going to have special treatment for tips and special treatment for overtime, special treatment for seniors. It's at the antithesis of tax reform. And so I don't think we're going to get much out of that. I think the tariffs are a big mistake. They're a big economic mistake. They're a big international-relations mistake. I mean, we've alienated neighbors and allies. So it makes me just think he's making bad decisions. I don't know why. Are the tariffs put in motion by the president legal, from your vantage point? There are some that are unquestionably legal. So steel, aluminum, autos, so-called section 232 national security things, has the authority to do that. Because there's a process in law and a process in procedure where you investigate, establish a case, make a judgment, and if you follow those rules, under 232, they are legally bulletproof, more or less. They are, and the Congress has said, here's what you can do. We have the authority to levy tariffs. We are where the Constitution put that authority. We're going to let you have it under these circumstances, and they spelled it out, and he does it. He can put in the tariffs. But when the president came in for the second term, as you well know, he said there's an economic emergency, and my powers to tariff are essentially limitless because I've declared an emergency. He said, I'm going to use the International Economic Emergency Powers, but that law does not contain the word tariffs. It does contain the word regulate, but no one typically associates regulation with what the House Ways and Means Committee usually does. So, number one, was it really an emergency? We'd had these current account deficits for 20 years. Didn't appear to be a sudden crisis. Number two, did he have the authority? I think the answer is no. Two levels of the courts have decided no. Supreme Court gets the final say. We'll see how it works out. And the president has said to the Supreme Court, if you overrule me, you're going to throw the economy into the ditch, and you're going to have to give back all this tariff revenue. It's going to be a calamity. So don't you dare do it. Whatever the law says, don't do it. Don't cross me. Don't cross the US economy. Not an argument that I like or buy. I mean, roll the clock back to January 1, and this wasn't a Third World nation, which they've asserted. This wasn't an economy that was dead in the water. It was growing at 2 and 1/2%. It's growing a lot less now. So it's not obvious that getting rid of the tariffs is a bad idea. I'd get rid of them tomorrow. I have described on this program, delicately, the president's attitude toward the Federal Reserve chairman, Jerome Powell, as jawboning. I think that is being delicate. Is this a dangerous thing the president is doing? Because his administration will say, look, we're critical of the Federal Reserve. We are empowered to be critical of the Federal Reserve, and that's all we're doing is we're offering our opinion. We're not threatening its independence. How do you view it? I've worked for two White Houses, and presidents regularly complain about the Fed, and Fed chairmen are regularly invited to have lunch with the secretary of the treasury, where it is explained to them that they're doing a terrible job and endangering the future of their boss. Go back and get it right. And they typically ignore them and go do their job. And so at that level, I thought the criticisms of the president were fine. But there's a key moment when it really shifted, and that was when he started openly saying, I'm going to get somebody who's going to cut rates. And suddenly we had members of the Board of Governors saying, well, I want to cut rates at the next meeting in a way that members of the Board of Governors don't usually do it. They're not that blunt. They're usually very, very, very restrained in their comments. They don't tip their hand. And suddenly I was thinking, is he saying that because that's the right thing to do or because he wants to be the chair? And now you're thinking about the Fed wrong. You're not thinking about the monetary policy and the economics. You're thinking about the politics. It makes the Fed less effective. Their job is to convey to American businesses and households the future of the economy and what they're going to do to support it, not to run for chairmanship. So, yeah, it's done some damage, and the next chair is devalued automatically because the presumption will be they cut a deal with the president to get the job. And for someone watching this, Doug, on their phone, their laptop at home, and they're like, so why should I care? What's the danger of what you're describing, a politicized, fearful Fed? A politicized, fearful Fed doesn't do the right thing for the person sitting in their home watching on the phone. They do the right thing for the occupant of the Oval Office. Last politicized Fed we had-- we've had them. Arthur Burns is notorious in Fed history for doing whatever Richard Nixon needed to succeed politically. And in the '70s, we had sustained high unemployment, sustained high inflation. That's what a politicized Fed gives you. Doug Holtz-Eakin I appreciate it very much. Thank you.
