Media reports
all seem to agree that it would be a huge blow to the Bush administration
if Rove were forced to step down. Not only because it would come
at a time when the president’s approval ratings are at an
all-time low, but because Rove has meant so much to the White
House’s political apparatus. I hold, however, that the removal
of the deputy chief of staff would come at the detriment of pro-growth
economic policies and quite conceivably the stock market and the
economy overall.
What the
mainstream media have been missing in this story is that the influential
Karl Rove is not simply a political advisor, he is a key supply-side
economic voice in the Bush administration. In fact, many hold
that Rove is President Bush’s top economic advisor.
Most political
insiders believe that Rove was instrumental in persuading President
Bush to stay with personal-saving-account-type Social Security
reform in both the 2000 and 2004 election races. In my interview
with Rove last winter, he was the first senior Bush official to
come down against raising the Social Security tax wage cap. He
also referred to the U.S. as an IRA/investor-class nation that
will never look back.
Rove knows
full well that roughly three-fifths of all voters come from the
investor class. That is why he was a strong supporter in 2003
of reducing tax rates on investor dividends and capital gains,
a strategy that has helped propel the U.S. economy at a 4.5 percent
annual rate over the past two years.
Not surprisingly,
Rove is a long-time admirer of Ronald Reagan. Earlier this year,
during a speech at the Reagan Library in California, he praised
the Gipper as a champion of free markets and entrepreneurship.
In particular he noted Reagan’s view “that government’s
duty is to remove roadblocks to economic growth . . . end regressive
taxation and regulatory policies that penalize hard working men
and women . . . and help encourage small business and enterprise
to flourish.” Rove went on to quote the great classical
free-market thinker Ludwig von Mises, who said that “capitalism
has raised the standard of living among the masses to a level
which our ancestors could not have imagined.” Rove also
said that because of Ronald Reagan, the debate over the
merits of capitalism versus a command-and-control economy has
been settled, that the free market has won in a rout, and that
economic growth and prosperity have followed in its path.
This is weighty
stuff for someone generally thought of simply as a political organizer.
In a hard-hitting
speech to the New York Conservative Party a few months back, Rove
told the audience that “Conservatives believe in lower taxes;
liberals believe in higher taxes. We want few regulations; they
want more. We believe in curbing the size of government; they
believe in expanding the size of government.” That same
night he emphasized the conservative reform agenda where ownership
replaces entitlement, welfare reform supersedes government dependence,
and Social Security reform benefits ordinary working people by
tapping into the markets. He added that conservatives must always
and everywhere oppose job-killing tax hikes.
In the hurly
burly of Washington politics and punditry, Rove’s supply-side
investor-class approach to economic policy is nearly always overlooked.
While media mavens are constantly searching for “gotcha”
political points, they seldom take the time to read the words
that truly reveal the underlying philosophies and policies of
our major figures. Anyone who takes the time to comb through Rove’s
work will discover a deep policy thinker who has consistently
given the president sound advice based on an optimistic world
view of growth and prosperity.
Indeed, Rove
is the rare political advisor who understands that good pro-growth
policies lead to successful politics. There’s no question
that Rove is in fact a brilliant political strategist, but he
is also an uncommon thinker who understands the economic underpinning
of winning elections.
I don’t
think there’s anything to the case against Rove, but that
must be left to the special prosecutor and the grand jury. My
point is the economic content in this controversy. Let’s
hope we don’t lose the strong pro-growth advocate we have
in Karl Rove.
