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Message Matters: Trump Succeeded, Yellen Failed
Most political reporters are fixated on the presidential horserace rather than the message candidates are sending to voters. Message wins all the time. Message moves polls. Message raises money. Message determines elections.
Most of all, a clear message tells voters what a candidate believes and where he or she wants to take the country.
Ronald Reagan was the master of the message. Campaigning on a few key points, he told America how he was going to rejuvenate the economy and defeat Soviet communism. He didn’t spend much time on detail. But over and over he repeated his strategic message. It worked.
The two biggest events this past week were Donald Trump’s landslide in New Hampshire and Janet Yellen’s testimonies before Congress. Trump’s message succeeded. Yellen’s failed.
An unlikely pair to be sure. But let’s give a quick thought to why Trump got it and Yellen did not.
First up, Janet Yellen. Six weeks ago the Fed raised its target interest rate, with a lot of hawkish talk about three years of sequential rate hikes. Markets crashed in response. And now the Fed is in full retreat.
This is not a clear message. This is not leadership.
Before the House this week, Yellen acknowledged that the Fed’s forecast and polices may not be working. (What an understatement.) She pointed to stock market declines and higher credit-risk interest rates. And when asked whether the Fed was changing its upbeat economic view that would lead to more rate hikes, she replied, “Maybe, but the jury is out.”
Oil prices and inflation are falling. So are profits. No clear message.
The next day before the Senate, not only did Yellen back off additional Fed rate hikes, she raised the issue of pushing short-term interest rates into negative territory. Woah. The flip-flop of flip-flops.
That policy hasn’t worked in Europe or Japan, and it won’t work here. It would destroy savers, again. Banks will go into short- and medium-term Treasuries, which at least have a positive yield, rather than make loans. And negative rates will crush net interest margins for banks.
The Dow fell 231 points following Yellen’s stellar performance. Year to date, stocks are off 11 percent. And banks are off 18.5 percent. You’re not going to breed economic confidence when the Fed leaves everyone in confusion.
Now let’s leave Ms. Yellen in the emergency room and move on to a patient who has healed in the message department.
Donald Trump is today mastering the art of the positive. Coming out of an Iowa loss, campaign manager Corey Lewandowski told him bluntly, according to the Wall Street Journal, “We can knock on every door and call every resident. But most important: If we remain positive and focus on our message, we can win New Hampshire.”
Win indeed.
When I interviewed Trump on the day before the primary, he emphasized his positive message of optimism, growth, and national security. In recent weeks, he has talked about how America has been losing key battles around the world, whether it’s ISIS, Russia, Iran, China trade, immigration, or the declining economy. And he has loudly proclaimed: If you elect me, we will start winning again. Everywhere.
Asked what a President Trump would do about the risk of recession, he reeled off a series of tax cuts, deregulations, and federal budget cuts. He knows the country is in revolt against Washington DC, and he plays to that with his program.
He talks about oil independence and opening up federal oil fields.
He talks about bombing ISIS oil trucks.
He mentions Anthony Scalia and Clarence Thomas as models for Supreme Court appointments.
He talks about creating jobs — over and over.
He talks about strong border controls to fix the illegal-immigration problem.
He talks about a strong military and renewed support for our military vets.
He proposes a total repeal of Obamacare, with HSAs and crossing state lines for more competition.
Perhaps most interesting, he is railing against big corporations and their big money deposited in super PACs. Unlike a typical Republican, he hangs out Big Oil, Big Pharma, Big Insurance, and Big Lumber as examples of the corrupt monetary influence on American politics.
I asked him if he intended to change the Republican party. He snapped, “You bet I do. It needs changing.”
There are soft spots in Trump’s proposals, most particularly on China trade. His tariff threat is worrying Wall Street and pro-growth free-traders like myself. More work on that will come.
But apart from even these details, Trump’s message is clear: America must start winning. And yes, we must make America great again.
Positive and optimistic. Growth. Leadership. Clarity. It worked in New Hampshire.
Janet Yellen, on the other hand, nearly fell off the financial ladder.
Message matters. There’s a lesson here for all of us.
Published in Economics
So what does Trump say about the matter?
I understand that there’s plenty to not like about Trump. Vulgarity is not really my thing either. I understand that by the sacred rules of modern politics that Trump should have been sunk five times over by now and that it’s bewildering and frustrating for people who want to seem him sunk and for people whose own guy has been subject to those rules still. I understand that Trump’s not a conservative; whatever overlap happens to exist in the Venn diagram of me and him is accidental – I’m not sure what principles guide him.
There is plenty of reasonable basis for not supporting Trump. Which is why it’s amazed me from the start of this that people have felt the need to reach beyond the undisputed and the self evident to the unsupported, self defeating, and exaggerated. Fascist? I don’t see it. We’re to the point now that someone takes poetic license to make a point and that point somehow trans-substantiates to a bedrock truth.
I think it would profit everyone to not mistake lack of detail for lack of coherence. First, Trump is naming real problems that have been thorns for conservatives for a long time. Second, Trump’s simplistic and sometimes contradictory answers are communicating broad goals and an idea of what he wants to see. Third, his whole schtick of neutering the media – we should be cheering that full throatedly for its own sake. Fourth, he’s exposing the weakness of the Republican party; the only candidate with some credibility on the hot button issues (immigration) also seems to have a likability problem in addition to a reputation for being unable/unwilling to make deals let alone deals that which move the ball our way.
Empty words, for empty minds. That’s all it is.
Empty minds want simple black and white messages, aimed at appealing to their narcissism: I’ll make everything great for you again!
When things that are actually complicated are encountered, as in the case of Fed rates, empty minds see failure. But Mr. Kudlow wants a “clear message” from a Fed chairman on an incredibly technical and complicated issue…that the “modal Trump voter” with a 4th grade education can “understand”.
Sorry, no such thing exists in the real world. Welcome to the real world Mr. Kudlow. It’s no place for “modal voters”.
Aghm…is the job of the Fed chairman, “leadership”?
Do you even care if a position is right, or wrong, regardless of how “clear”, simple, or condensable into 2 sentences it is? Apparently, not.
Of course, your comparison between a blow-hard politicians blowing hard, and a Fed chairman talking about a complex issue, is itself an indication of the problem of this Trumpian world.
The second issue of course comes from not being able to understand what Yellen said, or why, or how anyone reacted to it. Considering that what the Fed’s position was, and remains, is that their steps will be dependent on upcoming data…your interpretation is dead wrong. Considering that her steps and the steps of the Fed are based on the Same identical positions, logic, models, data, targets and intentions as they have been for the past ~40 years, i.e. since Volcker (who was a hero to conservatives, until he wasn’t of course), your “flip-flopping” argument is again dead wrong.
But that’s a complex question to analyze. 3 simple words are sufficient and a necessary condition these days. So, good job on that at least.
But as I said, right, wrong, is irrelevant. Complexity is irrelevant. Saying a simple phrase to appeal to the masses is the new measure of performance for Trumpian “conservatives”.
The future is here: