An Interview With David Malpass
David Malpass, a Reagan-era Treasury official and Republican candidate for U.S. Senate in New York, called in to FutureOfCapitalism.com headquarters this morning and for nearly an hour previewed some of his campaign themes.
"I'm running because Washington's expansion is very dangerous for the long term health of this country," Mr. Malpass says.
It's particularly tough on New York, which sends more to Washington than it gets back. "When Washington spends money, it harms New York, because New York puts more than its share into that spending," Mr. Malpass says. "As Washington spends, it relies heavily on New York to pay for it. It's the huge tax burden that's faced by New York."
I ask whether talk of the tax burden will still resonate when that burden is borne increasingly by a fortunate few in Manhattan or the Hamptons, while the benefits of spending are spread more widely. Mr. Malpass replies that one thing he learned about "countering the class warfare" back in the Reagan administration was to link the tax issue to jobs. "New York state is losing people and jobs," he says. "New York needs to remain the world financial center."
How would Mr. Malpass, if elected, approach the health care bill that passed last night? "Some parts will be repealed," he says, while others will be modified. He said that uncertainty about health care costs and fear of impending tax increases is already showing up in weak job-creation numbers for small business.
"There is a groundswell of opposition to Washington in general. I want an upheaval in Washington as well as Albany," he says, vowing to "stop the expansionism in Washington."
I ask what the precedents, if any, are for a conservative Republican senator from New York. Not Jacob Javits or Alfonse D'Amato. Mr. Malpass mentions James Buckley, but says he doesn't want to get stuck on the history. "Politics is cutting new ground in lots of areas," he says, pointing to Scott Brown's U.S. Senate victory in Massachusetts.
How will Mr. Malpass's experience as chief economist of Bear Stearns play in the Senate race, where Mr. Malpass, if nominated, would face Democrat Kirsten Gillibrand? He will try to turn it into an advantage. "New York should have senators interested in financial markets," senators who "have a deep understanding" of those markets, he says.
What does Mr. Malpass make of the flare-up between the Obama administration and the Israeli government? He says it is "unfortunate that the Obama administration has singled out Israel for its verbal attacks," and "a travesty to have the United States more critical of Israel than of Venezuela." America's choice to treat Israel this way, he says, sends the "wrong signal" to Iran.
Mr. Malpass is unusual among political candidates for his emphasis on what he calls "stable money." He says he would not have voted to re-confirm Ben Bernanke as chairman of the Federal Reserve, arguing that the volatility in both interest rates and the value of the dollar over the past 15 years has created "artificial profits for financial institutions at the expense of jobs."
"The nation and New York state face serious economic turmoil and job creation problems," he says. "I have skills, experience, and knowledge directly relevant to that major problem."
We circle back to the theme on which the interview began. "New York is hurt when Washington spends," Mr. Malpass says. But that's just part of the story. "Washington's expansion is harmful to the constitutional values that we hold as Americans," and our freedoms, Mr. Malpass says.
He cites the Tenth Amendment, which says that powers not delegated to the federal government by the Constitution are reserved to the states or the people.
"The Constitution didn't give Washington the responsibility and authority for mortgages," Mr. Malpass says. "Yet a big part of the mortgage industry is in Washington now."
The same line of analysis applies to health care. It's one thing for Massachusetts to decide it wants universal health care coverage, Mr. Malpass says. "Washington should not be doing this activity."
I ask how that applies to Medicare. "I don't want to go back and fight the old battles. We've got the new battles, right here, now," he says. "I don't think we can roll the clock back," he says. "We have to say no new entitlements."
"As Washington keeps adding them, it makes each one less affordable," he says.
Mr. Malpass volunteers that while he may sound like a spending or budget hawk, he also has optimism, as befits a veteran of the Reagan administration, about growth, jobs, and prosperity.
Decline or government expansion is not inevitable, he says, it is a "choice, made in Washington" that "has to be reversed."
He sees the potential building for an "upheaval in Washington," and says, "I want to be part of it."
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