If by some distant chance Bush advisor Karl Rove is pushed out of the White House by the Valerie Plame/CIA kerfuffle, it would come at the detriment of pro-growth economic policies and quite conceivably the stock market and the economy as well.
What the mainstream media have been missing in this story is that the influential Mr. 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. A few months ago, at 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.