- Former Federal Reserve Chairman Paul Volcker decried what he considered the sorry state of the government in an interview with Ray Dalio, the founder and cochief investment officer of Bridgewater Associates, published on Tuesday.
- Volcker, who served in various roles across government over a 50-year stretch, called out President Donald Trump’s “personal behavior” and Congress’ inability to “function effectively” in the wide-ranging conversation.
- “Too much policy seems to be out of the back pocket today, and god knows what happens tomorrow,” Volcker said. “For an old government man like me, it doesn’t look very good. Let’s hope it gets better.”
Former Federal Reserve Chairman Paul Volcker took both President Donald Trump and the lawmakers in Congress to task in a new interview with Ray Dalio, the founder and cochief investment officer of Bridgewater Associates, the world’s largest hedge fund.
Volcker, who also chaired two commissions that focused on strengthening the civil service and government employment opportunities, was asked by Dalio about comments that the former Fed chairman had made to The New York Times in October. In that interview, Volcker said the government was a “mess.”
“We have fake news, you don’t know what to believe, you’ve got presidents [who] don’t seem to mind either personal behavior or making outrageous statements – true or not,” Volcker said. “You have a Congress that’s been unable to function effectively, hopefully maybe that’ll change a little bit but we’ll wait and see after this past election. But we have not been on a constructive track, I think that’s fair to say.”
Volcker said in the Times interview that the US was “developing into a plutocracy” and said the lack of faith in government was startling.
In the interview with Dalio, released Tuesday, Volcker cast a downbeat tone about the state of government and the bureaucracy that supports its functions – particularly when it came to the Trump administration.
“Too much policy seems to be out of the back pocket today, and god knows what happens tomorrow,” he said. “For an old government man like me, it doesn’t look very good. Let’s hope it gets better.”
Volcker also called out the breakdown of norms in Congress, highlighting the speed with which Republicans pushed through their massive tax-reform bill – the Tax Cuts and Jobs Act (TCJA) – at the end of 2017.
“We rammed through a massive tax bill,” Volcker said. “Whatever you think about that tax bill, it shouldn’t be rammed through the Congress without any debates at midnight on December 31 or whenever it was done with almost nobody in the Congress having a good idea about what was in the bill, whether you like what’s in the bill or not.”
From the point of introduction by the House GOP leadership to Trump signing the bill into law, it took just under two months for the TCJA to pass. By contrast, the 1986 tax-code overhaul cited by Republicans as their model for the TCJA took about nine months from formal introduction to its signature by President Ronald Reagan.
While Volcker is generally identified as a Democrat, the longtime civil servant spent decades in government under various administrations and political parties. He worked for the Treasury Department under both Presidents John F. Kennedy and Richard Nixon, was first appointed to the top post at the Fed by President Jimmy Carter, then reappointed by Reagan, and also served on President Barack Obama‘s post-financial crisis response team.
“The quality of people appointed to cabinet offices or sub-cabinet offices, I think, by any estimation, is not up to scratch,” Volcker told Dalio.
The former Fed chairman also criticized the conflict of interests of some of Trump’s cabinet nominees, singling out the selection of Andrew Wheeler, a former coal-industry lobbyist, to lead the Environmental Protection Agency (EPA).
“When you see a lobbyist for polluting companies named head of the agency for anti-pollution, you wonder about the coherent nature of the appointment, and it’s happening too often,” Volcker said.
To try to rebuild the civil service, Volcker created the Volcker Alliance, a nonprofit dedicated to strengthening the federal government through stronger public-administration education and research. Volcker also recently released a memoir, “Keeping At It: The Quest for Sound Money and Good Government,” which advocated for a stronger civil service.