The Perot  Campaign, etc.
Jude Wanniski and David Goldman
May 27, 1992


THE PEROT CAMPAIGN is reported to be offering the campaign manager's assignment to Ed Rollins, who managed President Reagan's re-election campaign in 1984 and who was campaign director in Jack Kemp's 1988 presidential run. It would be a stunning, defining moment for Perot if this happens, as it would fix Perot clearly in the Reaganaut wings of both parties. Rollins would not manage a narrow, corporatist campaign a la John Connally's 1980 vintage, which some analysts are suggesting may be Perot's route. Perot is also said to be offering a campaign assignment to Hamilton Jordan, who was Jimmy Carter's campaign manager in '76, thereby adopting an ecumenical approach. Rollins has not yet met Perot, an event said to be scheduled for this weekend in Dallas, but the interest expressed in him by the Perot camp is itself provocative. Over the weekend, HUD Secretary Jack Kemp was asked on "Meet the Press" if he would accept an invitation by Perot to be running mate and domestic policy czar. Kemp joked he might consider if Perot threw in the Fed chairmanship and Treasury Secretary. Of course, Kemp could only answer with complete loyalty to President Bush. If there is an offer from Perot, he'd have to ponder it at that time, given his assessment of where the Administration is going this year, and over the next four, and his own political future if Perot runs under the growth banner and he sticks with Bush, Brady and Darman. (JW)

OUR UNHAPPINESS WITH THE FED centers on our old friend, Gov. Wayne Angell, who has abandoned $350 gold as the objective in his Price-Level Targeting model. We have been shoulder-to-shoulder with him in arguing for Fed restraint these last few years with gold above $350. It's still our target, which means the Fed should be adding liquidity at least to keep gold above $340. Angell, though, has shifted position to the old "disinflation" model, which is out-and-out deflationary. That is, he's no longer content to stick with a constant unit-of-account principle, to provide certainty around a $350 gold Polaris. His aim now is to squeeze CPI or PPI inflation out of the system, which, in our view, is the monetary equivalent of putting a balanced budget ahead of all growth objectives. The wires report today that Angell is complaining of leaks to The Wall Street Journal about his position of opposing any further easing of policy. Had Angell stuck to the $350 target, the bond rally would be in full swing toward a 7% yield. Without his leadership, the Fed is once again rudderless, and we have to hope Chairman Greenspan will be able to round up support to keep gold from further deflation. My guess is that Angell has fallen back under the influence of his old friend, Milton Friedman. (JW)

MICHAEL MILKEN, if you hadn't noticed, is being clearly told by the Justice Department that he can only hope to have his ten-year sentence reduced if his testimony helps convict Alan Rosenthal of federal charges that he helped Milken in a scheme to embezzle from mutual funds controlled by Drexel Burnham and David B. Solomon. That is, if Milken merely tells the truth, the Feds will recommend his sentence not be reduced. If he reads from a script they have written for him, which will salt away poor Mr. Rosenthal, then Mike is assured they will cut his sentence down somewhat. If this is not obstruction of justice BY THE JUSTICE DEPARTMENT and suborning to perjury BY THE JUSTICE DEPARTMENT, I will eat my hat. The entire legal corps and press corps sits on its hands and watches this corruption of our criminal justice system. The case, by the way, is laughable on its face. It's the one where the whole thing would have been legal if Milken had advised Solomon to file an explanatory paper with the SEC. Here's how it went: Solomon's Finsbury Fund customers had bought securities through Drexel. A question arose as to who would pay the commissions to the salesmen. Solomon said he didn't want to inform his customers ex post that they owed commissions. Drexel said it didn't want to pay the commissions. Drexel asked Milken to find a way to pay the commissions, amounting to $318,000, because the Fund had bought some of his junk bonds. Milken suggested several ways, which were rejected. He then proposed that future transactions for the Fund have prices adjusted by fractions of a point between the bid/asked spread, until the $318,000 was collected. Everyone agreed to this "scheme" to "embezzle," a scheme that would have been legal if Solomon had informed the SEC of what had occurred. This is the most heinous of all the "crimes" to which Milken confessed, the only one where Judge Kimba Wood could find a single dime the public had been bilked out of because of his nefarious schemes. The other crime Mr. Rosenthal allegedly helped Milken commit is a $1.6 million "fraudulent" tax writeoff scheme that benefitted Mr. Solomon, although Judge Wood acknowledged the government wasn't cheated out of a cent. Solomon and Drexel simply swapped their tax liabilities between 1985 and 1986. It is all disgusting. Kafkaesque and disgusting. This is the good old United States of America. (JW)