Karl Rove appeared on Friday for the fourth time in front of a federal grand jury, as prosecutors attempt to get to the bottom of who said what to whom and when in the "outing" of Valerie Plame as a CIA "operative." Once again, the neck of the president's top advisor is on the line, with many corners of Washington calling for his resignation before all the facts are known.
Media reports all seem to agree that it would be a huge blow to the Bush administration if Rove were forced to step down. Not only because it would come at a time when the president's approval ratings are at an all-time low, but because Rove has meant so much to the White House's political apparatus. I hold, however, that the removal of the deputy chief of staff would come at the detriment of pro-growth economic policies, and quite conceivably the stock market and the economy overall.
What the mainstream media have been missing in this story is that the influential 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 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 United States 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 longtime admirer of Ronald Reagan. Earlier this year, during 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."