I have already commented on how Mark Zandi, chief economist of Moody's Analytics, has given glowing marks to Hillary Clinton’s economic proposals. See: An Economist Totally in Hillary Clinton's Pocket
At the same time, Zandi has absolutely bashed Trump’s proposals.
In a recent interview with Jared Bernstein published at The Washington Post, he said:
If Mr. Trump gets precisely the policies he says he wants, then the economy will suffer a recession.
To be sure, there is little to cheer about in Trump’s economic proposals, but there isn’t much to cheer about in Clinton’s proposals either.
Why the different take by Zandi on the two proposals?
Zandi has provided a sword to Hillary Clinton surrogates on the airwaves to slay Trump talking heads
A source familiar with Zandi’s views tells me that Zandi, like a number of his Moody’s Analytics colleagues, is Democratic leaning. In 2010-2011, Zandi consistently supported the Democratic proposed deficit spending plans. In a 2010 paper co-authored with Alan Blinder, who served on President Bill Clinton's Council of Economic Advisers, Zandi estimated that the Obama stimulus created 2.7 million jobs and added 3.4% to real GDP. They doubled down on these assertions in a 2015 update claiming that unemployment would have risen to 16% in the absence of government action. That's what you call pro-Obama BS.
So how did Zandi become a McCain adviser? It raised eyebrows at WSJ at the time. Out of 35 economic advisers named, WSJ contacted just 3 including Zandi to find out how they got on the list:
In an interview, he [Zandi] said he became involved with the campaign over a year ago through Kevin Hassett, a scholar at the American Enterprise Institute and adviser to Mr. McCain in 2000. Though a registered Democrat, Mr. Zandi calls himself “eclectic … I’ve done work for both Democrats and Republicans.”
But as soon as Obama won the general election. Zandi went into full Obama support mode. And here is where things get really interesting with Zandi’s and Moody’s support for Obama’s fiscal policies.
In 2011, S&P downgraded the United States government credit rating but Moody’s didn’t follow.
A source tells me, “I recall seeing Zandi on TV at the time representing Moody’s, but, as an employee of the non-NRSRO subsidiary he should not have had any input into the US sovereign rating.”
Later the Justice Department sued S&P for $5 billion over allegedly fraudulent credit ratings on subprime mortgage-backed securities and CDOs in the run-up to the financial crisis. Ultimately, DOJ and other litigants settled with S&P for $1.5 billion.
Now get this. As the Financial Crisis Inquiry Commission Report shows, Moody’s engaged in the same type of behavior as S&P yet has faced no DOJ action. No fines. Current score: S&P $1.5 billion fine. Moody’s to date: $0.0 in fines.
Potential DOJ action against Moody's is still possible, but seems unlikely now that so many years have passed.
But with the DOJ dagger hanging over Moody’s, the support for Democratic fiscal policies, and Hillary over Trump is quite interesting. Some close to Moody’s are highly suspicious.