The enormous stakes of Donald Trump’s fight with Jerome Powell |
On Sunday night, Federal Reserve chair Jerome Powell gave a surprise video statement declaring he was under threat of criminal indictments, having been served with grand jury subpoenas from the Department of Justice. On paper, the matter was over cost overruns for renovations to historic Federal Reserve buildings and Powell’s related testimony to Congress. But Powell said that these were just a pretext, and the real reason was “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.”
Grand jury subpoenas on the Federal Reserve chair are a major escalation of President Donald Trump’s war against the central bank. Trump denied any involvement in the investigation, but the perception that it was part of an intimidation campaign against Powell was so strong that it generated unusually strong bipartisan pushback in Congress. Powell, who was nominated by Trump in his first term and later renominated by then-President Joe Biden, is respected among many elected officials in both parties. Sen. Thom Tillis (R-NC), a member of the Senate Banking Committee, has already said he’ll oppose any new nominee while these charges are ongoing. Sen. Lisa Murkowski (R-AK) made a similar statement. Other Republican senators sound, at minimum, concerned.
The confrontation is the dangerous but inevitable result of President Trump’s new vision of executive power, one in which the president directly exercises control over economic policymaking without any independent institutions to slow him down. So far it’s largely been a successful endeavor — with the notable exception of the Federal Reserve, where Trump has faced higher legal and political hurdles. Perhaps for that reason, it’s become the place he’s most focused on. The Powell fight will now prove the biggest test yet of his ability to impose his unfettered will on the most powerful economic institutions in the world.
How Trump consolidated economic power
Only a year into his second term, Trump has exercised far more personal power over economic policy decisions than in his first.
He has canceled spending, frozen funds, and pursued aggressive rescissions that treat appropriations as optional. He’s dismantled programs supported by Congress in a bipartisan manner, like the foreign aid services at USAID. He’s pursued mass firings of federal government workers, bypassing civil service protections, and leading to a nearly........