If you want to get a sense of Donald Trump’s deepening dementia, look no further than his self-annihilating vendetta against Federal Reserve Chair Jerome Powell. As you may recall, Powell’s term as chair expires soon, on May 15, but his term as a Fed governor continues through January 2028.
Trump has appointed a successor, former Fed governor and investment banker Kevin Warsh, who would ordinarily have his confirmation hearing next week. Warsh would then become Fed chair, succeeding Powell, who would likely leave the Fed entirely. So the quickest way for Trump to oust Powell would be just to let Warsh’s confirmation proceed and avoid screwing it up.
But Trump being Trump, his vanity, rage, and muddled thinking are causing Powell to stay in office. On Wednesday, in an interview on Fox News, Trump blurted out that if Powell doesn’t leave, “I’ll have to fire him,” adding, “I’ve wanted to fire him, but I hate to be controversial.” That’s good to know.
The problem, of course, is that Trump can’t fire Powell. In his daze, he somehow forgot that.
The Supreme Court has not quite ruled definitively on that question in so many words, but in earlier cases on a president’s right to fire other term appointees the Court has indicated that the Federal Reserve is a special category. The Court also blocked Trump’s efforts to fire another Fed governor, Lisa Cook, on fake charges.
And on Tuesday, Trump’s toady prosecutor Jeanine Pirro, U.S. Attorney for the District of Columbia, made another foray to go after Powell on discredited charges that he was negligent in allowing cost overruns in the refurbishing of Fed headquarters. She sent two deputies and an investigator to the Fed construction site. They approached construction workers, but were turned away. Robert K. Hur, a former federal prosecutor hired as outside counsel by the Fed, pointed out that prosecutors were violating federal Judge James Boasberg’s earlier ruling that Pirro’s investigation lacked sufficient evidence to proceed.
Why is Trump so angry at Powell? Because the Fed under Powell’s leadership hasn’t cut interest rates as fast and as deeply as Trump would like.
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But here again, Trump’s nemesis is Trump himself. The Iran war has spiked inflation to the point where further cuts are unlikely and the Fed may even raise interest rates. At the Fed’s last meeting on March 17–18, the evidence of inflation was so clear that despite several Trump allies on the policy-setting Federal Open Market Committee, there was only one vote for a rate cut.
What now? The Senate Banking Committee, which must report the nomination to the full Senate for confirmation to proceed, has 13 Republicans and 11 Democrats. But North Carolina Republican Thom Tillis, who is not running for re-election and has nothing to fear from Trump, has said that he will not vote to advance Warsh until Trump ceases his vendetta and the Justice Department ends its investigation.
“I don’t want to reward bad behavior,” he told NBC. With a 12-12 tie vote, the nomination will stay bottled up in committee. And the longer Warsh’s confirmation is blocked, the longer Powell stays on as chair.
In March, Powell explicitly said that he would remain as chair as long as necessary. “That is what the law calls for, that’s what we’ve done on several occasions—including involving me—and that’s what we’re going to do in this situation,” Powell told reporters.
The more that Trump keeps harassing Powell, the greater the likelihood that Powell will decide to remain as a Fed governor even if Warsh eventually gets confirmed. This would create the anomalous and unprecedented situation of a former Fed chair having more prestige and influence than the current chair. Warsh, a lone voice for cheap money, would regularly be outvoted, as other governors looked to Powell as the Fed’s real leader. That schism would weaken the Fed and the confidence of money markets in the Fed’s reliability.
A fine mess, and another disturbing window on Trump’s addled brain.
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