Trump against “The Lord too late”: Anatomy of the Harassment Campaign and demolition to the president of the FED | Economy

It has to be frustrating for someone who, like Donald Trump, owes a good part of his fame and his fortune to the phrase “You are fired!” Not being able to throw an employee with whom he is unhappy. That employee is called Jerome Powell. And Trump has been wanting to fulminate him at the head of the Federal Reserve (FED) for his refusal to lower interest rates.

The US president has tried everything: the insults (“Testaruda Mula”, “Silk”, “Hollow head” …), The Motes (the Motes (Mister Too late, he likes to call him), the suspicions for the extra cost in the reform of the headquarters of the Central Bank in Washington or the accusations of “being destroying” the country. But there is no way: Powell resists.

This week he took another step: Trump met on Tuesday with a group of congressmen who tanked about the possibility of saying goodbye to, the next day, tell the press that it was “highly unlikely” to do it, “unless you have to leave fraud.” It is not clear if he was serious, or if he was only playing his favorite game: the game of distraction.

After all, the law prohibits him from throwing Powell, who is left little in office: his mandate ends in May next year. Be that as it may, the mere idea was enough for the dollar and Wall Street to fall and the types of debt register increases, because the markets would see a responsible for the monetary policy complacing with Trump as a synonym for inflation.

In the appearance in which he said yes, but no, Trump expressed a recurring desire: a drop of three points of the types, which are now at 4.25% -4.50% and investors assume that they will stay at the next meeting of the Central Bank, scheduled for July 31. Almost all experts agree that a cut like the one who asks for the White House tenant would be an economic suicide of global consequences.

That day when he denied that he was going to throw the stubborn employee, the Republican lied by saying that Powell was appointed his successor and predecessor in the White House, Joe Biden. Actually, Powell was designated by Trump in 2017, during his first term, and Biden renewed his confidence four years later. It happened to Janet Yellen in the position. They were the days of wine and roses, when Trump considered him someone “strong, focused and intelligent.”

Powell, who has received this week the support of the great banks, is registered as a Republican and belongs since 2012 to the Board of Governors, seven men and women in whose hands is the monetary policy of the United States, which are the hard core of the Federal Open Market Committee and act with a double mandate: to achieve stable prices and maximum employment. Then, it was Barack Obama who appointed him for a position for 14 years, so, although he does not renew as president, if he decides, he will remain linked to the Fed until 2028, bad that despite Trump.

Powell has a degree in Political Science and graduated from the Law School of the University of Georgetown, in Washington. Someone who knows him personally defined this week in a conversation with El País as a “quiet man.” He also recalled that before the public service he worked for 20 years as a investor in the private sector, where he became a partner of the powerful firm Carlyle, and that this will guarantee that he will have money to stand up to Trump in the courts if necessary. In his curriculum, he also appears a season as vice secretary of the Treasury with Bush son.

A long tradition

In Washington, economists of different political sign agree that Powell will be remembered as “one of the good presidents” of the Fed; It took to react to the inflation brought by the pandemic, but then piloted a “soft landing” of the economy that avoided the recession. “I think it has honored the long tradition of commitment to the independence of the Central Bank. Going against this independence only subtracts the body ability to respond to possible crises,” he explained Thursday in a telephone interview Natalie Baker, director of Economic Analysis of the Progressive Analysis Laboratory Center for American Progress.

“Despite the noise, Powell is still committed to his goal: to leave the American economy in the best possible state,” he said, a market source, which asked to speak anonymously. “And he has not had precisely easy: he has survived Trump, a pandemic, and again to Trump.”

The second Trump has turned out to be much more corrected. The president accuses the Fed without evidence of having dropped the types last year to favor the election of the Democrats. From Trump’s return to power, Powell has reiterated that, in the middle of an economy that is being demonstrated “resistant” despite everything, the “uncertainty” that the Republican sows with so much tariff vaivén advises to leave the types as they are (at least, until September, when a cut is expected).

In view of the firm convictions of Powell, Trump and his people have resorted to a new attack plan: accuse him of waste in the renewal works of the two neoclassical buildings that serve the headquarters to the Fed in Washington. They are from the thirties and have never been remodeled since then. The scaffolding that partially cover them have been filled these days with curious and journalists who try to see through them, as Trump’s allies say, there are signs of waste as “landscaped terraces on the roof, sources, VIP elevators and first quality marble” to sport that would explain a deviation from the initial budget of 600 million dollars to 2,500 million.

In a letter sent the White House this Thursday, Powell blames that deviation to materials and higher labor costs than expected or a problem of toxic pollution on the ground that came to light on the fly and that had to be resolved. He also denies that there are VIP elevators or dining rooms. The marble part was answered alone thanks to an AP information: it turns out that it was Trump’s envoys who in 2020 requested more of that noble material, of the “Blanca de Georgia” variant on the facades, following the instructions of the then president, whose taste for ostentation is well known. The architects of the reform preferred the crystal, to underline “the transparency of the institution.”

Trump, as comfortable as usual when he was discovered in his contradictions, said this week that if there was “fraud” in that renewal he would say goodbye. A judgment of the Supreme Court last May extended the presidential powers to dismiss members of the independent agencies, such as the Federal Communications Commission (FCC) or the Competition Regulator (FTC), but excluded the Fed for considering different from the rest.

“The ruling, as the Judge (Liberal) Elena Kagan pointed out in her discrepant opinion, did not clarify why there is that difference, so I do not think that the possibility of a dismissal can be ruled out,” says the right professor of the University of Massachusetts Paul Collins, an expert in the politicization of the Supreme. Collins warns, however, that “even lawyers who advise Trump” doubt that the pretext of the extra cost is “enough to justify it.” “I am not sure that that matters to the conservative magistrates (of the high court), who have proven to be very reluctant to take the opposite to the president,” adds the expert.

At the moment, Trump and his Treasury Secretary, Scott Besent, have already slipped the idea of appointing Powell’s substitute around the summer, long before he indicates Washington’s custom. Something like that, considers the chief execonomist of the IMF Kenneth Rogoff, incorporates the risk of creating a federal open market committee “parallel”, which would add pressure to the Powell committee.

The background of a political intervention like the one that now looms over the Fed is not flattering. “The classic case is that of (President Richard) Nixon, who pressed for a decrease in interest rates (to Arthur Burns) to win the elections (of 1972); that brought an increase in inflation that took a decade to control,” Baker recalls, which adds that “changing the president” does not amount to control the Central Bank. The one to lower or upload the types would still be a decision made by the majority of a committee to which, remember, Powell would continue to belong to 2028. That his 12 members do not think monolithic way again demonstrated this week the governor Christopher Waller, who declared that he is on a decrease in the types of 125 basic points in July (he also said that if Trump asked him to replace Powell ‘yes I want’).

While Waller made merits, The Wall Street Journal This week published an editorial entitled Do not dismiss the president of the Fed, Mr. Trump. He defended that it is “in everyone’s interest, also in his own, that the markets perceive Powell’s substitute as a serious manager and not as a faint -hearted plugged down by the White House.” The same opinioners of the Journal They admitted below that an “unusual gesture of moderation” as that may be too much to ask for someone who owes a good part of his fame and his fortune to the impulse of screaming: “You are fired!”