Introduction to the Controversy
President Donald Trump’s budget chief, Russell Vought, has criticized Federal Reserve Chairman Jerome Powell, stating that he has "grossly mismanaged the Fed." This criticism opens up a new front in Trump’s ongoing feud with Powell. The Office of Management and Budget director suggested that Powell had misled Congress about a costly and lavish renovation of the central bank’s headquarters.
Background on the Trump-Powell Feud
Trump has repeatedly called on Powell to cut interest rates, but to no avail. There have been reports that Trump has considered firing Powell and has even thought about publicly naming his replacement before the end of Powell’s term next spring. This ongoing tension between the two has raised questions about the future of the Federal Reserve under Powell’s leadership.
The Renovation Controversy
At the center of Vought’s criticism is the renovation of the Federal Reserve’s headquarters, which has seen its costs balloon to $2.5 billion, roughly $700 million over its initial budget. Vought pointed out that the cost per square foot is $1,923, double that of renovating an ordinary historic federal building. He compared the cost to that of the Palace of Versailles, saying it would have cost $3 billion in today’s dollars.
Allegations of Mismanagement
Vought’s letter to Powell referenced the Fed boss’s June 25 testimony before the Senate Banking Committee, where Powell denied that the renovation included features such as rooftop terrace gardens, VIP private dining rooms, and premium marble. However, Vought alleged that these features were indeed part of the plans, suggesting that Powell had misled Congress. The Office of Management and Budget director questioned the project’s compliance with the National Capital Planning Act, which requires approval from the National Capital Planning Commission for projects like the Fed headquarters renovation.
Implications and Next Steps
The controversy raises questions about whether Trump will seek to remove Powell for cause. However, a recent Supreme Court decision suggested that Federal Reserve board members have special protection from being fired by a president. Vought’s letter asked Powell to respond to 11 questions about the renovation project within seven business days. The Federal Reserve declined to comment on Vought’s letter.
Conclusion
The feud between Trump and Powell continues to escalate, with the controversy over the Federal Reserve headquarters’ renovation serving as the latest flashpoint. As the situation unfolds, it remains to be seen how the relationship between the White House and the Federal Reserve will be affected and what implications this may have for the economy and monetary policy. One thing is certain, however: the tension between Trump and Powell will be closely watched by economists, politicians, and the general public alike.
