Introduction to the Controversy
The White House has launched a fresh attack on Federal Reserve Chair Jerome Powell, with a top Trump administration official saying Powell had "grossly mismanaged" the central bank. The criticism comes from Office of Management and Budget Director Russell Vought, who accused Powell of running a deficit and excessive cost overruns for building renovations.
Background on the Conflict
The conflict between the White House and Powell has been ongoing, with President Donald Trump repeatedly criticizing Powell’s decision to keep interest rates steady. The latest criticism from Vought marks a new line of attack, focusing on the cost overruns for the renovation of the Federal Reserve’s Washington, D.C. headquarters. According to Vought, the project has gone $700 million over budget, with a total cost of $2.5 billion.
Details of the Renovation Project
The renovation project includes features such as terrace rooftop gardens, water features, VIP elevators, and premium marble. Vought claims that the cost per square foot is $1,923, double the cost of renovating an ordinary historic federal building. In contrast, Chicago Fed President Austan Goolsbee defended the project, saying it was not a "luxury" overhaul but a needed rehabilitation of a very old building.
The Federal Reserve’s Response
The Federal Reserve’s Washington-based Board of Governors, which Powell chairs, declined to comment on the criticism. However, Powell has previously testified before Congress about the cost overruns, conceding that the project had run over budget but rejecting reports of lavish features. Powell also defended the need to upgrade the buildings, saying that the Fed takes seriously its responsibility as stewards of the public’s money.
The Legal Context
The Federal Reserve Act gives the Fed wide autonomy with regard to its buildings and facilities. However, Vought has raised questions about the project’s compliance with the National Capital Planning Act, requesting answers to 11 questions regarding the project within seven business days. The authority of the White House to intervene in the project is not clear, but Vought’s letter may be an attempt to build a case for removing Powell for cause, in this case fiscal mismanagement.
Implications for the Future
The controversy surrounding Powell’s leadership of the Federal Reserve has significant implications for the future of the economy. The Fed is expected to resume cutting interest rates in September, but Trump has called for a sharp reduction in rates now. The conflict between the White House and the Federal Reserve may ultimately affect the direction of monetary policy and the overall health of the economy.
Conclusion
In conclusion, the White House’s attack on Federal Reserve Chair Jerome Powell reflects a deeper conflict between the administration and the central bank. The criticism of Powell’s management of the Federal Reserve, including the cost overruns for the renovation project, may be an attempt to undermine his leadership and ultimately remove him from office. As the controversy continues to unfold, it remains to be seen how it will affect the future of the economy and the direction of monetary policy.
