President Donald Trump is not directly responsible for the darkest days of the Trump administration, or the times when I am most concerned about the American project. I was aware of what to anticipate from him.
The shocking thing is all the surrenders from media outlets, law firms, universities, and most importantly, from feckless establishment Republicans who openly and publicly despise Trump but have joined his bandwagon to protect their own necks. I used to believe that the nation was composed of tougher people and that a bully like Trump would find it more difficult to obtain what he wants.
Give it up to Jerome Powell, the chairman of the Federal Reserve, who simply refused to comply with Trump’s demand that short-term interest rates be lowered in order to boost the economy. Who would have guessed that a quiet, conservative banker in his seventies would be my hero and savior right now?
Powell utilized the opportunity to explain why he won’t back down and why the Fed must be independent when he was questioned about Trump’s intervention following the decision on Wednesday. “It would be very tempting to use interest rates to influence elections if you didn’t have that,” he remarked. That is commonly acknowledged, in my opinion, and it is crucial. That’s all I’ll say.
DEFIANCE PRINCIPLES
Trump’s strategy of using personal insults, outright lies, and theatrical attempts at public humiliation is exactly what his pressure campaign on Powell is all about.
When Trump visited the building site where the Fed’s headquarters is undergoing an expensive renovation that was estimated to cost $1.9 billion, it reached a climax on July 21. By now, the price has risen to $2.5 billion. It was intended to raise allegations of misconduct that would provide Trump the justification to dismiss Powell before the end of his term in May.
The dancing was awkward. Following their tour of the location, Powell moved aside as the two guys approached a bank of microphones, appearing as though he would prefer to have his teeth drilled. Trump has repeatedly attacked Powell on social media in recent months, calling him a catastrophe, an idiot, and a numbskull. He also demanded that Powell get closer because he was getting ready to fabricate some lies regarding the expense overruns.
Trump stated, “We’re looking at it and it looks like about $3.1 billion.” It increased somewhat, or perhaps significantly.
Like I do at home, Powell was shaking his head when Trump was speaking. When he disputed the $3.1 billion estimate, Trump produced a document that he claimed had suddenly sprung from his jacket pocket.
Powell did not believe it at all. Trump was playing his old tricks, as he discovered when he pulled out his glasses to read the page. The $3.1 billion estimate included the cost of a third structure that was unrelated to this project. Trump used the paper he pulled out as a prop to bolster his false narrative.
He informed Trump, “You just added a third building.”
Trump said, “It’s a building that’s being built,” as he picked up the paper and returned it to his pocket, still holding out hope that his lie would hold.
Powell clarified that it was constructed five years prior.
Oh no. When the skinny youngster refuses to give up his lunch money, what does the bully on the playground do? In an attempt to have the last say, Trump retreated and gave it one last go. He murmured, “It’s part of the overall work.”
Powell nonetheless gave him a final reprimand with the facts. He added, “It’s not new,” as Trump shifted the topic.
That is the manifestation of principled defiance. Powell didn’t question Trump’s intentions or make personal insults. Like so many of the others, he just refused to be a worm.
RATES OF INTEREST AT STAKE
Powell has previously stated that interest rates will probably be lowered by the end of the year. However, he asserts that the moment will be grounded in concrete facts rather than political whims. In an effort to boost economy and generate jobs throughout their administrations, presidents of both parties have previously pressured the Fed to cut interest rates. However, the Fed’s role is to protect our long-term interests by applying the brakes when inflation becomes a problem.
Ironically, many economists caution that it might backfire if Trump prevailed in this battle and forced Powell to compromise. The Fed only regulates short-term rates; it has no power over longer-term rates, which are more significant for business loans, credit cards, and mortgages.
Additionally, investors will become more concerned about inflation and raise those long-term rates if they believe the Fed is losing its independence. According to an editorial in Monday’s Wall Street Journal, we are already witnessing concrete proof that investors are already concerned about it. Although the Fed has lowered its short-term interest rates by one full point in recent months, it pointed out that long-term interest rates are still growing.
The editorial cautioned that the economic boost Mr. Trump anticipates won’t materialize if short rates decline while long rates rise in expectation of higher inflation.
Powell’s successor will be chosen by Trump in May, and he will undoubtedly choose a loyalist who will follow his instructions. As if trying out for the position, the two Trump appointees who are on the Fed’s rate-setting committee both criticized Wednesday’s ruling and demanded lower rates.
However, Trump’s attempt to seize power is currently failing. Even if it might only be a setback for our future tyrant, it’s a welcome change of pace.
Moran was the editorial page editor and columnist for The Star-Ledger of Newark, New Jersey, before joining Advance Local as a national political columnist. His email address is [email protected].
