Trump vs. Powell: The Battle for America’s Wallet

The president wants to fire the Fed Chair he appointed - raising legal questions and economic alarms.

LOS ANGELES - The Federal Reserve chair rarely becomes a household name - until economic turbulence hits.

Jerome Powell, once praised across party lines, is now in the crosshairs of Donald Trump, raising questions about his success, independence, and job security.

Powell, chair of the Federal Reserve since being appointed by Trump in 2018, is not an economist by training, but he's long been respected for his pragmatic approach. He previously served on the Fed’s Board of Governors under President Obama and, before that, worked as a private equity executive at the Carlyle Group. A Republican with deep roots in finance and policy, Powell was originally viewed as a centrist pick.

As Fed chair, Powell responded to the COVID-19 pandemic by slashing interest rates to near zero, launching massive bond-buying programs to stabilize markets, and supporting fiscal stimulus efforts - including direct payments to Americans and expanded unemployment benefits. His response was widely seen as bold and effective at the time. His response was widely seen as bold and effective at the time. According to The New York Times, “Mr. Powell moved swiftly in March 2020 to slash interest rates and unleash huge sums to calm markets, earning praise across the political spectrum for stabilizing the financial system during a crisis.”

Then came the inflation surge. From 2021 to 2024, Powell initially hesitated to raise rates, labeling inflation “transitory.” When it became clear prices were surging beyond expectations, he quickly course-corrected. The Fed aggressively raised interest rates in an effort to control inflation, which led to higher mortgage rates and increased borrowing costs for consumers and businesses.

Trump sees it differently. He accused Powell of “trying to hurt me” by raising interest rates during his presidency, even calling him an “enemy” of the United States in a tweet on Aug. 23, 2019, asking, “My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?”

In a March 2024 CNBC interview, Trump said, “If I had Jerome Powell, I would not reappoint him. I thought he was always late.” He has also floated firing Powell outright if reelected - stoking fears of political interference in monetary policy.

Other critics - particularly progressives - argue Powell focused too heavily on inflation at the expense of employment and equity. Sen. Elizabeth Warren has repeatedly accused Powell of risking a recession. In a June 2022 Senate Banking Committee hearing, she warned, “You know what’s worse than high inflation and low unemployment? It’s high inflation and a recession with millions of people out of work.” 

Warren has continued to argue that the Fed’s rate hikes could slow the economy too sharply and lead to widespread job losses. “He’s pushing hard to get more people fired because he thinks that is going to bring down inflation,” Warren said in a March 2023 appearance on CNN’s State of the Union. “I think that’s dangerous.”

Though appointed by Trump and reappointed by President Biden in 2022, Powell now finds himself politically stranded. And with Trump threatening to remove him, the question looms: Can he actually do it?

Legally, probably not. The Federal Reserve Act of 1913establishes the Fed’s independence from the executive branch, and governors - including the chair - are appointed to 14-year terms, with the chair serving a renewable four-year stint.

The Federal Reserve Act says that members of the Federal Reserve Board, including the Chair, can only be removed “for cause,” but it does not define what qualifies as cause - leaving the term open to legal interpretation.

According to legal experts at the Brookings Institution and the American Enterprise Institute, Trump might attempt to claim policy failure or disloyalty as sufficient cause. But that would likely trigger a constitutional challenge - and a crisis of confidence in the Fed’s independence.

This all matters because the Federal Reserve isn’t supposed to be political. It doesn’t exist to serve the president; it exists to stabilize the economy. While the Constitution doesn’t explicitly create the Fed, it does grant Congress the power “to coin money [and] regulate the value thereof” (Article I, Section 8), which Congress then delegated to the independent central bank it created in 1913.

If Trump wins and manages to oust Powell, it opens the door to something deeper: political manipulation of monetary policy - when interest rates, inflation, and your bank account are shaped not by economists, but by partisans.

As summed up by CNN’s Stephen Collinson: “This isn’t about Jerome Powell. It’s about whether the presidency can seize control of the last truly independent part of American economic life.”

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