Trump Plays Economic Arsonist Again (w/ Ben Walsh)

Summary

Bulwark Takes: "Trump Plays Economic Arsonist Again" Featuring Ben Walsh

Release Date: July 16, 2025

In the latest episode of Bulwark Takes, host Sam Stein engages in a deep-dive conversation with Ben Walsh, the Breaking News Editor at Sherwood News and a renowned economics expert. The discussion centers around the escalating tensions between former President Donald Trump and Federal Reserve Chairman Jerome Powell, particularly focusing on Trump's reported intentions to fire Powell. This summary encapsulates the key points, discussions, insights, and conclusions drawn during the episode.

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1. Introduction to the Discussion

[00:30] Sam Stein: Sam Stein introduces himself and welcomes Ben Walsh, highlighting Ben's expertise in economics and his prior work with HuffPost.

[00:50] Sam Stein: The conversation kicks off with Stein posing a critical question: "Can Trump actually fire Jerome Powell?" This sets the stage for an in-depth analysis of the potential ramifications of such an unprecedented move.

2. Trump's Intentions to Fire Jerome Powell

[00:50] Sam Stein: Stein provides context, noting recent reports that suggest Trump considered dismissing Powell, citing slow interest rate cuts as a primary reason. He mentions that Powell's term as Fed Chairman extends until 2026 and that Trump might be seeking to fire him "for cause" related to the Fed's multi-billion dollar headquarters renovation project.

[01:59] Ben Walsh: Walsh explains the legal constraints, emphasizing that the Federal Reserve operates as an independent agency. "He cannot fire Jerome Powell for the reason that he wants to fire Jerome Powell, which is because Jerome Powell will not cut interest rates fast enough," Walsh states, underscoring the Fed's independence and Powell's secure tenure.

3. Legal Constraints and Potential for Reversal

[03:14] Sam Stein: Stein probes further, asking if Powell could be compelled to resign or if he could legally contest such a firing.

[03:33] Ben Walsh: Walsh confidently asserts that Powell would likely fight any attempt by Trump to remove him. "He has made it pretty clear that he, in statements previously, that he does not think that the president has the authority to fire him," Walsh notes, highlighting Powell's preparedness to uphold his position.

4. Supreme Court’s Role and Historical Precedents

[04:17] Sam Stein: Stein brings up the Supreme Court's previous stance on Trump's firings of heads of independent agencies, questioning if Powell might enjoy similar protections.

[04:48] Ben Walsh: While acknowledging the unique independence of the Federal Reserve, Walsh expresses uncertainty about the Supreme Court's potential intervention. "It's very difficult to say what they would or would not do," he remarks, citing recent expansions of presidential power as complicating factors.

5. Market Reactions to Potential Firings

[05:24] Sam Stein: Stein shifts the focus to the immediate impact on financial markets following the reports of Trump's intentions.

[05:30] Ben Walsh: Walsh details the sequence of events, from a congresswoman's tweet to major news outlets like CBS, Bloomberg, and The New York Times reporting on the potential firing. He explains that the markets responded negatively, with "stocks fall, the dollar falls, and long-term treasury bond yields rise," indicating widespread investor concern.

[07:25] Sam Stein: Stein seeks clarity on why the markets are unsettled by the prospect of Powell's dismissal.

[07:54] Ben Walsh: Walsh elucidates that the unease stems not from specific monetary policies but from a broader erosion of the rule of law and institutional stability. "It's about the rule of law premium in American assets," he explains, emphasizing that investor confidence is shaken by potential governmental overreach.

6. Indicators of Market Sentiment

[09:25] Sam Stein: Stein inquires about the primary market indicators reflecting this instability.

[09:38] Ben Walsh: Walsh identifies the bond market and the dollar as key indicators, noting their significant size and the sophisticated nature of their trading environments. "The bond market and the dollar are the two biggies," he states, contrasting them with the more volatile stock market.

7. Trump's Public Remarks on Powell

[11:07] Sam Stein: Stein introduces a clip of Trump criticizing Powell, which adds another layer to the discussion.

[12:13] Ben Walsh: Analyzing Trump's statements, Walsh suggests that the President is testing the waters, hoping to pressure Powell into resigning rather than executing an outright firing. "I think he's going to try to drag it on... hoping Powell quits on his own," Walsh opines.

8. The Implications of Powell's Potential Reinstatement

[13:46] Sam Stein: Stein highlights Powell's remaining term and potential influence beyond his current role.

[14:11] Ben Walsh: Walsh discusses the Federal Reserve's consensus-driven approach to setting interest rates, indicating that even if Powell were removed, the overall policy direction might remain stable due to the collective decision-making process. "It's extremely unclear and in my view, unlikely, if Trump fires Powell... that Fed interest rate policy would dramatically shift," he explains.

9. Hypothetical Scenarios and Final Predictions

[15:29] Sam Stein: Stein presents a hypothetical situation where Trump successfully fires Powell amidst corruption allegations, asking for Walsh's prediction on market reactions.

[15:44] Ben Walsh: Walsh anticipates severe market backlash, mirroring previous reactions with "stocks fall, the dollar would weaken long term, U.S. treasury bonds yields would rise." He warns of sustained negative impacts until legal interventions, such as emergency injunctions, are enacted.

[15:58] Sam Stein: Challenging Walsh to put his predictions to the test, Stein playfully prompts him to act on his forecast.

[16:15] Ben Walsh: Closing his analysis, Walsh reiterates his belief that Trump will likely avoid directly firing Powell, opting instead to exert pressure for a voluntary resignation.

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Conclusion

The episode of Bulwark Takes provides a comprehensive analysis of the contentious issue surrounding Trump's reported intentions to dismiss Jerome Powell. Through expert insights from Ben Walsh, listeners gain an understanding of the legal barriers protecting Powell, the potential economic repercussions of such a move, and the broader implications for the stability of American financial institutions. The discussion underscores the delicate balance between presidential authority and institutional independence, highlighting the far-reaching consequences that political maneuvers can have on national and global economies.

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Notable Quotes:

• Ben Walsh [01:59]: "He cannot fire Jerome Powell for the reason that he wants to fire Jerome Powell, which is because Jerome Powell will not cut interest rates fast enough."

• Ben Walsh [07:54]: "It's about the rule of law premium in American assets... the stability of American institutions."

• Ben Walsh [15:29]: "I think it would be very bad [for the markets]."

• Ben Walsh [16:15]: "I don't think he's going to try to fire him. I think he's going to try to drag it on... nag him into quitting is the right one."

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This detailed summary aims to provide a comprehensive overview for those who may not have listened to the episode, capturing the essence of the discussion and the critical viewpoints presented.

Transcript

[Unnamed Speaker]

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[Sam Stein]

Hello. Welcome back to the Bulwark Takes. I'm Sam Stein, managing editor at the Bulwark. I am joined by Ben Walsh, who is now the breaking news editor at Sherwood News. But for purposes of this, you should know that Ben is economics guru and wizard and has written about economics repeatedly, including when we work together at HuffPost. Ben, how's it going, man?

[Unnamed Speaker]

Great. Good to be here, Sam.

[Sam Stein]

Thank you for doing this. We're going to be talking about Jerome Powell, and I just kind of want to get an answer eventually to the question, what would happen if Trump actually fired him? And then I guess the other question is, can Trump actually fire him? So I'm just gonna set it up because I think it's relevant for this conversation. But basically what happened, this is recorded Wednesday. It's like 1:30 this morning. And actually last night, but into this morning, there was like a trickle of news that Trump had told a gathering of house conservatives at the White House yesterday that he had some intentions to file Jerome Powell, Fed Chairman. At first it was like, wait, maybe, I don't know. And then this morning got real serious where these lawmakers said that Trump had quizzed them about whether he should Jerome Powell. They said, yes, you should. He then, according to some reports, produced a letter that he had drafted firing Jerome Powell, but had said he had not determined whether he was going to send it. But everything seemed imminent and it set off a lot of panic. Before we get to Trump's subsequent comments in which he kind of sort of maybe, maybe didn't walk it back, I just want to ask you, as someone who follows this stuff closely, because I don't, like, I was under the impression that he can't file Jerome Powell, but can he file Jerome Powell?

[Unnamed Speaker]

He cannot fire Jerome Powell for the reason that he wants to fire Jerome Powell, which is because Jerome Powell will not cut interest rates fast enough. The Federal Reserve is an independent agency. You know, it's a central bank of the United States. Jerome Powell was nominated by Trump, renominated in 2018, renominated by Biden. His term as Fed chair runs into 2026. The current thinking in MAGA world in the White House, as I understand it, is that the idea is to fire Jerome Powell for cause, not for policy differences. And the cause that they have found is that the renovations, right, Jerome Powell is overseeing a multi billion dollar renovation of the Fed hq. And so the idea is to, you know, as renovations of historic federal buildings go, it will shock you that there have been, you know, some hiccups along the way. Nothing major as far as I understand it. And as federal budgets go, it's not a particularly large project per se. But the idea that the White House is seized upon, according to various reports, is to fire Jerome Powell for cause related to his management of this building renovation.

[Sam Stein]

Okay, that's ridiculous, but we're going to put that aside for the time being. If he were to go ahead and subsequently say, yeah, you know, this building is costing way too much money, and Powell's like, taking money off the top and yada, yada, yada, I'm firing this guy. Would it be so cut and dry that Powell would have to resign, or could he fight it?

[Unnamed Speaker]

I think he would likely fight it. He has made it pretty clear that he, in statements previously, that he does not think that the president has the authority to fire him. I think it is, as a matter of law, fairly clear that the president does not have the authority to fire him on the grounds that have so far been floated.

[Sam Stein]

Who's to judge?

[Unnamed Speaker]

Well, that's. That's part of the issue, right? That is part of the issue and goes to a broader set of actions that this administration has been taking in terms of firing people in under questionable legal circumstances. Those people either do fight it or don't fight it, or by the time that the resolution of their firing has been judged to be illegal, you know, the cart's already out of the barn sort of situation.

[Sam Stein]

Now, the Supreme Court has, in the process of weighing in on Trump's firings of other heads of independent agencies, ostensibly independent agencies, come up with some fairly novel legal reasoning that while Trump has and can act to fire those heads, the Fed is sort of unique in its independence, and therefore, they kind of carved out some protections for Powell. Is it fair to presume that the Supreme Court would protect Powell should he choose to fight a firing?

[Unnamed Speaker]

I don't think it's safe to assume that they would protect him per se, because I don't think it's really. It's not my area of expertise to judge what the Supreme Court will or won't do. But it's also, I think people whose area of expertise the Supreme Court is have noted that they have gone far beyond previously thought boundaries of presidential power in terms of what they've granted President Trump. And so I think it's just very difficult to say what they would or would not do, what would happen. And I think we got A preview of this today. Right. And when this news broke that you ran through is the market reaction would be pretty significantly negative.

[Sam Stein]

Tell us what happened this morning. And then that's going to set up how Trump dealt with it this afternoon. But tell us what happened this morning.

[Unnamed Speaker]

Yeah. So as you said, it kind of started last night when Anna Paulina Luna, the congresswoman from Florida, tweeted that Jerome Powell is going to be fired. Firing is imminent.

[Sam Stein]

Let me just make a side note. I love when the lawmakers want to pretend to be reporters. They love breaking news. It's so good. They understand the rush.

[Unnamed Speaker]

Right. Well, it also gives you kind of a little bit of sense of where we are in the world that Anna Paulina Luna is the congresswoman breaking this news. And that doesn't get much of a reaction. But then this morning, CBS News reports on this meeting with Republican representatives, which is apparently where Representative Luna heard this, that Trump asked the group, should I fire Powell? They kind of all said, yes, sir, you probably should. And then what CBS says is that several people in this meeting indicated that Trump, Trump indicated that he will do it, that he, he will fire Powell. And then Bloomberg significantly follows up with that story, citing a White House official as the source, saying that Trump is likely to fire Powell.

[Sam Stein]

And then they want it, they want it out there. Like the White House is just like, yeah, let's give them this.

[Unnamed Speaker]

And then the Times follows it up with Maggie Haberman reporting that in this meeting, Trump waved around a letter that is the letter firing Powell and said, hey, I could send this if I want to, basically, but I haven't. So then I think what's important is you look at what happens after this kind of group of stories gets published, which is stocks fall, the dollar falls and long term treasury bond yields rise, which means their value falls. So overall, it's a negative rating from the markets in terms of, you know, increasing news around Trump firing Powell. The markets do not like this and they don't like it for very specific.

[Sam Stein]

Let's pause for a second. Let me just ask the question. Like, is the reason they don't like it because of the instability it suggests about monetary policy going forward, or is there something in a macroeconomic sense that they didn't like? Because in theory, lower interest rates would mean more money in the economy and, you know, you know, maybe it would have an inflationary effect, but you can make the case that, you know, there would be some, you know, economic stimulus to that, obviously. So what is it that the markets don't like?

[Unnamed Speaker]

My Reading of it is it has nothing to do with the pros or cons of the specific, you know, macroeconomic policy in terms of rates. Those are debates that can and do happen within the Fed. And you know, presidents can and do participate in those debates as much as they would like to claim that they, you know, don't. Every president since Reagan basically has job owned the Fed. That's kind of within the guardrails of what happens. What I think markets are reacting to here is sort of real testing of what I would call kind of the rule of law premium in American assets. US Den dollar denominated assets. Right. Things that you buy and sell in the US are worth a little bit more money because people are fairly sure that the government is not going to seize them or that the government is not going to sort of engage in, engage, engage in highly reckless or erratic policymaking. And there is something to be said for the fact that the rule of law has knock on effects in terms of economic stability that we all benefit from and not just people inside the U.S. but people all over the world benefit from that because of, you know, the related effects that it has with assets they can hold and their economies and all that kind of thing. And so it really is about this sort of like rule of law stability and the sort of orderly functioning of institutions in the US So is it.

[Sam Stein]

Fair to say then like the metrics you're following when you want to get a sense of how serious the market is taking? Any speculative news around Powell is not the Dow or the nasdaq, but the value of the dollar and bond market.

[Unnamed Speaker]

The bond market and the dollar are the two biggies. And the reason why is because the currency markets and the treasury markets are much bigger in value than the stock market. While the stock market did move in concert with the dollar and with bonds, there's basically no way to goose the dollar or the bond market. You know, there's the, you know, we all know kind of the Wall street bets meme stock phenomenon where people kind of gather around these meme stocks and just sort of post their way to gains. There's, you don't do that, I don't do that. But there's, there's also a reason why, there's a reason why there's like the meme stock effect never hit the treasury market. Right?

[Sam Stein]

Right.

[Unnamed Speaker]

Is because it's like orders of magnitude larger. The amount of money is just too big. The players are by and large much more sophisticated and they're really watching things very, very closely as professionals and so the bond market in particular, if you remember, was the thing that really got moves in the bond market, were the thing that really got the president back down from the initial wave of retaliatory tariffs.

[Sam Stein]

Yeah. But we got a couple more weeks and we get them back, so we'll see. I'm going to play a little clip of Trump here talking about Powell in the west, in the Oval. He was asked about this. He, he notably said, well, I'm not going to fire the guy. And, but then he also said, maybe I will fire the guy. So let's take a look at this clip. And then on the flip side, I want to get your reaction to it. Too late.

[Donald Trump]

He's always been too late, hence his nickname, Too late. He should have cut interest rates a long time ago. Europe has cut him 10 times in the short period of time, and we cut them none. The only time he cut him was just before the election to try and help Kamala or Biden, whoever the hell it was, because nobody really knew. Obviously that didn't work. But he tried to cut him for the Democrats. Kamala. And how did that work out? You'll tell me it didn't work out too well, did it? But he's, he's, I think he does a terrible job. He's costing us a lot of money, and we fight through it. It's almost the country has become so successful that it doesn't have a big impact, but it does hurt people wanting to get a mortgage. People want to buy a house. He's a terrible, He's a terrible Fed chair. I was surprised he was appointed. I was surprised, frankly, that Biden put him in and extended him. But they did. So, no, we're not planning on doing anything. We're very concerned.

[Sam Stein]

All right. What do you make, what do you make of that?

[Unnamed Speaker]

I think the president is reading the news. He knows that there are.

[Sam Stein]

He's not reading the news. He might be following Truth.

[Unnamed Speaker]

He's. Truth. He's watching. He's watching the news.

[Sam Stein]

He's watching. He's watching cable.

[Unnamed Speaker]

Yeah, he's watching the news. You know, I think, like you said, it's pretty clear that the White House wanted this trio of stories out there about, I think, you know, testing the waters, seeing what's going on. And the thing is, is that, no, you're wrong. Okay?

[Sam Stein]

They want Powell to quit. He doesn't want to fire the guy or they want to get it or they want him to just think he has to save his job by lowering interest rates.

[Unnamed Speaker]

I think that sure, all, all possible. I think, you know, I will say that, like we have seen before, that the President will like, for all that his, like, brand has been built around the guy that fires people. He, he doesn't like doing it. And he often does try to sort of drag people along and just sort of make their lives miserable until they just say, I've had enough of it. You win, I'm out. I don't think that Powell is going to do that. He was very pointedly early in the administration responding to questions about whether Trump could fire him with a terse bit of legalese that he read verbatim on multiple occasions. And I think that shows that he's just like, steeled for it and he thinks he has solid footing and he doesn't want to do it. He's not going to go.

[Sam Stein]

He only has eight more months. So, you know.

[Unnamed Speaker]

Well, that's actually, that's only partially true. That's only partially true. He has eight more months as the chair. He stays on as a member of the Board of governors until 2028. And so I think that one thing that might shock you is that there's more nuance to this situation than Trump is allowing for. And that is that, you know, the thing that Trump is really mad about is interest rate policy.

[Sam Stein]

And they all vote the same way. They've all voted the same way on this.

[Unnamed Speaker]

It's a 12 person committee that sets interest rate policy. Right. And they work very hard to be in consensus. And yes, the Fed Chairman is the one that gets up there after the decision and takes questions at the press conference. But like you said, it's 12 people voting. They work really hard to develop a consensus. And so it's extremely unclear and in my view, unlikely, you know, if Trump fires Powell or after, if he forces him to leave, that somehow Fed interest rate policy would dramatically shift.

[Sam Stein]

Well, could he replace all the Board of Governors or not?

[Unnamed Speaker]

Well, he nominates the various, various people to fill different roles.

[Sam Stein]

Right.

[Unnamed Speaker]

Then sit on the Board of Governors. He can't replace everyone in one fell suit.

[Sam Stein]

No, let's end with this hypothetical. Trump next week decides, you know what, this building, this headquarters is in fact exercise of corruption. And we have, the DOJ is looking into it. And Jerome Powell cannot remain in his post while under investigation. And therefore I am firing him. And I will name my apartment. Let's say it's Scott Benson or whatever. I don't really care. What is your prediction for the reaction in the markets to that move?

[Unnamed Speaker]

I think it would be the same reaction we saw today after this trio of stories. But larger stocks would fall. The dollar would weaken long term. U.S. treasury bonds yields would rise. It would be very bad. It would be very, very bad.

[Sam Stein]

For how long?

[Unnamed Speaker]

I think for as long as until there was an emergency injunction put in by US Federal court.

[Sam Stein]

All right. Put your reputation on the line then. Does he fire him?

[Unnamed Speaker]

I don't try to. He's going I don't think he's going to try to fire him. I think he's going to try to drag it on. And I would, I would bet that I think your, your call that he's trying to do the kind of like hang him out to dry and kind of nag him into quitting is is the right one.

[Sam Stein]

Well, they don't call you Nostradamus for nothing. So bring it to the bank.

[Unnamed Speaker]

They don't call them Nostradamus. They don't.

[Sam Stein]

Oh, you're right. Ben Walsh, thank you, man. I appreciate it. I'm getting the title right. Breaking news editor of Sherwood News all around good guy economics policy wizard Ben Walsh. Appreciate it. Appreciate you guys watching this.

[Unnamed Speaker]

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