← Bulwark Takes
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- [00:00]
Andrew Egger
Hi, this is Andrew Egger with the Bulwark, joined by my colleague and, dare I say, my good friend Joe Perdicone, our Congress reporter. We're here to talk a little bit today about Jerome Powell and Donald Trump. No love lost between the chair of the Federal Reserve and the president, going all the way back to Trump's first term, when he would regularly complain about what Powell was doing with various rate cuts, kind of accuse him of holding the economy back for one reason or another. Donald Trump is a low, low interest guy. Let the economy burn. Hot, baby. And as the trade war has really started to tank US Markets recently, Trump is back at it again. Jerome Powell gave a speech to the Chicago Economic Club yesterday that was full of some relatively bracing analysis of the current state of the economy, talking about the obstacles that are facing economic growth now in terms of uncertainty and things like that, and, and talking about, you know, the Fed's rate plan, and Trump didn't take it very well. Trump got on Truth Social this morning and he posted this. The ECB is expected to cut interest rates for the seventh time, and yet too late. Jerome Powell of the Fed, who is always all caps, too late and wrong, yesterday issued a report which was another and typical, complete mess. Oil prices are down, groceries even eggs are down, and the USA is getting rich on tariffs. Too late. Should have lowered interest rates like the ECB long ago, but he should certainly lower them now. Powell's termination cannot come fast enough. So the President of the United States agitating once again for the firing of the Fed Chairman. Joe, where are we at here? What do you make of all this?
- [01:39]
Joe Perdicone
So the Fed chair has a lot of autonomy to kind of steer and control the levers of the economy to be as best off as he can make it, given outside factors, whether it's Congress, whether it's a crazy administration ripping things up and flipping it around every other day. And Trump hates things that he can't control. And when you have this very powerful position like Fed Chair that has these longer terms, Trump now wants to fire him. He's wanted that for a long time. He's talked about it. Powell doesn't really talk that much, and when he does, it's big news. But because he is arguably with, along with the President, they're two of the most important people on the planet in terms of economic stability. So Trump really can't control him. And he bothers him when Pal says something like, we're going to feel the effects of these tariffs and even just the waffling on them for Years to come. You know, think of the, like, cascading disruptions to. He mentioned automobiles. Um, you're. It's going to disrupt things, make things more expensive. Obviously, everyone who knows anything about tariffs besides Trump says that. And so that bothers him when his policy is undermined and there's nothing he can do about it. And he can't just. Trump can't tell Powell, go do this, and then he'll go do it. That's not how it works. Powell acts in his own interest to keep the economy stable as he can. And so Trump's getting more mad by the day. And I saw an article in Politico where he was saying, you know, Powell's job looks safe for now because firing him abruptly would lead to great instability in the markets. And I'm like, well, there you go. Like Donald Trump, famous for avoiding chaos and instability. Like.
- [03:39]
Andrew Egger
Yeah, and anything that might cause instability in the markets is just. He's ruled it out already. You can't have that.
- [03:45]
Joe Perdicone
We can all sleep better. No, like, he's getting closer to this. He's hated Powell for a long time because Powell doesn't bend the way that he can make members of Congress bend, the way that he can make even corporations and law firms bend. And so, you know, we're getting close to that point in terms of, you know, a replacement. He's shown that he picks people who are horribly unqualified or who have no relevant experience. A position as important as that, you'd need, you know, pretty overwhelming support for it. And so it's just like, what we're watching right now is like the prologue to a very big mess that could happen if he. If he does get more mad, which he does, and if his tariff plan doesn't work out, which it won't. So this is a really big deal. And I think that it's. It's pretty scary if you understand the full impact of. Of what a disruption at the Fed could do.
- [04:55]
Andrew Egger
Yeah, yeah.
- [04:56]
Joe Perdicone
It's really.
- [04:56]
Andrew Egger
It's so bizarre to see the kind of analysis that you. That you mentioned a little bit. I mean, I don't want to pick too much on this one Politico story, but. But where have these people been for the last five years? Where these people been for the last three months. Right. I mean, I think. I think that the. The fire, Jerome Powell kind of undercurrent in the first Trump term has a lot of similarities to something like, we're going to go get Greenland, where it was just kind of this wacky story that. That was always just sort of like burbling below the surface. It was, people were all like, wow, I guess he, is he really going to do that or is this just a thing he's talking about? And because he didn't do it before, people just assume that he's still just kind of blowing off steam and making noise now. But there's a lot of places where Trump was just blowing off steam before, let himself get talked off of ledges, let himself get refocused to other priorities, where we're not seeing that much at all in this administration. They're doing everything everywhere, all at once, everything that Donald Trump wants. And this seems to be increasingly a thing that he wants. I mean, this is just a quick quote from David Frum in the Atlantic today. Trump forced out two FBI directors because they would not follow his orders. James Comey at the beginning of Trump's first term and, and Christopher Wray at the beginning of the second one. Wray was a Trump appointee whom President Joe Biden left in place for all four years of his term. Trump decided that Wray was not obedient enough and after Wray's resignation, replaced him with a loyalist, Cash Patel, 51 of 53 Republican senators voted to confirm Patel as unqualified as he was. And with that, the tradition of FBI independence was snuffed out. So tell me again how Trump cannot fire the head of the Federal Reserve. When you're analyzing this, you have to, you have to say, okay, Trump wants to fire the guy, so what would potentially prevent him? People around him talking him out of it. That's not really a thing in this term. He's fired all the people who are not yes men for his every whim. Just hasn't brought them back in the second administration. Legal constraints, first of all, there, there aren't that many, I mean, he, he, he ultimately can fire Jerome Powell if he chooses to do so. And even if, even if there were a procedural bar to it, who cares? I mean, like that, that, that has not proven a major impediment for Trump so far in this term. And so we're basically down to what is he going to, is he going to norm respect, is he going to keep Powell because he, somebody ultimately appeals to his higher faculties about, you know, the long term effects of presidents yanking people out of these independent posts and putting them back in, you know, staffing them with loyalists. That doesn't seem like it's a major, not too high up Trump's pros and cons vision board either. So I don't know, like, like, do you, do you have a sense that, like, are we all just sort of sleepwalking here? Like, are we all just essentially way, way, way underselling the risk of what seems to be like, increasingly a. I don't want to say inevitability, but a likely thing at this point.
- [07:35]
Joe Perdicone
Yeah. So the Bloomberg editorial board published a piece together that was very scary if you, you know, really fully read it. And it's about the, like, uncertainty of everything that's happening. And Powell is like this last piece of glue kind of holding things together. So you see it out like in the bond markets. There's, you know, people, people are dropping investment, this long term investment in the United States because there's so much uncertainty about the U.S. to, you know, be as prosperous or to be able to pay its bills. Ripping PAL out would snowball that more so than it already has been. In addition to that, like, in terms of, you know, him listening to people around him, I haven't seen much of that since he was inaugurated. Because if you look at the whole tariff rollout, no, none of the Cabinet secretaries were on the same page. Treasury Secretary Scott Bessant was saying one thing, Commerce Secretary Howard Lutnick was saying another. Top leaders in the Senate were saying like, oh, this is just negotiation. So, like, what that indicated to me was either a lot of these people aren't even in the room when these discussions are happening, or they are and it doesn't matter because it's based on Trump's mood. So if his mood changes and this could be a much greater escalation that could have, we don't even know the full effects of what it would do in terms of investment in the United States, security to the global economy, the dollar, everything, it's, it's pretty wild. And to think that Trump is going to, you know, listen to the people around him, as he did to a certain degree on some things, especially economic things, especially in the early onset of, you know, the pandemic. He was saying crazy things like, you know, what about bleach? But he was also, policy wise, they were implementing a lot of things that the people around him were suggesting, whether it was closures, it was the stimulus checks, whatever. That's not really happening now. Everything is emanating directly from him. And that's the biggest concern amongst people who have a stake in the United States of America. And so him taking this next step, which he wants to. We don't know when it could come. It could come in 10 minutes. It could come in 10 weeks, it could come in 10 months. We don't, we don't know. And that's part of the chaos element that is pretty, pretty concerning.
- [10:21]
Andrew Egger
I think you're absolutely right that, that the Fed chair is kind of the last big economic one right now where you have Congress already, you know, further kneecapping itself, setting aside its own ability to have any say in different tariff wars and things like that. Obviously they still have a lot of say over spending. But, but, but as far as, you know, broad macroeconomic policy like setting interest rates and stuff, it would be a real, real sea change if Trump were to yank Jerome Powell and put in someone who essentially just calls him up in the morning and asks him where he wants interest rates to be.
- [10:53]
Joe Perdicone
Now, I just want to say, like, in terms of the scaredness of publications like Bloomberg or economists, I was a Business insider, I was a reporter there during the first Trump term. And whenever he would criticize Powell or he would do something like, even slightly scary on the economic front, there was massive panic and, like, massive concern. And so nowadays it's like times a thousand and it's, and it's much more real because it actually happens at a much faster rate. And so the level of uncertainty is super dangerous for a volatile crypto country, which we can see from the markets is absolutely happening now. So store your money under your mattress. Or don't. Don't do that.
- [11:45]
Andrew Egger
Thanks, Joe, for, for hopping on and, and chatting with it a bit. Chatting with me about it a bit. And thanks to you guys all out there for, for watching, paying attention. We hope you'll subscribe, we'll hope you'll keep following along, and we'll see you next time.