Background on Jerome Powell and the Federal Reserve
Jerome Powell, the current Chair of the Federal Reserve (Fed), has been at the helm since February 2018. Appointed by President Donald Trump, Powell’s term is set to continue until February 2022. The Fed, an independent central banking system in the United States, plays a crucial role in managing monetary policy, supervising and regulating banks, and maintaining the stability of the financial system.
The Controversy Over Fed’s Washington Headquarters Renovation
The renovation project of the Fed’s Washington headquarters has sparked controversy due to its estimated cost of $700 million. Critics, including Russ Vought, the Director of the Office of Management and Budget under Trump, have labeled it as an “ostentatious remodel” with features such as rooftop gardens, fountains, and high-quality marble. Vought’s criticism drew comparisons to the Palace of Versailles in France.
Hassett’s Comments on Trump’s Authority to Dismiss Powell
Kevin Hassett, the Chief Economic Advisor to the White House, stated on July 13 that President Trump has the authority to dismiss Fed Chair Jerome Powell for a justifiable cause if supported by evidence. Hassett also mentioned that the Fed “has much to answer for” regarding the high renovation costs.
Hassett further explained that any decision by Trump to attempt Powell’s dismissal due to the renovation cost issue would depend on responses from Russ Vought’s questions sent to the Fed. These questions targeted Powell’s project management and transparency.
Trump’s Pressure on Powell to Lower Interest Rates
Throughout his presidency, Trump has repeatedly called for Powell’s resignation due to the Fed’s failure to lower interest rates since Trump took office in January 2017. The Fed’s monetary policy decisions are separate from the renovation project, but Trump’s dissatisfaction with interest rates has added pressure on Powell.
Fed’s Response to Criticism
In a FAQ section published on Friday, the Fed defended its renovation project by describing it as the first comprehensive overhaul since the 1930s. The Fed highlighted improvements such as lead contamination removal and addressing unforeseen asbestos issues. Images of deteriorated plumbing and roof leaks were included, along with an explanation that rising costs are due to increased material, equipment, and labor expenses.
Key Questions and Answers
- Q: Can President Trump dismiss Fed Chair Jerome Powell? A: Yes, according to Kevin Hassett, the White House Chief Economic Advisor, Trump has the authority to dismiss Powell for a justifiable cause if supported by evidence.
- Q: What is the controversy surrounding the Fed’s Washington headquarters renovation? A: Critics, including Russ Vought, have labeled the $700 million renovation project as excessive and opulent, drawing comparisons to the Palace of Versailles.
- Q: How has the Fed responded to criticism? A: The Fed published an FAQ section defending the project, describing it as a necessary overhaul since its initial construction in the 1930s, and addressing concerns about rising costs.
