Dem
47
GOP
53
Also on the economic front, Donald Trump is constantly criticizing Federal Reserve Chairman Jerome Powell (his own appointee), demanding that he either lower interest rates or resign. Trump even wrote Powell a letter a week ago demanding interest rate cuts. Powell understands that lowering interest rates would cause inflation to spike and the dollar to drop. He doesn't want that, so he is holding firm. It is not clear if Trump has the power to fire Powell, but he probably doesn't.
Part of Trump's desire for low interest rates—even if that sets off a new round of inflation for which he would be blamed—is due to his background as a real estate developer. Real estate lives or dies by interest rates. Real estate developers would prefer 0% interest if they could get it. Eric and Donald Junior are running his company now and still doing projects, so from a strictly commercial view, he prefers low interest rates.
But Lael Brainard, a former Fed governor, thinks Trump has a different reason for wanting to fire Powell: He is worried about the interest that the government will have to pay on the new $4 trillion in debt that his BBB created. For every point of interest that Powell knocks off the rate, the government saves $400 billion over 10 years. If interest rates go from 4% to 1%, as Trump wishes, that 3% cut will save the government $1.2 trillion over 10 years. That's the real goal: hiding the effect of his BBB (Budget Busting Bill). Trump is probably unaware that reducing interest rates will spur inflation. He also doesn't care that the Fed is supposed to be independent of the Executive Branch.
Some people would also like low interest rates. These include people with variable-rate mortgages, credit card debt, and student loans. On the other hand, seniors who need interest on their savings to pay their bills want high rates, not low rates. Also, high interest rates strengthen the dollar, which makes companies that buy a lot of stuff abroad (say, Walmart), very happy. There is no way to please everyone.
Trump's talk about canning Powell has led to speculation about who Trump would replace Powell with, if he is able. The main talk is about the Kevins, although with Trump, you never know. One of them is Kevin Hassett, director of the National Economic Council. He has talked to Trump several times recently and told Trump he is interested in the job and would take it if offered. The other one is former Fed governor Kevin Warsh. He has dissed Powell in public, which is music to Trump's ears. Another possibility is Secretary of the Treasury Scott Bessent.
Of course, once appointed and confirmed by the Senate, the new Fed chairman might take his job seriously. His job is to balance inflation and unemployment. It is not to make Trump look good or decrease federal interest payments. Slashing rates and igniting inflation would make Trump blame the new chairman for the inflation, which would cause Trump to attack the new guy and maybe try to fire him. Surely all candidates for the job can imagine that scenario. (V)