Jan.13

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Unforced Errors, Part I: Jerome Powell

In our Minnesota item from yesterday, we mentioned the news that the White House plans to investigate Fed Chair Jerome Powell for fraud, in relation to the $2.5 billion spent on renovating the Fed's headquarters. We did not mean to imply that, but for the shooting in Minneapolis, Powell would not be targeted. Undoubtedly, he would have been, either way. We only brought the story up to illustrate that complaints of "fraud," which will also be used to justify various interventions in Minnesota and California (and probably other states, eventually), are very clearly being weaponized by the Trump administration.

Now it's time to take a much closer look at the Powell story, which is also blowing up. It's not blowing up as much as the Minneapolis shooting, but it's blowing up, nonetheless. We should start by pointing out that Powell has made very clear he will not be intimidated by this administration, and therefore will not bow to pressure to resign, or to set interest rates at the level Donald Trump prefers. On top of that, Powell's term as chair comes to an end on May 22 of this year. At this point, there's very little point in pushing him out, since he'll be out the regular way before you know it.

That means that the announced investigation is clearly not meant to serve specific policy goals. It may be about taking revenge on someone that Trump blames for many of the nation's economic woes, but particularly inflation. And since the bad economic numbers look to be dragging down Trump's approval rating, it is probable that Trump is blaming Powell for that, too. That is more than enough for Trump and his underlings to thirst for vengeance.

It is also possible that the investigation is a warning to the next Fed Chair, and indeed to any person in the federal bureaucracy who refuses to do Trump's bidding. Something along the lines of, "If you resist me, you're going to find that you're the target of a fraud investigation." It's actually quite similar to the Red Scare of the 1950s, and Sen. Joseph McCarthy's (R-WI) habit of accusing opponents of being communists as a way to intimidate and silence them. And that parallel actually makes all the sense in the world, since Trump learned the art of playing dirty from Roy Cohn, McCarthy's right-hand man.

Still, we continue to be puzzled by this question: Is there NOBODY in this administration who thinks, at least for a minute or two, about the consequences of their actions? We accept that Trump does not care about consequences that will not affect him. Like, for example, if his actions weaken democracy, or undermine the rule of law, or hurt innocent people, it's absolutely no skin off his back. But doesn't he care about consequences that WILL affect him? Because going after Powell is surely going to produce more harm than benefit for the Trump administration. Let's run down the main ways in which that is true:

• Economic Instability: This one is so obvious that even Trump should be able to infer it without assistance. And it's so serious that it should be enough to put an end to the Powell persecution all by itself. While the President doesn't give a damn about the privations of American citizens, even if it's his own voters, he does care about his own approval rating. He also cares about his own business interests. Both of these things are helped by having a strong economy, and are harmed by having a weak economy. And if investors and business owners in America and abroad feel the Fed has been compromised, and is no longer trustworthy, it will introduce uncertainty into the markets, and will certainly make the U.S. economy weaker. This is obvious enough, and substantive enough, that Trump's own Treasury Secretary, Scott Bessent, is complaining about the Powell investigation.
  
  
• Governor Powell: It is true that Powell finishes his term as chair in May, but his term as a governor does not expire until January 31, 2028. It is common for Fed Chairs to resign from the Board of Governors once their time as Chair is up, and the 72-year-old Powell had signaled he was likely to do the same. Now, however, he might choose to stay on, just to prevent Trump from naming a replacement.
  
  
• Governor Cook: If that were not enough, Trump also tried to fire Governor Lisa Cook, also on the basis of "fraud." That case has worked its way through the courts, and will be heard by the Supreme Court in just a couple of weeks. With Cook, the Trump administration could at least hang its hat on the claim that she committed mortgage fraud (the same sort of "fraud" that New York AG Letitia James and Sen. Adam Schiff, D-CA, also committed). It's thin, but it's not zero. The Supremes have already signaled they are not eager to undercut the Fed's independence, and now they have to believe that if they give their blessing to this kind of "fraud" claim as a justification for removal, it will be carte blanche for Trump (or any future president). So, the odds of them ruling against him surely just increased, perhaps by a lot.
  
  What this means is that Trump, who desperately wants to remake the Fed, may well have cost himself TWO appointments by announcing this Powell investigation. That's a big number on a body that only has seven seats.
  
  
• The Senate: There is also the small matter of the Senate, which would have to approve any Fed nominee that Trump puts forward. Senate Republicans, even some of the ones who pretend to be MAGA, understand how the Fed works, and that politicizing it would be disastrous. So, even if Trump does get to pick one or two new governors, and even if he thinks he can seat a fawning lackey, that doesn't make it so. The Republican senators effectively killed the nomination of E.J. Antoni to lead BLS without even taking a vote, by signaling that he was not going to get approval. And the Fed is several orders of magnitude more significant than BLS.
  
  Oh, and in this case, we don't even have to speculate. Sen. Thom Tillis (R-NC), who sits on the Senate Banking Committee, announced that he will block any and all Fed nominations until the Powell investigation is "resolved." Sen. Lisa Murkowski (R-AK) does not sit on the Committee, but she seconded the plan. Since the investigation is a sham, what that translates to is: "Donald, you're not making ANY changes to the Fed until you decide to end this political theater." And even once the White House backs down, which could be in a week, a month, or a year, any nominee the administration puts forward is going to be put under a very, very powerful microscope.
  
  
• Department of Justice: Tillis also declared yesterday that the "independence and credibility" of the DoJ is now "in question" thanks to the Powell investigation.
  
  Let us be clear about one thing: Tillis did not just figure this out yesterday. Like anyone who follows national politics, he's known for months and months that the DoJ under AG Pam Bondi is hopelessly compromised. But now he's saying it out loud. The other senators know it, too, but they have to be a little more circumspect, since Tillis is retiring, and most of the rest of them are not (at least, not voluntarily). However, it is becoming much more possible that they will also start putting DoJ nominees under the same microscope that is going to be used for Fed nominees for the next 3 years and change.
  
  It is also clear, incidentally, that the Democrats have concluded that impeaching Donald Trump will ultimately help drive MAGA voters to the polls in 2026 and/or 2028, but that impeaching some other member of the administration might not have that effect, while also rallying the Democratic base (or, at very least, communicating that the blue team is TRYING to push back). So, House Minority Leader Hakeem Jeffries (D-NY) has mentioned the possibility of impeaching DHS Secretary Kristi Noem. However, it's not impossible that Bondi will take the lead in this particular sweepstakes. And there's a version of events where she actually gets removed from office, as a way of sending a loud message to Trump without attacking him directly. There's no way that happens before the elections, but there's at least a chance, albeit a very slim one, that it happens in 2027.

In short, even if you assume that Donald Trump is incredibly selfish (which he is) and that he only cares about his own needs (which he does), he and his underlings very clearly did themselves much more harm than good with this sham Powell investigation. It's just so colossally stupid, even if you take the self-involved nature of Trump's "leadership" as a given. That means we're back at the same question we started with: Is there NOBODY in this administration who thinks, at least for a minute or two, about the consequences of their actions? We get that Trump is a walking id who does not consider timeframes beyond, say, the next 24 hours. But there has to be someone around him who can foresee these things. Right?

As the headline implies, we actually have another item about colossally stupid unforced errors; this one will focus on the latest developments in a different sham investigation, the one involving Sen. Mark Kelly (D-AZ). However, we're close to 7,500 words on the day, which is already a bit more than we'd prefer. People have lives, after all. So, we'll do Kelly, and some other pending items, tomorrow. (Z)