One Republican senator, speaking on the condition of anonymity to talk more freely, told me: “There are a lot of Republican senators who think it’s a terrible mistake—a mistake of gargantuan proportions—to allow the Federal Reserve to be politicized. I don’t like this whole business of putting people on the Fed for their political beliefs.”
Trump, the senator added, “ought to leave Powell alone.”
In his 60 Minutes interview, Powell rejected the notion that Trump can fire him. He said his term lasts four years, and “I fully intend to serve it.”
Janet Yellen, who lost her Fed chair position to Powell in 2017, wrote in an email to me, “I am concerned about the Fed’s independence and have been critical about President Trump’s criticisms of the Fed.”
In a speech in Tokyo in 2010, then–Fed Chairman Ben Bernanke warned that a Fed board subservient to election-minded political leaders can damage the economy. He said that “political interference in monetary policy can generate undesirable boom-bust cycles that ultimately lead to both a less stable economy and higher inflation.”
Presidents being pols, they’ve meddled in the central bank’s work in a few notable cases, with an eye toward goosing the economy. In his memoir, Keeping At It, former Fed Chair Paul Volcker described “an awkward meeting” at the White House with Ronald Reagan in 1984, an election year. Reagan stayed silent, but his chief of staff, James Baker, told Volcker, “The president is ordering you not to raise interest rates before the election.”
“I was stunned,” Volcker wrote. “Not only was the president clearly overstepping his authority by giving an order to the Fed, but also it was disconcerting because I wasn’t planning tighter monetary policy at the time.”
So he walked out, “without saying a word.”
Richard Nixon had more success. In 1971, the year before his reelection, Nixon spoke by phone with the Fed chief Arthur Burns and encouraged him to press his colleagues to lower rates. “You can lead ’em,” Nixon said. “You always have, now. Just kick ’em in the rump a little.”
Assuming that they pass background checks and that Trump follows through on the nominations, Moore and Cain are not certain to win Senate confirmation. Republican senators have thus far been quiet about the possible appointments. But lately they’ve shown more willingness to stand up to Trump despite his hold over the GOP rank and file.
Trump surprised Republican senators in recent weeks by returning to the notion of repealing Obama’s Affordable Care Act. A Republican effort to abolish Obama’s signature legislative achievement collapsed in 2017, when the party controlled both the House and Senate.
The Senate Republican leader Mitch McConnell told reporters last week that he had spoken with Trump and dissuaded him from trying again before the 2020 election. “So, I made it clear to him we were not going to be doing that in the Senate,” McConnell said.