President Donald Trump has many people he perceives as enemies in Washington, D.C., and few of them have resisted his pressures as successfully as outgoing Federal Reserve Chair Jerome Powell. Now, a former Obama-era economic adviser argued that he has left behind a “genius” playbook for those looking to beat back the president’s threats.
Jason Furman is an economist and scholar, best known for chairing the Council of Economic Advisers during former President Barack Obama’s second term. On Thursday, he published a new piece for the New York Times, hailing him as a good Fed chair, but an even better opponent to Trump.
Powell drew significant ire from Trump over his repeated refusal to cut interest rates enough, something that would have been beneficial to the president’s many business allies, but not necessarily good for the economy and inflation rates overall. Early into his second term, Trump began putting immense pressure on Powell and the Fed, threatening to fire him — something he lacked the authority to do — and later launching a criminal investigation into him, which was widely interpreted as a thinly veiled intimidation play.
Powell’s reaction, Furman argued, saw him create a whole new playbook for hitting back at Trump.
“In economics departments, they teach you how to handle the situations central banks are likely to find themselves in: excessive inflation, financial crises, runs on the banks. But no one teaches you how to handle a situation like this,” he explained. “Mr. Powell wrote his own playbook. He posted a plain-spoken two-minute video addressing the American public. ‘No one — certainly not the chair of the Federal Reserve — is above the law,’ he said. But the president’s ‘unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.’ He vowed to continue performing his duties ‘without political fear or favor.'”
In the wake of Powell’s sober address, former Fed chairs across the political spectrum spoke out against Trump’s investigation, followed by members of Congress. GOP Sen. Thom Tillis threatened to use his committee authority to block Trump’s nomination to replace Powell if the investigation was not called off, a threat largely credited with ultimately sinking the case. Powell also opted to buck decades of tradition and remain on the Fed board of governors after his term as chair ends, to better allow him to combat Trump’s pressure.
“Mr. Trump’s gambit had completely backfired,” Furman explained.
He continued: “President Trump nominated Kevin Warsh, a former Federal Reserve governor, to replace Mr. Powell. Mr. Warsh is well above the bar in terms of both knowledge and experience. His most immediate task will be to finish the job Mr. Powell was doing, bringing inflation down to the Fed’s 2 percent target. He will succeed only if he follows through on the promise he made in his confirmation hearing to maintain the Fed’s operational independence. Mr. Powell has shown him — and the rest of us — how that is done.”