In Trump World, where alternative facts rule, reality is starting to make comeback.
For months, the president has hammered Jerome Powell, the chair of the Federal Reserve, denouncing him as a “numbskull” and demanding that he lower interest rates more rapidly.
Powell kept his course, but also kept quiet, until federal prosecutors threatened to bring criminal charge against him for lying to Congress.
Finally, Powell fought back. In a highly unusual two-minute video, he branded the criminal probe a “pretext” and asserted: “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation.”
This is a paradigm moment that crystalizes a central tension in the political universe. Trump’s view is that “Reality is what I say it is,” as the historian Ruth Ben-Ghiat put it, and what serves his interests. But his opponents, epitomized by Powell, say no: Reality is based on evidence, on facts, on independent observation and calculation.
Trump has embraced “alternative facts” (a phrase coined by his former adviser Kellyanne Conway) his entire career. He claimed, without evidence, that his inaugural crowds were larger than his predecessor’s. That the 2020 election had been stolen. That tax cuts pay for themselves. All false. All lies.
Even more insidiously, Trump has gotten rid of government officials who stand for professional integrity and could contradict his prejudices — inspectors general, career prosecutors, climate scientists. He fired the head of the Bureau of Labor Statistics, Erika McEntarfer, charging — again, without evidence — that her figures were “RIGGED” against him.
Trump has also assailed other experts and institutions that can challenge his definition of reality — federal judges, law firms, universities and media companies. Many have folded in the face of his pressure, terrified of his power to sue them or regulate them or simply denounce them on social media. Almost all Republicans have gone along as well, impressed by the fervor of his followers, but also fearful of his wrath.
Lately, that unity has shown signs of splintering. Republicans in the Indiana legislature rejected his demands to redraw Congressional boundaries. Five Republican senators voted for a war powers resolution, rebuking Trump’s actions in Venezuela, and so infuriating the president that he declared they “should never be elected to office again.” A whopping 17 Republican House members broke ranks and supported a measure to restore expired subsidies for health insurance premiums.
The attempt to intimidate Powell really hit a nerve, because it threatened the basic independence of the Federal Reserve, one of the central principles that has made the American economy the strongest in the world. And it challenged the essential concept that “evidence and economic conditions” should guide the Fed’s decision-making, not political pressure or self-interest.
“Powell investigation backfires with Hill Republicans,” headlined the news website Semafor. One of the strongest denunciations came from Sen. Thom Tillis of North Carolina, whose decision to retire has freed him to be far more critical of the White House.
“If there were any remaining doubt whether advisers within the Trump administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” said Tillis. He vowed to block any replacement for Powell, whose term as chair ends in May, “until this legal matter is fully resolved.”
Sen. John Kennedy of Louisiana said he would be “stunned” if Powell had done anything wrong, adding: “We need this like we need a hole in the head.” Rep. French Hill of Arkansas, chair of the House Financial Services panel, warned that the threat by federal prosecutors “could undermine this and future administrations’ ability to make sound monetary policy decisions.”
A bipartisan group of economists, including former Fed chairs and treasury secretaries, issued a stern warning: “This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly. It has no place in the United States, whose greatest strength is the rule of law, which is at the foundation of our economic success.”
Douglas Holtz-Eakin, an adviser to two Republican presidents, summarized the general reaction: “This strikes me as a really unwise and boneheaded move. This is really stupid.”
Trump will certainly continue his war on reality, but he is now losing some battles.
Steven Roberts teaches politics and journalism at George Washington University. He can be contacted by email at [email protected].
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