WASHINGTON (AP) — Federal Reserve Chair Jerome Powell is gaining some key backing on Capitol Hill from GOP senators who fear the repercussions if President Donald Trump follows through with threats to try and remove the politically independent central banker.
As Trump seemingly waffled back and forth this week on trying to dismiss the Fed chair, some Republicans in Congress began to speak up and warn that such a move would be a mistake. Trump would potentially obliterate the Fed’s independence from political influence and inject uncertainty into the foundations of the U.S. economy if he fires Powell.
“If anybody thinks it would be a good idea for the Fed to become another agency in the government subject to the president, they’re making a huge mistake,” GOP North Carolina Sen. Thom Tillis said in a floor speech.
The measure of support from GOP members of the Senate Committee on Banking, Housing, and Urban Affairs showed how traditional Republicans are carefully navigating a presidency in which Trump often flirts with ideas — like steep tariffs or firing the Fed chair — that threaten to undermine confidence in the U.S. economy.
Tillis, who recently decided not to seek reelection after clashing with Trump, later told The Associated Press that the economic fallout from Powell’s firing would mostly hurt “little guys like me that grew up in trailer parks that may have a few thousand dollars in a 401k.”
He also pointed out that the underlying complaint that Trump has with the Fed — its reluctance to cut interest rates — is not controlled by Powell alone, but instead a 12-member committee.
“The markets expect an independent, central bank,” said GOP South Dakota Sen. Mike Rounds, who cautioned against firing Powell. “And if they thought for a minute that he wasn’t independent, it would cast a spell over the forecasts and the integrity of the decisions being made by the bank.”
Still, plenty of other Republicans think that dismissing Powell is a fine idea.
“The most incompetent, worst Federal Reserve chairman in American history should resign,” said GOP Ohio Sen. Bernie Moreno.
Trump said he was also encouraged to fire Powell during a meeting with about a dozen far-right House members Tuesday evening.
Do presidents have authority to fire the Fed chair?
House Speaker Mike Johnson, R-La., told reporters that he was “unhappy with the leadership” at the Fed, but added “I’m honestly not sure whether that executive authority exists” to fire Powell.
House Financial Services Committee chair French Hill has underscored that presidents don’t have the authority to fire the Fed chair, yet has also been sympathetic to Trump’s complaints about Powell’s leadership. He and other Republicans have also noted that Powell’s term as chair is ending next year anyway, and Trump will have an opportunity to name a new chair then.
When Congress started the Federal Reserve over 100 years ago, it insulated it from political pressure by stipulating that its governors and chair could only be fired “for cause” — a higher bar than most political appointees. However, the Trump administration has maneuvered to meet that standard by accusing Powell of mishandling a $2.5 billion renovation project at the Fed’s headquarters.
“When his initial attempts to bully Powell failed, Trump and Republicans in Congress suddenly decided to look into how much the Fed is spending on building renovations,” Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee, said in a speech Wednesday. “Independence does not mean impunity and I have long pushed for more transparency and accountability at the Fed. But give me a break.”
After Powell sent Congress a letter detailing parts of the renovation project, Sen. Tim Scott, the Senate Banking Committee chair, released a short statement saying Scott “has continued to call for increased transparency and accountability at the Federal Reserve, and this letter is consistent with improving the communication and transparency he is seeking.”
Avoiding a protracted legal battle
Regardless, it would be legally dubious to fire Powell over the renovation.
“That would be litigated and I don’t see a reason, for cause or otherwise, to remove him,” Sen. John Kennedy, a Republican member of the Senate committee that oversees the Fed, told reporters this week.
He added that he understood the president’s “frustration” with the Fed’s reluctance to lower interest rates as it tries to tamp down inflation, saying, “I get that, but I think it’s very important the Federal Reserve remains independent.”
Even those Republicans who argued that the president has grounds to fire Powell and piled criticism on the central banker conceded that it would still be a painful step.
“That’s a decision the president will make, and he’s being very deliberate about it,” said Moreno, the Ohio senator who called for Powell’s resignation. “But I don’t think we should put the country through any of that.”
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