Stephen Miran, President Trump’s pick for an open spot at the Federal Reserve, faced backlash on Thursday after revealing that he would only temporarily leave his position as a top economic adviser to Mr. Trump if he is confirmed as a Fed governor.
Mr. Miran’s comments, made during his confirmation hearing, amplified concerns about his willingness to uphold the longstanding independence of the central bank from political meddling. That independence has allowed the Fed to make decisions about interest rates and other policies based on what is best for the economy instead of what is best for the person occupying the White House.
Rather than resigning from his position as chair of the Council of Economic Advisers, Mr. Miran told lawmakers on the powerful Senate Banking Committee that he would take an unpaid leave of absence to fulfill a term on the Fed’s Board of Governors that is set to expire at the end of January. He cited the short tenure of the position and said the decision reflected the advice of counsel.
Senator Jack Reed, Democrat from Rhode Island, called the arrangement “ridiculous.”
“Your independence has already been seriously compromised by your statement,” he added.
Senator Andy Kim, a Democrat from New Jersey, said the decision made it very likely that Mr. Miran would continue to be beholden to the president while serving at the central bank.
“You could very well be continuing to act in a way that is in the political interests of the president, because you know he is going to be your future boss again at the White House,” Mr. Kim said. “Why do you even want this job at the Fed for four months, if you’re just hedging your bets and just continuing to hold your position at the White House?”
The law stipulates that members of the Fed’s board “shall devote their entire time to the business of the Board.”
The issue dominated a hearing that gave Republicans and Democrats their best opportunity yet to dig into the Trump administration’s plans to overhaul the central bank amid a relentless pressure campaign from the president, who wants the Fed to slash interest rates.
Mr. Miran’s hearing was hastily scheduled so that he could possibly be in place before the Fed’s next meeting on Sept. 16 and Sept. 17. He was selected to fill the temporary position in August, after Adriana Kugler abruptly stepped down from her post five months before her term ended.
Mr. Miran sought to head off questions about his ability to make policy decisions free of political influence from the start of the hearing. In opening remarks, he said that the Federal Open Market Committee, which votes on major policy decisions, was an “independent group with a monumental task, and I intend to preserve that independence and serve the American people to the best of my ability.”
As the hearing got underway, he repeatedly pushed back on the idea that he would function just as a “puppet” of Mr. Trump’s as Senator Elizabeth Warren, Democrat of Massachusetts, accused him of being on Thursday.
“No one — not the American public, not investors here at home, not the worldwide financial markets — will trust him as an independent voice,” she said. “Every claim he makes and every vote he takes will be tainted with the suspicion that he isn’t an honest broker, but that he is Donald Trump’s puppet.”
Mr. Miran said he had not been asked to make any pledge to lower interest rates and said his views would be determined by the economic data and his own analysis.
While Republicans appeared ready to confirm Mr. Miran, his assurances rang hollow for many Democrats on the committee, given the extent of the attacks being waged on the Fed.
Mr. Trump is already embroiled in a legal battle with Lisa Cook, a governor he is trying to oust over allegations that she committed mortgage fraud. Ms. Cook, who has not been charged or convicted of any wrongdoing, has sued to prevent her removal, teeing up what is expected to be a prolonged fight over the president’s ability to remove a Fed official “for cause.” That is typically interpreted to mean professional neglect or wrongdoing.
“Your nomination is getting rushed because the president is frustrated with the Fed for not cutting rates, and he wants loyalists on the Fed board,” said Senator Tina Smith, Democrat of Minnesota.
Mr. Miran did not talk about Ms. Cook’s case directly, but he did clarify when asked that he had not made false statements on any mortgage applications.
If Ms. Cook loses her case, Mr. Trump will have yet another opening on the Fed’s board to fill, tipping the balance of support further in his favor. The president will also get to nominate a new chair once the term of the current head of the Fed, Jerome H. Powell, ends in May.
If Mr. Trump has a majority of governors in his corner, he is likely to command greater sway over an institution that is supposed to operate independently from the White House.
As a governor, Mr. Miran would be able to vote on every major policy decision the Fed makes, including on interest rates and the rules that govern Wall Street. He would also be involved in deliberations related to the inner workings of the Fed and its staff.
Lawmakers repeatedly brought up a paper that Mr. Miran co-authored in 2024 that sharply criticized the central bank and concluded that its institutional setup made it prone to policy errors and that it was unaccountable to the very people it was supposed to serve. The paper also included a series of profound reforms for the central bank. Perhaps most notably, he called for an end to the “revolving door between the executive branch and the Fed” — the exact journey that Mr. Miran now finds himself taking.
As part of a radical reset, he called for shorter terms for top officials and the ability for the president to remove policymakers for any reason. Mr. Miran wanted the 12 regional reserve bank presidents to have more say in interest rate decisions, but to come under the control of state governors. He also sought to subject the central bank’s budget to the congressional appropriations process rather than maintaining the Fed’s autonomy.
Before joining the administration, he also floated the idea of weakening the value of the U.S. dollar in a bid to make American imports more competitive, a proposal known as the Mar-a-Lago Accord. He also highlighted the costs of the dollar’s status as the world’s reserve currency, a position that stands in sharp contrast to how the Fed sees it.
The Fed, which is overseen by Congress, is obligated to set monetary policy in pursuit of low and stable inflation as well as a healthy labor market. The central bank’s longstanding inflation target is 2 percent, a level it has exceeded since consumer price growth accelerated in the pandemic.
Before Mr. Trump imposed tariffs on effectively all of the country’s major trading partners, inflation was easing. But price pressures have intensified again, leaving a divided Fed in a difficult spot in terms of what to do about interest rates. The labor market, meanwhile, has started to show more obvious signs of softening.
Officials are getting ready to restart cuts that were put on pause in January in recognition that the risks posed to the labor market are outweighing the risk of a persistent inflation problem. But policymakers are likely to move slowly once they get going again, keeping them at odds with the president’s demands for borrowing costs that are three percentage points lower than the current range of 4.25 percent to 4.5 percent.
Mr. Miran has been a vocal cheerleader of the president’s economic policies and is expected to press for what Mr. Trump wants at the Fed. But he would also have to be careful about alienating himself from his soon-to-be colleagues. Decisions related to interest rates and the balance sheet, for example, are made by a 12-person committee of the governors and a rotation of five regional Fed presidents.
Colby Smith covers the Federal Reserve and the U.S. economy for The Times.
The post Trump Pick’s Plan to Return to White House After Fed Stint Draws Backlash appeared first on New York Times.
