Trump Should Take on the Fed
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

Should the chairman of the Federal Reserve take a lesson from Secretary of Defense Mattis? The ex-general is being praised for the letter tendering his resignation to the President. “Because you have the right to have a Secretary of Defense whose views are better aligned with yours on these and other subjects,” Secretary Mattis wrote, “I believe it is right for me to step down from my position.”
Well, if that’s such a call to honor, what about Chairman Jerome Powell? The misalignment of views between the President and Secretary Mattis is nothing compared to the differences between Mr. Trump and his Fed chairman. Mr. Mattis’s nose was out of joint because of a difference of opinion on our allies. Messrs. Trump and Powell are at odds over the core of the whole economy.
We comprehend that the situations aren’t entirely analogous. It may be true that both the defense secretary and the Fed chairman were nominated by Mr. Trump. The President’s constitutional authority as commander in chief, though, is about as clear as anything in the entire Constitution. If the President tells the defense secretary to jump, the constitutional answer is “How high?”*
The parchment is far less clear on the standing of the President in respect of monetary policy. As we read the Constitution, somewhere between 99% and 101% of the monetary powers it grants to the government are granted to the Congress. It has the power to lay and collect taxes, borrow on the credit of the United States, regulate commerce, and coin money and regulate the value thereof, etc., etc.
Unlike Secretary Mattis, Mr. Powell serves for a fixed term. He’s a governor of the Fed for 14 years, by law removable only for cause. He’s chairman for but four years. It’s less clear whether a president can fire a chairman, although if Congress hadn’t intended for the President to have some say in monetary policy, it wouldn’t have given him the power to nominate the Fed chairman in the first place.
It’s certainly being debated. The Wall Street Journal issued a terrific op-ed piece on this head just the other day. It appeared under the title “Can Trump Fire Jerome Powell?” Its author, Peter Conti-Brown of Wharton, notes that in 1965, President Lyndon Johnson was told he couldn’t fire Wm. McChesney Martin, Jr. (LBJ failed to make an issue of it). Ultimately, Mr. Conti-Brown reckons, it’s a political question.
Which brings us to President Trump. We think Mr. Trump should confront the Fed. He is right that it is a bigger problem than Communist China. Precisely for that reason, though, it’s going to take a recognition that the problem is bigger than the failures of any one chairman. It is going to involve leadership in rallying the Congress to reassert its powers.
Between 2005 and 2015, we argued ourselves blue — downright ultramarine — in the face on this issue. We came to realize that neither Presidents Bush nor Obama were going to rise to the occasion. The jury is out on Mr. Trump. He did, though, campaign against the Fed during his race for the White House. We take his rising gall as an encouraging sign. On monetary reform, we’d love to see him to try to make history.
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* That concept was taught to us long ago at Sand Hill, Fort Benning, by a drill sergeant who had regarding the relevant constitutional point a number of formulations that were less dainty.
Image: Chairman Jerome Powell (Federal Reserve via Wikipedia).