President Donald Trump has both the authority and justification to dismiss Federal Reserve Chairman Jerome Powell due to his handling of monetary policy and apparent political bias, according to former State Department advisor Christian Whiton.
Powell’s actions during both the Trump and Biden administrations demonstrate a pattern of questionable decision-making that has undermined economic stability. During Trump’s first term, Powell initiated aggressive interest rate hikes despite minimal inflation concerns, raising the federal funds rate from 0.41% to 2.2% by the 2018 midterm elections – a move that coincided with Republicans losing control of the House.
The economy had been showing strong signs of improvement under Trump’s initial policies, with GDP growth jumping from 2.0% to 4.6% within his first year, unemployment dropping from 4.7% to 4.0%, and manufacturing jobs beginning to recover. Trump’s administration had implemented substantial economic reforms, including corporate tax cuts from 35% to 21%, across-the-board personal income tax reductions, and policies that encouraged the repatriation of overseas corporate capital.
However, Powell’s monetary decisions appeared to work against this momentum. The situation reversed during the Biden administration, when Powell maintained near-zero interest rates and expanded the Fed’s balance sheet from $7.4 trillion to $10 trillion, despite clear inflationary pressures. This contributed to inflation peaking above 9% in 2022 and a cumulative loss of over 20% in Americans’ purchasing power.
Currently, Powell maintains elevated interest rates despite European central banks implementing cuts and a lack of significant inflation. This has prompted renewed criticism from Trump, particularly following recent reports of moderating job growth.
The legal basis for removing Powell stems from the Federal Reserve Act’s “for cause” provision, which could encompass both incompetence and political motivation. More fundamentally, the concept of an “independent” Federal Reserve appears to conflict with Article II of the Constitution, which vests executive power in the president.
The Supreme Court has consistently upheld presidential authority to dismiss executive branch officials, though it recently noted the Fed’s “uniquely structured, quasi-private” nature. Critics argue this distinction is irrelevant given the Fed’s fundamental role in monetary policy and currency management.
The historical precedent of Fed chairs working cooperatively with presidents regardless of party affiliation has eroded, with recent actions suggesting alignment with Democratic administrations at the expense of Republican ones. This shift strengthens the argument for presidential oversight of monetary policy, particularly given that voters hold presidents accountable for economic performance.
Alexander Hamilton’s writings in Federalist Papers #70 support this view, warning that a “feeble Executive implies a feeble execution of the government.” The practical reality of bureaucratic accountability requires presidential authority over personnel decisions.
Despite Powell’s insistence that his termination would be illegal, constitutional scholars argue that maintaining an independent Federal Reserve undermines democratic principles by placing monetary policy beyond presidential control. This arrangement effectively creates an unaccountable power center within the executive branch, contrary to constitutional design.
The growing evidence of politically motivated decision-making at the Fed, combined with Powell’s track record of misjudging inflation risks, presents a compelling case for presidential intervention to restore both economic stability and constitutional order.