The Fed chair has saved Trump from his worst instincts but failed to do so for Biden.
When historians eventually study whom Donald Trump treated worse—his enemies or his friends and loyal servants—the sad case of Jerome Powell will weigh heavily on the scales.
Not only did Trump discharge the usual fusillade of schoolyard insults and infantile tantrums at the man he appointed chair of the Federal Reserve Board; as the world now knows, Trump’s Department of Justice has also opened a spurious criminal investigation of Powell for allegedly making false statements to Congress about a cost overrun in a construction project.
We have seen Trump’s particular style of gratitude before. John Bolton, his former national security adviser turned critic, is living under a politically hatched indictment, and Mike Pence, his first-term vice president, was exposed to a violent mob for executing his constitutionally mandated duties.
Yet Powell’s case is distinct because he—more than any other top-level civil servant—helped secure the most significant policy triumph of Trump’s career. He even played a crucial part in Trump’s eventual reelection.
During the Obama years, after the mortgage bust, Ben Bernanke and the Fed kept the short-term interest rate close to zero, setting the stage for Powell’s role in the Trump economy. Free money was great for stock-market investors, but Main Street’s recovery was torpid.
In 2018, when Powell took office, a year into Trump’s first term, the federal funds rate was still only 1.5 percent. Under Powell, the Fed gradually hiked the rate to 2.5 percent and then pulled back. Trump squawked and mused about firing Powell.
Trump’s carping notwithstanding, economic growth spiked during Powell’s first year to 3 percent, the highest since the mid-2000s, and wages rose at the fastest rate since before the financial crisis.
