The only surprising thing about President Trump calling on federal investigators to prepare a possible criminal complaint against the highly respected Federal Reserve Chairman Jay Powell — himself a Trump appointee — is whether anyone is surprised by this news.
The sequential and dramatic waves of prosecutions against officials such as his former National Security Advisor John Bolton, former FBI chiefs James Comey and Christopher Wray, New York Attorney General Letitia James, former CIA chief John Brennan, Federal Reserve Director Lisa Cook, former Department of Homeland Security official Miles Taylor, Senator Adam Schiff, cybersecurity chief Christopher Krebs, and former Special Counsel Jack Smith, among others, are alarming.
As his messages on Truth Social show, Trump personally directed these processes, revealing the instrumentalization of the Judiciary against perceived political enemies.
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Some critics see this as the impulsive, emotional outbursts of the deranged Queen of Hearts from Alice in Wonderland, shouting “off with her head” at anyone who displeases her. What this reading misses is that these actions are much more deliberate, part of a larger tactical pattern.
The accusations against Powell that he lied to Congress because of cost overruns in building renovations are ridiculous and will certainly be rejected in court.
The alleged 40% overrun may be true, but it is not criminal, much less reckless. The Fed’s renovations are costing $2.5 billion, 40% over budget because of cost inflation, while Trump admitted last month that his own demolition and construction of a new ballroom in the East Wing of the White House soared to 200% over budget.
This is truly impressive given that the project began just six months ago and Trump, as a builder, should have known how to accurately estimate costs.
The costs of the Fed’s renovation are not out of the ordinary, considering this is the first comprehensive renovation in about 90 years since the Marriner Eccles building was built in 1937.
In contrast, the Hart, Russell and Dirksen Senate administrative buildings and the Cannon House administrative building have continually undergone major renovations over the decades.
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Furthermore, regardless of the nature of these common cost overruns, not a penny of it comes from U.S. taxpayer resources.
The Fed is financing these reforms from its own budget, as it is completely operationally self-sufficient, financed primarily by its own investment income in U.S. Treasury securities it holds — not by budgetary appropriations approved by Congress.
Ambush gone wrong
Trump tried to ambush Powell on national TV this summer during a visit to the construction site, but the attempt backfired: Trump embarrassed himself and Powell corrected him — Trump’s claim that the renovations had ballooned to $3.1 billion was quickly debunked by the Fed chairman, who pointed out that that figure included a separate, already completed renovation of another building.
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On the face of it, Trump is angry that the Federal Reserve isn’t cutting rates faster and deeper, and this is how the president explained why he’s being targeted: “This new threat has nothing to do with my testimony last June or the renovation of the Federal Reserve buildings… These are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the president’s preferences.”
The bipartisan endorsement of Powell’s assessment includes comments from Senator Thom Tillis, Republican of North Carolina and a member of the Banking Committee, who concluded: “If there was any doubt that advisers within the Trump administration are actively pushing to end the independence of the Federal Reserve, there should be none now. What is at issue is not the independence of the Department of Justice.”
No fewer than 71% of the 200 CEOs attending the recent Yale CEO Summit complained that Trump had already eroded the Federal Reserve’s independence through actions taken by his administration, and 81% said they preferred director Chris Waller as Powell’s prospective successor when the chairman’s term ends, assuming he will bolster the Fed’s independence.
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So if this attack by the legal system is not an impulsive tantrum, what is the strategic logic?
Like Trump’s false claim this month that the attack on Venezuela was motivated by anticipated interest from U.S. oil producers—which they emphatically denied, calling Venezuela “uninvestable”—this is a diversionary maneuver by Trump.
In a new book, Trump’s Ten Commandments (Simon & Schuster), we call this Trump’s “wall of sound” tactic to change the public narrative of his falling polls, with Gallup’s year-end national poll recording just 36% approval of his performance and the Economist/YouGov polls showing 57% disapproval — with more than half of even MAGA/Trump voters not supporting him on his handling of the Epstein files and on issues like cost. life, health, and ICE/immigration tactics, which have plummeted to 30% in recent surveys.
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And Trump achieved his mission of getting all media outlets to abandon the 24-hour hammering on his weaknesses in relevant domestic policies.
Furthermore, he activates three other levers in this diversionary maneuver involving Fed/Powell — he invokes his highly centralized leadership model, in which there are no independent control agencies; crushes opponents with selective retaliation; and deftly manipulates the classic mass communication propaganda tool known as the “sleeper effect”, in which a false message is repeated in a relentless and determined way until it eventually gains traction.
All of this is in Trump’s toolkit that we call his “Ten Commandments.” He is far from tone deaf or foolish. He’s smart as a fox.
The opinions expressed in Fortune.com commentary texts are solely those of the authors and do not necessarily reflect the opinions and beliefs of Fortune.
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