After former New York Federal Reserve President William Dudley suggested the central bank should stop President Donald Trump from being reelected in an explosive op-ed, GOP North Carolina Sen. Thom Tillis is calling for the Senate to investigate the Fed’s independence.
Dudley’s op-ed, posted Tuesday on Bloomberg, said the Fed should refuse to play along with an economic disaster in the making — Trump’s trade war with China — and said there’s an argument that the 2020 election itself “falls within the Fed’s purview.”
After all, Trump’s reelection arguably presents a threat to the U.S. and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives. If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020.
So there it is: A former president of the New York Fed is calling for the U.S. central bank to refuse to offer economic stimulus to purposely steer the Trump administration’s reelection campaign — and the efforts to level the trading field — straight into a ditch.
This is the same Fed that has said it will maintain its independence while under a constant storm of Trump insults and jawboning to lower interest rates.
And Tillis has seen enough to call for an investigation to see how truly “independent” the Fed is. Tillis said he will ask Banking Committee Chair Sen. Mike Crapo, R-Idaho, to convene a special hearing “regarding Fed independence and the danger of this institution taking unprecedented and inappropriate steps to meddle in the presidential election,” according to Politico.
“I am very disappointed that former Fed monetary Vice Chairman Bill Dudley is lobbying the Fed to use its authority as a political weapon against President Trump,” Tillis wrote in a statement. “The President is standing up for America against China after 30 years of our country and our workers being ripped off and there is now an effort to get the Fed to try to sabotage the President’s efforts.”
Tillis of course is facing a difficult primary challenge in the 2020 general election, so he’s allying himself close to Trump, who has battered the Fed with insults.
…..We are competing with many countries that have a far lower interest rate, and we should be lower than them. Yesterday, “highest Dollar in U.S.History.” No inflation. Wake up Federal Reserve. Such growth potential, almost like never before!
— Donald J. Trump (@realDonaldTrump) August 21, 2019
Trump’s repeated attacks are apparently what motivated Dudley to share his two cents and tell the Fed and Powell to stand firm.
“Central bank officials face a choice: enable the Trump administration to continue down a disastrous path of trade war escalation, or send a clear signal that if the administration does so, the president, not the Fed, will bear the risks — including the risk of losing the next election,” Dudley wrote. “Trump’s reelection arguably presents a threat to the U.S. and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives.”