Trump’s latest unlucky appointment is already 'cooked': analysis

U.S. President Donald Trump gestures during a press conference at a NATO summit in The Hague, Netherlands June 25, 2025. REUTERS/Yves Herman

Bulwark Economics Editor Catherine Rampell says the ally that President Donald Trump worked so hard to place over the federal Reserve is already hanging off a tailspin — and he hasn’t even taken a seat.

“In economics, there’s a concept called the ‘winner’s curse.’ It means that the person who ends up winning an auction has often overpaid for the prize. It’s a good way of characterizing the fate of the newly confirmed Federal Reserve chair, Kevin Warsh,” said Rampell.

Warsh finally clinched the seat by pledging to sign on to Trump’s crusade to cut interest rates. Unfortunately for Warsh, Rampell says he won’t be delivering on that promise “for reasons that are clear to everyone,” meaning Warsh “is hurtling toward a reckoning with his benefactor.”

Yesterday, for the first time since 2007, rates on new 30-year Treasury bonds surpassed 5 percent. This, said Rampell, is why “Warsh is very, very cooked.”

Inflation hadbeen drifting downward in recent years until Trump’s “Liberation Day” tariffs ticked reversed them. Then came Trump’s Iran war, which “supercharged’ consumer and producer prices, with consumer prices hitting 3.8 percent growth in April from a year earlier.

“Even worse, this one-two punch of tariffs and war threatens to reset expectations for how bad inflation will get,” said Rampell. “What this means is that instead of these shocks being temporary, we could be at the start of a vicious cycle in which companies that are fearful of getting surprised by higher prices in the future raise their own prices preemptively today. If everybody does this at once, you get more inflation. It’s a self-fulfilling prophecy.”

But Warsh can’t cut interest rates while inflation is rising for fear of the cuts giving rising rates a nitro boost on into the atmosphere. And even if he wants to deliver the rate cuts Trump craves he still can’t.

“For starters, Warsh will be only one of twelve votes on the Fed committee that sets interest rates, and the rest of the committee is making it clear they’re not interested in more cuts,” said Rampell.

He could make himself the lone vote on the board to reduce rates and then tell Trump he was powerless to deliver the goods, but Rampell said: “I cannot overstate how cuckoo that would be,” considering the chair’s history as a consensus builder with only occasional dissents.

“Maybe Warsh thinks he can manage Trump. Maybe he thinks his marriage to the daughter of a close Trump ally will shield him from the full force of Trump’s rage and retribution. But other onetime confidants with even closer ties to MAGA’s paterfamilias have been shredded for less,” said Rampell. “Congrats on your new gig, Mr. Chairman. Good luck to you.”

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