How Trump’s latest target could repel 'senior voters' in midterms

U.S. President Donald Trump looks on as Jerome Powell, his nominee at the time to lead the U.S. Federal Reserve, moves to the podium at the White House in Washington, U.S., November 2, 2017. REUTERS Carlos Barria

Hedge fund billionaire Ken Griffin and Chicago Booth Business School professor Anil Kashyap called Trump’s bid to seize control of monetary policy a “risky game” akin to a policy by former President Richard Nixon, which kicked off 1970s stagflation that helped undo at least two presidential administrations following him.

By removing veterans on the Fed, including Fed Chair Jerome Powell, Trump hopes to install allies who will slash interest rates to accommodate his short-term strategies rather than tweak policy to counter market disorder.

But Griffin’s and Kashyap’s opinion in a joint Wall Street Journal editorial reports that Nixon’s own manipulation of the Fed in the 1970s “contributed to a prolonged surge in prices.”

“It is in the president’s best interest for the Fed to be seen as independent — and to act independently. That independence gives the central bank space to make difficult choices required to curb inflation,” the financiers warned. “In a worst-case scenario, if the Fed visibly bows to political pressure and permits inflation to rise unchecked, tens of millions of retired Americans will see their savings diminished.”

That, in turn, could cut away at senior voters, who are among Trump’s more solid base. “Senior voters — tired of bearing the brunt of inflation — could cost the administration dearly in the midterms,” they wrote.

Credibility in economic policymaking is built slowly, they say, through respect for processes, but that credibility can be quickly lost. And without it, the costs of borrowing money rises, sustainable growth drops and global confidence in U.S. institutions falters.

Preserving the Fed’s independence is only part of a broader effort that Trump appears unwilling to adopt, however.

The two pressed the White House to steer Congress to reduce government spending, which would amount to an about-face from Trump’s current policy. The president’s signature Big Beautiful budget bill adds more than $3 trillion in debt over 10 years. They also suggest Trump ensure taxpayer-supported universities equip students with the skills the future demands, and pursuing immigration policies that attract the world’s brightest.

“Without resolution, the government will pay more to finance deficits, young families will struggle to afford homes, and companies will invest less,” the warned.

Read the Wall Street Journal opinion column at this link.

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