The Supreme Court just put the Fed in peril —and Trump is ready to strike

When President Donald Trump attacked former Federal Reserve chair Jerome Powell and replaced him with loyalist Kevin Warsh, it became clear that one of America’s most important financial institutions could be compromised by Trump’s political wishes. Now a right-wing newspaper, The Wall Street Journal, is running an editorial by a prominent conservative on how to retain the Fed’s independence from a Republican president.

“The independence of the Federal Reserve is in peril. In Trump v. Slaughter, the Supreme Court vastly expanded the president’s power over so-called independent agencies,” Alton Frye, presidential senior fellow emeritus of the Council on Foreign Relations and a fellow of the National Academy of Public Administration, wrote on Tuesday. “In Trump v. Cook, decided the same day, the court recognized the unique standing of the Federal Reserve Board but left its independence in a precarious state. The vote was 5-4. If the Federal Reserve’s independence is to be protected, it needs a mechanism more powerful than presidential self-restraint or a tenuous balance of opinion in the Supreme Court.”

Frye added, “How best to assure independence for the central bank? In the Budget and Accounting Act of 1921, Congress can find a definitive answer based on a longstanding agreement between the political branches backed by a century of precedent.”

Explaining how the Government Accounting Office (GAO) could protect the Fed from Trump, Frye elaborated that “applying the GAO model to the Fed would insulate the central bank from political influence. The Fed’s mission meshes more clearly with powers assigned by the Constitution to Congress than to the president. In fulfilling its monetary-policy responsibilities, the Fed is acting on Congress’s powers ‘to coin Money’ and ‘to borrow Money on the credit of the United States.’”

Frye continued, “Those powers are enhanced by the legislature’s authority “to make all laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States.” The Constitution gives no comparable authority to the president.”

Overall Frye concluded that “Mr. Trump’s renewed attempts to dismiss Fed Gov. Lisa Cook underscore the need to safeguard the Fed. There is little likelihood that the current president or his congressional supporters will advance this kind of proposal. Over the long haul, however, the enduring bipartisan commitment to an independent Federal Reserve could make this reform possible. It isn’t too early to start building the coalition to make it happen.”

Despite Trump’s attempts to make the Fed lower interest rates and report economic data that is rosier than reality, on Monday CNN journalist Daniel Dale was able to debunk the Trump White House’s claim that manufacturing is booming by citing Fed data.

“‘We have the largest number of plants ever being built in the United States right now,’ Trump says,” Dale asserted. “When I asked the White House for any source for this claim, they could not provide any. US factory construction spending has steadily declined this term.”

Dale then brought up the Federal Reserve’s statistics showing while $250,089,000,000 was spent in total manufacturing construction in November 2024 (when Trump won his second election), only $172,674,000,000 was spent in total manufacturing construction in June 2026.