THE LUNACY OF LAWFARE AGAINST THE FED / THE WALL STREET EDITORIAL

The Lunacy of Lawfare Against the Fed

Criminalizing a spat over interest rates is an Argentina-level mistake.

By The Editorial Board

Federal Reserve Chairman Jerome Powell Photo: Al Drago/Bloomberg News

Agitators within the Trump Administration for weeks have flogged a Federal Reserve office renovation as a pretext to harass Chairman Jerome Powell. 

Now comes the lawfare, with a criminal perjury referral against Mr. Powell to the Department of Justice from a Member of Congress. 

How low can this crowd go?

The complaint in MAGA quarters is that the multiyear renovation of several office buildings in the Fed’s Washington, D.C., campus is running way over budget—the cost is said to total some $2.5 billion now, up from a $1.9 billion estimate when the refurbishment started.

It’s a dubious project, with a zoning application that envisioned a new underground parking garage and concourse connecting two buildings, atria and water features, a jazzed up “executive” dining facility, and luxury finishes. 

It’s also not the first government building project to run over budget. 

And if you think this cost overrun matters to the federal budget you missed a few decimal points and commas in the One Big Beautiful Bill Act.

No, this kerfuffle is pure pretext. 

President Trump has been annoyed by Mr. Powell since the Fed chief proved less pliable than expected after Mr. Trump appointed him in the first term. 

Mr. Trump now wants Mr. Powell to cut interest rates to help the economy, despite stubbornly elevated inflation. 

The President also is annoyed that the Fed chief keeps warning that monetary officials must monitor the economic consequences of Mr. Trump’s beloved tariffs to make sure they don’t become inflationary.

Cooler heads have prevailed on Mr. Trump, at least for now, not to fire Mr. Powell in a dispute overtly about monetary policy. 

Mr. Powell would sue if Mr. Trump tried, and he might well win since the Supreme Court has signaled that it’s disinclined to extend Presidential power that far. 

But the financial-market disruption while such a case wends its way through the courts could be considerable.

This is the reason—the only reason—Mr. Trump and his acolytes are interested in the Fed office building. 

Some of them think Mr. Powell’s putative mismanagement of the building project could provide grounds to fire Mr. Powell “for cause.” 

And where this political game-playing leads, these days the lawfare won’t be far behind.

So with dreary inevitability, Rep. Anna Paulina Luna, a Trump-aligned Republican from Florida, this week referred Mr. Powell to the Justice Department on an accusation he lied under oath to Congress last month about the building project. 

He told Senators some of the more controversial parts of the renovation plan, such as a “VIP dining room” or rooftop beehives, aren’t being built although they were included in the zoning application. 

Ms. Luna is parroting Bill Pulte, Mr. Trump’s director of the Federal Housing Finance Agency, who weeks ago called for an investigation of Mr. Powell over this testimony.

The Congresswoman is trying to criminalize what at its core is an argument over monetary policy. 

Mr. Powell’s term as Chair ends next May and it’s certain he won’t be reappointed. 

Whatever Mr. Powell’s rhetorical inexactitude, it’s madness to create a new precedent for prosecuting officials for policy disagreements. 

Doing so is the road to the hyper-politicized monetary policy you’d expect in Argentina.