From the storm of trade tariffs to the shadows of Capitol Hill, Powell is under unprecedented dual attacks from public opinion and politics. Trump is angrily accusing him of not cutting interest rates 'in a timely manner' while threatening in the media to oust him; many Republicans in Congress view him as the last line of defense against political interference. The biggest question now is: what 'principled mistake' has Powell made, and does Trump really hold the 'termination order'?
Why are Republican lawmakers collectively 'clinging to the pillars'?
Surprisingly, within the Republican Party, there are far more supporters of Powell than expected. Representatives like Lucas from Oklahoma and Cramer from North Dakota are dissatisfied with Powell's hesitation on inflation and do not want to see the Federal Reserve being directly 'manipulated' by the White House. 'Considering the complex situation, he has acted relatively steadily,' Lucas stated; 'his presence gives the market more confidence,' Cramer commented. Even Senator Scott, who has always been 'watching' the Federal Reserve, said, 'If Powell is ousted, the market will panic more.'
The consensus among these lawmakers is clear: the independence of the Federal Reserve is the most reliable 'safety valve' for Wall Street, manufacturing, and consumers. If it is replaced by political decisions, the loss of dollar credibility and global financial turmoil may be the real disaster.
The Legal Killer Move: Can the President Really Take Action?
Despite the ongoing support, senior aides are privately discussing: is there a legal avenue for the president to dismiss Powell? Former National Economic Council director Hassett and his deputy Eland even believe that 'the law does not prohibit the president from replacing Federal Reserve positions at any time'. This statement immediately sparked heated debate: if the clause of 'with cause' is left as a loophole, can Powell only survive by 'unless there is a strike or illegal action'?
Currently, a lawsuit targeting the Federal Reserve Board's protection clause has been appealed to the Supreme Court. If the ruling supports the president's power to dismiss the chair, it may instantly invalidate the 'protective charm' of the entire independent agency. At that time, whether Powell's term lasts until 2026 or he only has two years left in his position, he could face the risk of being 'neutralized' at any moment.
What did Powell do wrong?
Hesitation in Tackling Inflation: Faced with soaring prices, he chose to remain cautious and refused to cut interest rates early, which exposed a 'soft spot' for many politicians who believe in 'cutting rates to save the economy'.
Directly Warning About Tariffs: In Chicago, he openly warned that tariffs would bring inflation and unemployment pressure, and this attitude of 'criticizing government policy' was seen by Trump as 'betrayal'.
Refusal of Political Compromise: He has repeatedly emphasized that he 'will not be constrained by the president'. Within the White House, this 'tough guy' image has earned praise from those who support independence while enraging those who wish to intervene directly.
The 'Blabbermouth King' Trump
In the short term, to 'avoid market panic', Trump is likely to first engage in a 'war of words'—continuing to vent his anger on social media and directly criticizing Powell in the State of the Union address. But to truly invoke the termination clause? That will depend on the Supreme Court's ruling on the related lawsuit and whether the Republican bigwigs can step up to block it at the last moment.
The Political Cost is Huge: If he rashly dismisses the Federal Reserve chair, Wall Street, global central banks, and international investors will lose confidence in the stability of the U.S. financial system.
The Last Line of Defense on Capitol Hill: Even if the Supreme Court allows it, mainstream Republican senators and representatives have clearly stated that they do not support political interference; their resistance may kill this issue in hearings.
Election Considerations: With the 2024 elections approaching, any action that severely impacts the market could backfire on the president's re-election prospects. If Trump truly 'takes action', he needs to weigh political interests against economic risks.
Currently, it seems that Powell is at the center of the storm: cutting rates too early could trigger inflation, and cutting rates too late could result in accusations of ignoring economic decline; withstanding political pressure is necessary to preserve the independence of the Federal Reserve. If he is really 'fired' by Trump, it would be a spectacle in the history of the U.S. Constitution, and the Federal Reserve would completely lose its so-called institutional advantage of 'independence', at which point the credibility of the U.S. market would be re-priced.
