The most potent source of support for Donald Trump’s campaign, by far, is nostalgia for his first term. Trump may have relentlessly rattled the cage of democratic norms, but the restraints largely held. The economy coasted as the recovery from the Great Recession reached its apex of low unemployment and low inflation. The inflation surge of 2021–22 soured the voters on Joe Biden’s presidency, and — having decided Trump is not to blame for the chaos of 2020 — they want 2019 back.
The trouble with this hope is not only that a repeat performance is not assured, but that Trump is deliberately setting out to not repeat it.
The Wall Street Journal reports Trump’s campaign is planning to weaken or end the Federal Reserve’s autonomy. The plans range from ousting Fed chairman Jerome Powell to giving the president a direct hand in setting interest rates and other Fed policy:
Several people who have spoken with Trump about the Fed said he appears to want someone in charge of the institution who will, in effect, treat the president as an ex officio member of the central bank’s rate-setting committee. Under such an approach, the chair would regularly seek Trump’s views on interest-rate policy and then negotiate with the committee to steer policy on the president’s behalf. Some of the former president’s advisers have discussed requiring that candidates for Fed chair privately agree to consult informally with Trump on the central bank’s decisions, the people familiar with the matter said.
The reason the Federal Reserve has autonomy is that there is sometimes a tension between the economy’s short-term and long-term performance. Most famously, Richard Nixon’s Fed chairman Arthur Burns prioritized a hot economy that would help Nixon’s 1972 reelection campaign, which economists blamed for contributing to inflation later in that decade.
That tension routinely popped up during Trump’s first term. Despite having chosen Powell for the position, Trump turned against him, as he did many of his appointees, because Powell did not treat Trump’s immediate political needs with sufficient (which, to Trump, means absolute) attention. Trump repeatedly demanded interest-rate cuts that Powell did not supply. His goal is to make the next occupant of the position, which could be either Powell or somebody else, more pliant.
The danger of such an arrangement would be compounded by the fact that Trump is contemplating an inflationary agenda during a second term. His major domestic priorities include a broad-based tariff, which would raise the price of goods, another upper-class tax cut, and another middle-class tax cut, to wash away the nasty political aftertaste of giving the rich a tax cut.
All these prospective moves would put more pressure on the Fed to tamp down inflation than existed during Trump’s first term, when inflation was continuing the low trajectory that had remained in place since the Clinton era. The Fed’s autonomy would have greater importance, which explains why Trump’s advisers are especially determined to curtail it.
And of course, the broader context is that a prospective second Trump administration will be designed to break through the guardrails that held him back the first time. Unlike Republican traditionalists and many voters, Trump considers his first term a failure and blames the disloyalty of his appointees.
That is why conservative groups are devising plans for him to shake up the federal bureaucracy. It’s why his sons Eric and Don are acting as loyalty czars to vet potential appointees. And that is why Trump continues to elevate January 6 as a campaign theme — he is forcing the party to supply total loyalty to even his wildest lies and most authoritarian ambitions.
The Republican Establishment believes Trump is a man they can control and manipulate, and a second term will bring stability. But what Trump wants is considerably more ambitious and threatens something far more chaotic than the public envisions.
