In a significant escalation of tensions between the Trump administration and the Federal Reserve, Office of Management and Budget Director Russell Vought publicly criticized Federal Reserve Chairman Jerome Powell on Thursday. Vought accused Powell of gross mismanagement and suggested that he misled Congress regarding a costly and extravagant renovation of the Federal Reserve's headquarters.
This sharp rebuke from Vought marks a new chapter in President Donald Trump's ongoing conflict with Powell. The President has persistently urged the Fed chairman to cut interest rates to stimulate the economy, but his calls have gone unanswered. Reports indicate that Trump has even contemplated firing Powell and has considered appointing a replacement well before the end of Powell's term next spring.
Vought's letter raises pertinent questions regarding whether Trump will attempt to remove Powell for cause, though recent Supreme Court rulings suggest that Federal Reserve board members enjoy special protections against being dismissed by the President.
In his social media post on X, Vought highlighted that the Federal Reserve has been running a deficit since FY23, marking an unprecedented moment in the institution's history. He pointed out that the renovation costs for the Fed's headquarters have ballooned to $2.5 billion, which is approximately $700 million over the original budget. Vought emphasized that the cost per square foot for the renovation stands at an astonishing $1,923, which is double the expense typically associated with renovating a historic federal building.
To put this in perspective, Vought remarked that the renovation costs could rival the expenses associated with the Palace of Versailles, which would cost around $3 billion in today's dollars.
Vought's tweet included a reference to a letter he sent to Powell, which cited Powell's testimony before the Senate Banking Committee on June 25. In his letter, Vought expressed serious concerns regarding the project's adherence to the National Capital Planning Act, which mandates that significant projects like the Fed's headquarters renovation receive approval from the National Capital Planning Commission (NCPC).
Vought criticized Powell's claims during his testimony, where the Fed chairman denied the presence of features such as VIP dining rooms, premium marble, special elevators, and rooftop garden terraces. Vought argued that these discrepancies suggest that the project is not compliant with the approved plans, which could necessitate a halt in construction and the need for new approval from the NCPC.
In his correspondence, Vought demanded answers to 11 specific questions related to the renovation project, requesting a response from Powell within seven business days. As of now, the Federal Reserve has opted not to comment on Vought's letter or the issues raised.
This developing story highlights the ongoing friction between the Trump administration and the Federal Reserve, particularly as the nation grapples with economic challenges and the management of public funds.
