Banana Republicanism
The Trump administration has opened a criminal investigation into Federal Reserve Chair Jerome Powell on grounds so flimsy and transparently hypocritical that it is difficult to know whether anybody is supposed to take the charges at face value. When a respected public servant is being accused of wasting taxpayer dollars and lying to Congress by a president whose extravagant White House renovation has already doubled in cost in just three months, and whose inexhaustible capacity for lies has essentially broken every fact-checking medium, one almost wonders if the criminal allegation was chosen for its absurdity, to demonstrate that Donald Trump can make the law mean whatever he wants it to.
Trump’s gambit is more likely to fail than it is to succeed. Powell’s term ends in four months, a timeline so brief that it wouldn’t be hastened by even a well-founded criminal charge, which this is not. In theory, harassing Powell with trumped-up charges could intimidate him into backing down, but the Fed chair responded with a defiant statement. Republican Senator Thom Tillis vowed not to support any new nominees to the Federal Reserve board “until this legal matter is fully resolved.” And even if Trump were to manage to install sufficiently pliant figureheads at the agency, the Fed’s demonstrable lack of independence would be apt to weaken its influence over monetary policy and make the economy worse, not better.
What’s more, Trump is gambling that his control over the Republican Party is so unshakable that he can extend his banana republicanism to a policy domain that matters deeply to his wealthy partisan allies. Those conservative economic elites who don’t actively cheer on Trump’s authoritarianism and corruption have learned to live with both, because he delivers the goods in the policy realms that matter to them: tax cuts, deregulation, and other conservative economic priorities.
Every affluent Republican, from the tech right to fossil-fuel owners to heirs managing their inherited portfolios, has a direct and visible interest in stable and competent monetary policy. The Republican Party’s respect for the Fed’s independence is already evident in a recent Supreme Court ruling, in which the conservative majority appears to be seeking to create a special exemption for the Federal Reserve from the Court’s general doctrine that presidents are entitled to fire the heads of independent agencies. When Trump messes with the Fed, he is defecating where his wealthy donors eat. Perhaps they will go along with this, too, but he is testing the limits of their acquiescence.
[Rogé Karma: Trump is getting closer to having an ‘infinite money pit’]
The apparent source of this desperate gamble is that Trump seems keenly aware that the public disapproves of his presidency and his economic policy making. But rather than move to the center and try to allay the concerns of his wavering supporters, Trump’s response to adversity has been to try to seize as much economic and political power as he can, as fast as possible.
Thus the invasion of Venezuela, which he hopes will provide him with a windfall source of petro-dollars. (Sunday night, Trump shared on Truth Social a mock biography describing himself as “Acting President of Venezuela.”) After floating a proposal to cap credit-card interest rates that stands little chance of passage in Congress, he told reporters on Air Force One that firms that fail to comply with his target by January 20—before any law capping interest rates can conceivably make it through the House and Senate—will be “in violation of the law.”
In normal times, private companies could simply laugh off a president’s threat that they have “violated” a law that does not exist. But since Trump has amply demonstrated his eagerness to redefine the law as synonymous with his own whims, his threats may well contain real power.
Trump’s clumsy legal intimidation of Powell mirrors tactics used by regimes such as those of Argentina, Russia, Turkey, Venezuela, and Zimbabwe. This is not a list of the most prosperous economies in the modern world. What these states have in common (with the exception of Argentina, which has rebuilt its economic and political systems from the setbacks they suffered under disastrous Trump-style experiments) is an entrenched elite that hoards wealth and control.
[Caitlin B. Tully: The Court has an easy answer on the Fed]
The administration is fond of accusing immigrant communities of importing dysfunctional political cultures from the developing world. “If these societies all over the world continue to fail, you have to ask yourself, if you bring those societies into our country and then give them unlimited free welfare, what do we think is going to happen? You’re gonna replicate the conditions that they left,” Stephen Miller recently told Fox News.
The global South may be cursed with more than its share of regimes in which economic success depends on political access and the rule of law is a bitter joke. However, it is not the desperate refugees fleeing poverty and oppression who are importing their political culture, but Trump himself.