Last week on CNBC, President Donald Trump upbraided the Federal Reserve for raising interest rates. “I don’t like all of this work that we’re putting into the economy and then I see rates going up,” he said.
The president’s remarks elicited a furious response in the financial press. “Attacking central bank is one more step in what seems like a Presidential strategy of turning the United States into a banana republic,” tweeted Larry Summers, Clinton’s former treasury secretary and wannabe Fed Chair. In a lead editorial, The Washington Post scolded the president for once more trampling a presidential norm: “Presidential respect for the independence of the Federal Reserve is an unwritten rule but vital to modern American governance.”
No question, Trump was once more busting an unwritten presidential norm. But tradition aside, why should the Federal Reserve, dominated by bankers and their servitors, be insulated from the democratic discourse?
The decisions the Fed makes on interest rates—in this case, raising them to preempt anticipated rising inflation—are inherently political judgments about values and priorities. Is future inflation such a concern that it is necessary to raise interest rates, slow the economy, and throw people out of work in order to get in front of it? Or after years of wage stagnation, is it better for the Fed to give the economy its head, even put up with a little inflation, hoping that as workers grow scarce, companies will be forced to raise wages?
Nightmares about inflation galloping out of control are largely fanciful inventions of creditors worried that debtors will gain an edge. Progressive economists have long argued that allowing the Fed to control these decisions rigs the rules against working people in favor of Wall Street. As the economist Dean Baker wrote, “The outraged reporter gang might want to study up some on the meaning of democracy.”
The tempest over the Fed illustrates what is becoming a repeated syndrome. In his chaos presidency, Trump clearly relishes disrupting established convention and institutions. Often—as in his vile slander of immigrants, his racist pandering to neo-Nazis, his incessant attacks on “fake news”—he spreads poison and division, seeking to delegitimize checks on his misrule. But in some areas—particularly those central to his populist posturing—he challenges entrenched institutions and policies that are long overdue for transformation. In many cases, his targets are those that progressives have criticized for years.
His questioning of NATO and calls for greater burden sharing mirror critiques issued by the peace movement and progressive foreign-policy reformers. His call for rebuilding America’s decrepit infrastructure—though quickly shelved—mimicked a central theme of progressive candidates, including Bernie Sanders.
Trump’s challenge to China and his insistence on renegotiating NAFTA and the Korean trade deal echo demands made by progressive Democrats and labor unions for years. Early reports suggest that NAFTA negotiators are considering elimination of the noxious Investor-State Dispute Settlement system that gives multinationals a private legal system, and impose a $17 minimum wage for autoworkers across the region.
In these cases, reflexive “resistance” to Trump is used by establishment forces hoping to defend the old order: the corporate trading system, the “rules-based” international order, a NATO alliance flailing about for a purpose after the collapse of the Soviet Union. Trump is in the White House in large part because these institutions have been failing most Americans. In his noxious and narcissistic presidency, Trump fares best if the choice is between his chaos and more of the same.
Progressives cannot fall for this trap. The folly of Trump’s trade wars—for example, isolating the United States by taking on China and allies at the same time—is no reason to embrace the old corporate trading order. Trump’s churlish behavior at the NATO and G-7 meetings doesn’t justify rising to the defense of institutions seemingly intent on reinventing the Cold War.
That’s why the thrust provided by Senators Bernie Sanders, Elizabeth Warren, and the progressive wing of the Democratic party is so important. The answer to Trump isn’t to defend what’s failed but to lay out a bold agenda of change that challenges the rigged rules and offers real alternatives that help address the pressing needs of working people. Trump’s Achilles heel is that, for all of his populist posturing, his actual agenda—mostly drawn from the right-wing shibboleths of the Republican Congress—offers no answers for working people.
He rails against offshoring, but the Republican tax bill he touts gives multinationals a permanent tax incentive to shift jobs abroad. With his own pen, he could penalize offshoring companies in government procurement, but he has refused to act.
Despite his expressed doubts about our interventions across the Middle East, he’s doubled down, adding troops and expanding the use of drones in conflicts that offer no victory and no end. He claims to be for working people, but his administration systematically undermines workers’ power—attacking the minimum wage, sabotaging labor unions, rolling back worker-safety and environmental protections—and seeks to undermine Medicaid, Medicare, food stamps, and virtually the entire shared security system for working people.
The answer to Trump’s disruptions isn’t an embrace of the failed policies and institutions of the past. It is to be clear about what progressives stand for, while relentlessly exposing Trump’s false promises.