Former Treasury Secretary Says Trump Is Trying to 'Scapegoat' Jerome Powell
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
Former U.S. Treasury Secretary Larry Summers warned that President Donald Trump may be trying to "scapegoat" Federal Reserve chair Jerome Powell in the event the economy slows down enough to hit a recession.
"He's looking to set up a scapegoat if the economy performs badly," Summers said during an appearance on ABC News' This Week. "That's what this attacking chairman Powell is really about. It's not really about trying to change policy."
Newsweek reached out to the White House by email outside of normal business hours on Sunday morning for comment.
Why It Matters
Trump has made tariffs the centerpiece of his economic and foreign policy plans, using trade negotiations to try and end conflicts and completely reshape the international trade landscape to more heavily favor the United States.
However, many economists and business leaders have warned that Trump's plan will cause a recession as the tariffs raise prices for Americans, which could deter buying and prompt more Americans to hold onto their money.
Trump has therefore urged Powell to cut the interest rate in order to spur the economy and get people to spend more money, but Powell has resisted—much to Trump's frustration.
What To Know
The stock market took a hit on Friday after Trump signed a series of executive orders to impose tariffs on over 90 countries, ranging from 10 to 41 percent.
The July Jobs report showed that growth had slowed, showing just 73,000 new jobs—well under the projected 100,000 that the Dow Jones had estimated. Additionally, the jobs reports for May and June were hit with significant revisions that showed very weak growth across those months.
Trump fired Dr. Erika McEntarfer, the Commissioner of the Bureau of Labor Statistics (BLS), and accused her of manipulating the reports for "political purposes."
Summers, who served in former presidents Bill Clinton's and Barack Obama's administrations, suggested on Sunday that Trump is likely also trying to line up Powell as a scapegoat should the economy continue to struggle, even though Trump appointed Powell during his first term in office.
"I think that this kind of political Fed bashing is a fool's game," Summers said. "The Fed doesn't listen, so short-term interest rates aren't going to be different because of it."
He continued: "The market does listen, and so longer-term rates are going to go higher, which is going to make it more expensive to buy a house. This is hurting the economy, not helping. I think the president understands that and what the president is doing is recognizing that, for all kinds of reasons, of which his policies are very important ones, the economy is at a lot of risk."
Summers also expressed surprise that more people hadn't responded within the administration to McEntarfer's firing, saying that the decision to remove her "is way beyond anything that Richard Nixon ever did."
When Nixon dismissed special prosecutor Archibald Cox during the Watergate Scandal, it prompted several officials to resign rather than fire Cox, causing what was known as the "Saturday Night Massacre."
Trump faced a similar issue in February, which has been likened to Nixon as the "Thursday Night Massacre," when Department of Justice (DOJ) officials resigned rather than execute an order to dismiss federal corruption charges against New York City Mayor Eric Adams.
No one has yet resigned in response to McEntarfer's firing, but Summers indicated that he sees the firing as a scapegoating as well, saying: "These numbers are put together by teams of literally hundreds of people following detailed procedures that are in manuals."
"There's no conceivable way that the head of the BLS could have manipulated this number," he added. "The numbers are in line with what we're seeing from all kinds of private sector sources."
Summers remains cautious about suggesting the economy is headed for a recession. Instead, he said the economy is at "stall speed," which "could tip into recession," but that "wouldn't be my prediction right now."
Former U.S. Treasury Secretary Larry Summers speaks during the World Economic Summit in Washington, D.C., on April 17, 2024.
Former U.S. Treasury Secretary Larry Summers speaks during the World Economic Summit in Washington, D.C., on April 17, 2024.
Mandel Ngan/AFP via Getty Images
What People Are Saying
President Donald Trump in a post on Truth Social on Saturday wrote: "'Too Late' Powell should resign, just like Adriana Kugler, a Biden Appointee, resigned. She knew he was doing the wrong thing on Interest Rates. He should resign, also!"
In a post from Friday, Trump wrote: "Jerome 'Too Late' Powell, a stubborn MORON, must substantially lower interest rates, NOW. IF HE CONTINUES TO REFUSE, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!"
Ernie Tedeschi, the former head of Yale University's Budget Lab, wrote on X on Friday about McEntarfer's firing: "I've worked closely with Erika. I know of no economist who is more data-focused & devoted to truth in statistics. She never shied from speaking truth to power when the data were disappointing. Nothing would be worse for US credibility than political meddling in our economic data."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
USA Today
9 minutes ago
- USA Today
'South Park' trolls DHS for using screengrab to recruit ICE agents: 'So we ARE relevant?'
Just when some fans thought the feud between "South Park" and the White House reached an impasse. The raunchy comedy showed no signs of easing up this week, with more jabs at President Donald Trump as a 20-second teaser for its Aug. 6 episode featured an image of Trump sitting at a dinner table with Satan. The moment depicts Trump rubbing Satan's leg under the table before Satan tells him to stop. Despite the ongoing satirical jabs, Homeland Security's official X account shared a screengrab from that trailer to encourage people to apply for jobs at Immigration and Customs Enforcement. The still depicts multiple masked and armed ICE agents storming a road in the same direction, with a link to the agency's careers page. "Wait, so we ARE relevant?" the "South Park" X account replied to the Aug. 5 post before telling the agency to "eat a bag of [expletive]." The show's Season 27 premiere last month made a not-so-subtle dig at Trump, who was depicted cuddling in bed with Satan, his lover, using actual photos of the president crudely placed on an animated body. White House spokesperson Taylor Rogers later dismissed the episode, calling the Comedy Central staple a "fourth-rate show" that "hasn't been relevant for over 20 years and is hanging on by a thread with uninspired ideas in a desperate attempt for attention." The controversial episode, titled "Sermon on the Mount," proved to be a ratings juggernaut, marking the show's most-watched season premiere since 1999, with viewership up 68% from last season's premiere, according to Paramount Global. The Aug. 5 post from Homeland Security comes amid a massive recruitment campaign to hire more than 14,000 immigration agents, attorneys, and other workers. Through his federal spending plan, Trump aims to have enough ICE agents to execute his border crackdown and the goal of deporting 1 million people a year. What time does the next 'South Park' episode drop? The newest episode of "South Park" Season 27 is set to drop Wednesday, Aug. 6, at 10 p.m. ET/PT on Comedy Central. The episode will be available to stream on Paramount+ the following day, Aug. 7, at 6 am ET/3 a.m. PT, according to the streaming platform. Contributing: Brendan Morrow, Trevor Hughes, Sara Chernikoff, and Fernando Cervantes Jr., USA TODAY
New York Post
9 minutes ago
- New York Post
Michael Goodwin: Sen. Warren backing Mamdani is the latest example of Dems floundering — and their zany agenda
More than six months into Donald Trump's highly consequential second term, Democrats are still looking for their sputtering resistance movement to deliver some big victories. Instead, they've suffered repeated failures and are responding with an increasingly angry radicalism that has zero appeal to the hearts and minds of most voters. A recent Wall Street Journal poll found that a mere 33% of national respondents hold a favorable view of Dems, which the Journal called the party's lowest point in its polls over three decades. Advertisement It also found that a stunning 63% of voters hold an unfavorable view of the party. Those dismal results are the fruit of a run of bad candidates —think Kamala Harris and Tim Walz — and a scatter-shot strategy that consistently defies common sense and traditional American middle-class values. The impression is that party leaders and high-profile advocates are lurching from one temper tantrum about Trump to another, each delivered with the desperation of a Hail Mary pass. Advertisement They seem more concerned about the welfare of illegal immigrants, including gang-bangers, than about the physical safety and financial security of innocent, tax-paying Americans. Comes now the latest example of their zany agenda, this one courtesy of Massachusetts Sen. Elizabeth Warren. In a few brief remarks Monday, she managed to prove that the passing years have not dimmed her gift for poor judgment and terrible ideas. Major party headache Her new brainstorm threatens to become another major headache for her party. Advertisement Appearing in Gotham with socialist mayoral candidate Zohran Mamdani, Warren declared that 'New York City is the place to start the conversation for Democrats on how affordability is the central issue, the central reason to be a Democrat, and that delivering on it in meaningful, tangible ways that will touch working families is why we're here.' It's a pretty strange thing to say given that it was almost exclusively Democratic mayors, governors and lawmakers that created the affordability crisis she now bemoans. She went on to claim that Mamdani, the 33–year-old nepo-baby radical who won the Dems' mayoral primary, should be the party's national face. 'Bring it on!' Republicans say, convinced that he would be a major drag for Dems in the 2026 elections. Advertisement The GOP would be delighted to run against a party that features a radical leftist who never held a real job in his life. It's worth noting that four years ago, then-Mayor-elect Eric Adams declared himself 'the new face of the Democratic Party.' The idea never gained much traction, with his tenure soon swamped by the tide of illegal border crossers waved in by Joe Biden, as hundreds of thousands made their way to New York for free housing, food and medical care. Adams never quite recovered, and that was even before he faced federal corruption charges brought under Biden that the Trump Justice Department dropped. Nonetheless, the turmoil and critical coverage were such a burden that Adams passed up his party's primary and is seeking re-election in November as an independent. Although he and the NYPD deserve great credit for driving shootings to historic lows, recent polls show the mayor's support is stuck in single digits and sometimes falls below the slice of voters who say they are undecided. NY Dems shun him As for Warren's idea about making Mamdani the national model for the party, she is so deep in fantasy land that she's even out of step with leading New York Dems. They are avoiding the far-leftist candidate like the plague, which is what he could be politically in areas that are more balanced than the People's Republic of New York, where there is just one registered Republican for every six registered Dems. Advertisement And so Gov. Hochul, Senate Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries all have declined to endorse Mamdani, which is an exceptional rebuke to him and his platform. Normally, they would reflexively back the winner of the party's mayoral primary, but they look ahead and see his major positions — defund the police, hike taxes, boycott Israel and support the anti-Jewish mobs disrupting cities and college campuses — as a toxic brew that even if it prevails in the city, won't fly around the rest of the state or across the nation. They see him as a major burden next year, when Hochul will be seeking re-election and Schumer and Jeffries will be trying to guide Dems to victory in their respective chambers. Of the group, Hochul has been the most outspoken and explicit in shunning him. Advertisement Mamdani's plan to tax high-income New Yorkers would require legislative approval and her signature, and the governor made it clear that's not going to happen. Days before the late June primary, Hochul threw cold water on the tax proposals he aims to use to fund his long list of free things, including buses and child care. 'I'm not raising taxes at a time where affordability is the big issue,' she said in a TV interview. 'I don't want to lose any more people to Palm Beach. We've lost enough . . . so let's be smart about this.' Advertisement Hochul's answer was surprising in that she's usually an automatic yes vote for new taxes, congestion pricing being a recent example. But her answer was also clever in that she adopted Mamdani's theme of an 'affordability crisis' and turned it on its head to use it as a reason not to support him. She's right in the sense that when it comes to affordability, New York governments' addiction to high spending and taxing already are major causes. Trickle-down pain City and state regulations also amount to a mountain of expensive red tape that discourage construction as well as business and job creation. Advertisement Her congestion tax is a good example of the trickle-down impact. The price of every loaf of bread, bottle of beer and bag of potato chips sold in Midtown now includes a portion of the added tax she slapped on delivery trucks. Meanwhile, the state's enormous budget reflects the way the government mafia grabs a piece of every action. Albany is now spending $254 billion this year, more than $100 billion more than it spent a decade ago. Florida has millions of more people than New York, but somehow manages to make do with spending $117 billion. That's almost identical to the city's budget alone, which is $116 billion this year, up from $75 billion over the last decade. These exploding expense budgets do not include the numerous 'off-the-books' entities such as the MTA, public colleges and universities, the Dormitory Authority and scores of other lesser-known units that spend multiple billions of dollars they collect from the public. Just remember: As bad as things are, they can always get worse. And if Mamdani is elected, everything definitely would get worse.
New York Post
9 minutes ago
- New York Post
DHS Secretary Kristi Noem unveils plans for new migrant detention space in Indiana: ‘The Speedway Slammer'
The Trump administration is collaborating with Indiana to expand capacity at a state correctional facility in order to hold illegal migrants, Homeland Security Secretary Kristi Noem announced Tuesday – dubbing the new wing of the prison, 'The Speedway Slammer.' 'Today, we're announcing a new partnership with the state of Indiana to expand detention bed space by 1,000 beds,' Noem wrote on X. 'Thanks to [Indiana Gov. Mike Braun] for his partnership to help remove the worst of the worst out of our country.' 'If you are in America illegally, you could find yourself in Indiana's Speedway Slammer.' Advertisement 3 Noem indicated that Indiana's 'Speedway Slammer' would be opening 'soon.' AP The name is a nod to Indiana's auto racing culture, particularly the famous Indianapolis Motor Speedway, which is located about 75 miles south of the new detention space at the Miami Correctional Facility. Braun, a former Republican US senator, announced on Aug.1 that Indiana would 'fully partner with federal immigration authorities' to assist President Trump carry out mass deportations. Advertisement As part of the partnership, the Indiana Department of Correction would work with Immigration and Customs Enforcement (ICE) to make available up to 1,000 beds at Miami Correctional Facility, near Bunker Hill, Ind., and the Grissom Joint Air Reserve Base, to house migrants slated for deportation, Braun said. Camp Atterbury – operated by the Indiana National Guard – will also be made available for temporary use by DHS to house illegal migrants subject to deportation, according to the governor. 'We are proud to work with President Trump and Secretary Noem as they remove the worst of the worst with this innovative partnership,' Braun said in a statement. 'Indiana is taking a comprehensive and collaborative approach to combating illegal immigration and will continue to lead the way among states,' he added. Advertisement 3 Braun said the facility would house 'the worst of the worst' migrants. Getty Images 3 The state-run Miami Correctional Facility will add 1,000 beds to house detained illegal migrants. Miami Correctional DHS noted the agreement was 'fully funded' by the One Big Beautiful Bill Act Trump signed into law on July 4, which authorized spending for 80,000 new beds for ICE to utilize when detaining and deporting migrants. Indiana's 'Speedway Slammer' follows the opening of Florida's 'Alligator Alcatraz' earlier this summer to assist the Trump administration's deportation efforts. Advertisement Republican Florida Gov. Ron DeSantis opened the swampland facility, located deep in the Everglades and on the site of an old airport, on July 3. The property, outfitted with tent structures to house the illegal migrants, has the capacity for 2,000 detainees but will eventually hold 4,000. The Trump administration began deporting migrants directly from the Alligator Alcatraz airport, which is able to accept commercial-sized aircraft and conduct both day and nighttime operations, on July 25.
