Vought slams Fed Chair Powell over 'grossly mismanaged' luxury renovations



In his latest crusade to rein in spending, Office of Management and Budget Director Russell Vought has set his sights on the Federal Reserve.

Vought called out Chairman Jerome Powell for greenlighting luxury renovations to the Fed's Washington, D.C., headquarters that exceeded the original budget by roughly $700 million, totaling roughly $2.5 billion. The renovations include a rooftop terrace with gardens, VIP dining rooms and elevators, "premium" marble, and water features.

"The president is extremely troubled by your management of the Federal Reserve System," Vought said in a statement. "Instead of attempting to right the Fed's fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington, D.C., headquarters."

"The cost per square foot is $1,923 — double the cost for renovating an ordinary historic federal building," Vought added. "The Palace of Versailles would have cost $3 billion in today's dollars!"

'Chairman Jerome Powell has grossly mismanaged the Fed.'

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  Photo by Win McNamee/Getty Images

Vought also pointed to Powell's congressional testimony in June, where he denied that the lavish renovations were taking place. Vought said Powell's testimony "raises serious questions" about the renovation's compliance with the National Capital Planning Act, which would require the project to be approved by the National Capital Planning Commission.

"Although minor deviations from approved plans may be inevitable, your testimony appears to reveal that the project is out of compliance with the approved plan with regard to the major design elements," Vought said. "This would bring the project outside of the NCPC's approval and thus in violation of the NCPA, and require the Fed to immediately halt construction and obtain a new approval from the NCPC before proceeding any further."

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  Photo by Chip Somodevilla/Getty Images

The renovations were originally approved by the NCPC in September 2021 and featured plans to include the luxurious water features, terrace gardens, VIP elevators, and private dining rooms.

During the hearing, however, Powell insisted that these renovations were not taking place despite no changes being made to the original project.

“There’s no VIP dining room. There’s no new marble. There are no special elevators,” Powell said during the hearing. “There are no new water features, there’s no beehives, and there’s no roof terrace gardens.”

Powell claimed that the construction plans previously approved in 2021 have since changed. Despite his claim, the Fed would not be able to change these plans without formally submitting the modifications to the NCPC and the Commission of Fine Arts. According to the NCPC's website, the latest approval for the project was submitted in September 2021, and there have been no new requests filed since then.

Because of these discrepancies, Vought said OMB will be conducting further oversight on the project.

"Chairman Jerome Powell has grossly mismanaged the Fed."

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Debt spiral looms as Trump tests tariffs to tame rates



Following the market’s reaction to Donald Trump’s recent tariff hikes, many investors remain fixated on short-term stock declines. But I’m less concerned about the immediate drop in equities and more focused on the broader ripple effects — especially given the current state of U.S. fiscal policy.

The Trump administration inherited serious economic challenges from the last four years of Bidenomics, a mess made much worse by unsustainable levels of deficit spending.

A stock market downturn could cut tax revenue significantly. In that case, any interest savings might be wiped out — or worse.

U.S. debt has surpassed 120% of GDP. Deficits now resemble those of a wartime economy. The government’s interest payments exceed defense spending — a major warning sign for any nation. Meanwhile, inflation remains stubbornly high.

The new administration took office facing high interest rates — not historically high, but elevated relative to recent norms, especially given the nearly $37 trillion in national debt — and a strong U.S. dollar. That hinders Trump’s policy options.

Given that context, are tariffs a strategic move to lower interest rates, refinance the debt, and buy the administration some breathing room? If so, can that approach work — and at what cost?

Roughly $7 trillion in U.S. debt is scheduled for refinancing this year. Add a projected $2 trillion deficit, and the government faces an enormous financing challenge.

The administration may be betting that aggressive tariff policy triggers a “flight to safety,” prompting investors to move money out of equities and into long-term government bonds. Greater demand for bonds would push their prices higher and yields lower, since bond prices and yields move in opposite directions.

We saw some evidence of this last week when the 10-year Treasury yield dipped below 4%, though it rebounded above 4% by Monday.

A stock market sell-off could pressure the Federal Reserve to cut short-term interest rates. So far, Fed Chairman Jerome Powell has shown no willingness to step in — but that could change.

The strategy carries significant risk. Federal tax revenue depends heavily on both economic growth and stock market performance. If markets continue to tumble, government revenue could shrink, adding further strain to an already fragile fiscal outlook.

Even if yields on the 10-year Treasury dropped by 100 basis points (or 1%), and the government managed to refinance all $9 trillion in scheduled debt, the interest savings would total only about $90 billion.

But that scenario is unlikely. Issuing more Treasury bonds increases supply, which typically pushes yields higher — unless some outside force steps in. And if such intervention is possible, it raises a larger question: why pursue this risky strategy in the first place?

There are also other risks to consider. A stock market downturn could cut tax revenue significantly. In that case, any interest savings might be wiped out — or worse, deficits as a percentage of GDP could grow even larger.

On top of that, a declining market can trigger the “reverse wealth effect.” When portfolios shrink, consumers tend to spend less. Since consumer spending makes up about 70% of the U.S. economy, that kind of pullback can slow growth. Businesses may also become more cautious, further weakening economic activity.

Luke Gromen of Forest for the Trees recently pointed out that in 2022, a 20% drop in the stock market led to a $400 billion decline in federal tax receipts. If the same happens in 2025, the financial impact would far outweigh any gains from refinancing debt.

In a recent report, Luke Gromen noted that the last three recessions pushed the U.S. deficit higher by 6%, 8%, and 12% of GDP, respectively. In today’s terms, that would mean increases of $1.6 trillion, $2.1 trillion, and $3.2 trillion during a recession.

Yet, Congress has offered no serious plan to cut spending. Any reductions that do happen would likely shrink GDP, which makes solving the problem even more challenging. That leaves the administration with very little room to maneuver.

While the White House denies any intent to trigger a market crash, some economists believe the administration’s aggressive tariff strategy may be designed to lower interest rates by creating financial stress.

If true, it’s a high-risk approach to managing the government’s rising interest burden. The longer it takes to deliver results, the greater the danger it backfires — potentially triggering a debt spiral instead of relief.

Let’s hope for a resolution before those risks materialize.

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Fed vice chair exits role as DOGE gears up for audit



Federal Reserve Board Vice Chair for Supervision Michael Barr resigned from his position last week after he previously claimed that he wanted to avoid a potential "dispute over the position" with the Trump administration.

Barr's resignation follows reports that the Department of Government Efficiency is preparing to audit the Federal Reserve.

'Asking a Magic 8-Ball whether we should change rates is ACTUALLY better than the Fed!'

In January, Barr sent a letter to then-President Joe Biden, stating that he planned to exit as vice chair on February 28 or earlier if a successor was confirmed. He noted that he would "continue to serve as a member of the Federal Reserve Board" after stepping down.

In a press release announcing his decision, Barr called it "an honor and a privilege to serve as" vice chair, which he noted was a position "created after the Global Financial Crisis to create greater responsibility, transparency, and accountability for the Federal Reserve's supervision and regulation of the financial system."

"The risk of a dispute over the position could be a distraction from our mission. In the current environment, I've determined that I would be more effective in serving the American people from my role as governor," Barr declared.

Bloomberg reported that Vice Chair Philip Jefferson and Governor Michelle Bowman remain on the committee. The media outlet noted that President Donald Trump will likely have to appoint an existing board member as the next vice chair for supervision since a new vacancy is not expected until next year.

Elon Musk, a critic of the Federal Reserve, indicated last month that the DOGE is preparing to conduct a review of the central bank.

"All aspects of the government must be fully transparent and accountable to the people. No exceptions, including, if not especially, the Federal Reserve," Musk wrote in a post on X.

He has repeatedly called the Federal Reserve "absurdly overstaffed."

According to a September 2023 report from Reuters, the central banking system employs roughly 24,000 people.

Federal Reserve Chair Jerome Powell has pushed back on Musk's overstaffing claims.

"We run a very careful budget process where we're fully aware. We owe that to the public, and we believe we do that," Powell told Fox Business in January.

Musk has also scrutinized the Fed's system for determining rate changes.

"Asking a Magic 8-Ball whether we should change rates is ACTUALLY better than the Fed!" he stated.

Musk has argued that lowering rates would "materially benefit lower income earners."

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