The cost of renovating the 1930s Marriner S Eccles Building has ballooned to $2.5bn - Al Drago/Bloomberg Donald Trump’s feud with Jerome Powell has moved from interest rates to a new battlefront: an imposing marble-clad building just a stone’s throw from the White House.
As the president cast around for ways to pressure the chairman of the Federal Reserve to lower borrowing costs, his attention has focused on the Fed headquarters, a 1930s neoclassical edifice called the Marriner S Eccles Building.
The structure is undergoing a major renovation – and is running majorly over budget. The works were budgeted at $1.9bn (£1.4bn) when they began in 2021, but the cost has ballooned to $2.5bn.
Trump’s outriders have begun claiming that the project is so grandiose it could end up costing more than the Palace of Versailles - Al Drago/Bloomberg Trump’s outriders have begun claiming that the project is so grandiose – with alleged VIP dining rooms, executive elevators, and roof gardens – that it could end up costing more than the Palace of Versailles.
It may also cost Powell his job.
Budget tsar Russell Vought has written to the Fed chairman saying the president was “extremely troubled” about the “ostentatious overhaul”. He told journalists on Thursday he wanted to get down to the Constitution Avenue and review the works for himself, adding that Trump was “offended” because he “is a builder”.
Kevin Hassett, the director of Trump’s National Economic Council – who is in the frame to replace Powell – called it “a real problem of oversight and excess spending”.
Kevin Warsh, his chief rival for the Fed job, said the costs were “outrageous” and showed the central bank had “lost its way”.
Fed chairman forerunners Kevin Hassett (left) and Kevin Warsh have been quick to criticise the renovation project Sackable offence
Trump world senses an opportunity.
The president cannot legally sack Powell just because he wants interest rates to fall faster than the Fed does. But the law might allow him to do so if there is “cause” such as “inefficiency, neglect of duty, or malfeasance”.
Recent comments suggest that Trump thinks the renovation debacle might fit this bill.
Would he investigate Powell over the cost blowout?
“Well, I think he’s already under investigation. He spent far more money than he was supposed to [on] rebuilding,” the president told reporters.
Would he rule out sacking Powell before his term ends next May? “It’s highly unlikely, unless he has to leave for fraud.”
Trump’s opponents are trying to frame this as a political witch-hunt rather than a genuine concern over the building works.
“When his initial attempts to bully Powell failed, Trump and Republicans in Congress suddenly decided to look into how much the Fed is spending on building renovations,” Elizabeth Warren, Democratic Party senator, said in a speech on Wednesday night.
“Nobody is fooled by this pretext to fire Powell. And markets will tank if he does.”
Story ContinuesPowell’s defence
Be that as it may, Powell appears rattled. He has tried to push back on claims of lavish spending.
“There’s no VIP dining room,” Powell told a recent Senate committee hearing. “There’s no new marble, there are no special elevators. There are no new water features, and there are no roof terrace gardens.”
The Fed has now posted an FAQ page about the project on its website. It says the electrics, plumbing, heating and air conditioner are all obsolete. Some systems are as old as the building itself.
The cost blowout has largely come from higher labour and materials costs – the early part of construction was during the pandemic – and unanticipated levels of asbestos and toxic soil contamination.
Jerome Powell has defended the renovation – but Donald Trump is no stranger to lavish touches himself - Carlos Barria/Reuters Renovations of a second Fed building were cancelled last year, and the central bank says it will cut costs over time because its 3,000 Washington-based staff will occupy less space than now.
To keep the wolves at bay, the Fed has now referred the project to the inspector general who oversees the bank.
That hasn’t satisfied the White House.
James Blair, deputy chief of staff whom Trump has appointed to the National Capital Planning Commission, said he, like Vought, planned to visit the site and assess whether the plans still conformed to the 2021 blueprint his commission had approved.
Ultimately, though, the Fed is formally accountable to Congress, not the White House. Warren said that if Trump was concerned about lavish building projects, he should look closer to home.
“I have long pushed for more transparency and accountability at the Fed. But give me a break. The president’s housing and urban development secretary is apparently using taxpayer funds to gut the National Science Foundation (NSF) building and turn it into his personal castle, with a private elevator and a personal gym for his family,” she said.
The gold and gilt on show in Trump’s Oval office has been growing by the month - Aaron Schwartz/Bloomberg She was talking about Scott Turner, who is moving his department into the NSF’s offices in Virginia. A trade union for public servants alleged that the plan included these exorbitant extras, but Turner has described these claims as “ridiculous and not true”.
Recent photographs of the Oval Office reveal that Trump himself is no stranger to a bit of executive bling.
The gold and gilt on display is growing month to month. He is also reportedly commissioning a South Lawn Ballroom for the White House that is inspired by, of all places, the Palace of Versailles.
“It keeps my real estate juices flowing,” the property-mogul-turned-president has said about his White House refurbishment.
Perhaps he feels similarly about the latest front in his fight with the Fed.
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