Elon Musk Questions Fed's $25 Billion Headquarters Renovation
2min read Elon Musk, the head of the government efficiency department, has turned his cost-cutting focus towards the Federal Reserve, questioning the central bank's $25 billion headquarters renovation project and suggesting that the Fed could become a primary target for scrutiny.
“At the end of the day, it's all taxpayer money. I think we absolutely should—we absolutely should—look at whether or not the Fed has really spent $25 billion on their interior designers,” Musk joked in an interview with reporters on Wednesday. “It's just shocking.”
This remark comes at a time when political tensions surrounding the Fed's independence are rising, with Trump hinting that he might fire Fed Chair Jerome Powell. The Fed has been undertaking a massive renovation of its Washington D.C. offices, including the Marriner S. Eccles Building and the adjacent Federal Reserve Board East Building, aiming to update infrastructure, reduce rental costs by housing most employees in Fed-owned office space, and improve operational efficiency.
The project, initially budgeted at $19 billion, has since ballooned to $25 billion, drawing criticism from conservatives who argue that the scale and luxury of the project, including a rooftop garden and a glass atrium, are out of touch with the economic realities faced by Americans. Critics also point out that while the Fed has historically been a net contributor to federal revenue, recent efforts to stimulate the economy through quantitative easing and subsequent sharp interest rate hikes have left the Fed operating at a loss.
Supporters of the Fed's plan argue that the high cost is due to elevated construction costs, local regulations regarding historic buildings, and the age of the structures. The Marriner S. Eccles Building was completed in 1937, and the Federal Reserve Board East Building was finished in 1933. Neither building has undergone a comprehensive renovation since their construction nearly a century ago.
The Fed took over the Federal Reserve Board East Building in 2018, which had been underutilized for an extended period. At the time, Daniel Matthews, then the Public Buildings Service Commissioner for the General Services Administration, stated that the takeover would “put a vacant building back into production, allowing the Federal Reserve Board to consolidate several leases and save taxpayer dollars.”
Critics, however, argue that the Fed's use of these assets reflects government inefficiency. A report by the Mercatus Center, a think tank, highlighted that the Fed's $25 billion capital investment dwarfs similar projects. The report, authored by economist and former Fed employee Andrew Levin, noted that the renovation of part of the Ronald Reagan Building used by the Department of Homeland Security cost less than $2 billion.
“The Federal Reserve Board's expenditure is more than ten times that number,” Levin said in a podcast on Monday. However, the two projects are not entirely comparable, as the Fed buildings have nearly a century of history, while the Ronald Reagan Building opened in 1998. Changes to the Fed buildings must comply with historical preservation standards set by the National Capitol Planning Commission, unlike the Reagan Building.
Despite this, Congress directly controls most federal renovation projects and has a political incentive to reduce costs. Meanwhile, the scrutiny of the Fed's plan stems largely from a lack of formal oversight of the Fed's spending. Unlike cabinet agencies, the Fed does not rely on congressional appropriations, and its inspector general reports to the Fed chair rather than to the president and Congress. Legal restrictions also prevent the Government Accountability Office from auditing many of the Fed's operations, including capital projects like this one.
Critics like Musk argue that independence must be balanced with accountability, and the Fed's lavish headquarters expansion is unsettling, especially as the Fed reports historic operating losses. For the Fed, this is another sign that its long-standing ability to operate free from political pressure may be waning. Currently, the Fed is attempting to guide the economy through one of the most significant reorganizations of the global trade system in decades.
