Trump Administration Attacks Fed Over $2.5 Billion Building Renovation

The Trump administration has intensified its political attacks against Federal Reserve Chair Jerome Powell, focusing on the renovation of the Federal Reserve’s Marriner S. Eccles Building. The current construction costs have escalated to $2.5 billion, approximately $700 million more than the initial budget. The White House has raised concerns about the cost overruns and procedural issues related to the renovation plans.

The Office of Management and Budget Director Russell Vought sent a letter to Powell detailing his concerns about the renovation project’s cost overruns. Vought’s letter included questions about the project’s flashier elements, such as a private dining room and a rooftop garden. The Fed responded by publishing a post on its website, attributing the cost increase to higher-than-forecasted prices for labor and materials, repeated reviews from government agencies, and unforeseen events like finding more asbestos than expected in the building.

Powell has instructed the Fed’s Inspector General Michael Horowitz to review the renovation project. The renovation concerns come at a time of mounting tensions between the White House and the Fed over the central bank’s pause on interest rate cuts. Trump has repeatedly shared his perspective on monetary policy, despite the expectation that the Fed be free from political interference. White House spokesperson Kush Desai stated that Trump could both push for lower rates and “ensure that taxpayer money is not wasted” with the renovation.

In addition to the cost overruns, the White House’s case hinges on allegations that the Fed did not follow procedural rules, which would have required approval from the National Capital Planning Commission (NCPC) to make changes to its plans. Vought, in his letter to the Fed, cited Powell’s Senate testimony in which he said there would be no “new VIP dining rooms” or “new water features” and “new marble” as part of the Eccles building refurbishing. Vought’s view is that if those features were indeed included in the project, Powell may have misled Congress. If the features are no longer being included, Powell may have violated rules that require agencies to clear changes to architectural designs with the NCPC.

Much of the disagreement hinges on the definition of the term “new.” For example, there is a private dining area on the fourth floor of the building that is slated to be redone, according to the plans. However, a “new” dining room is not being constructed. The same goes for an elevator that leads guests to the private dining area. Parts of the original plan, such as the water features and a design for a rooftop garden, were scaled back or eliminated altogether. However, those alterations did not rise to the level of “substantial changes” to plans that would warrant a review from the NCPC. The Fed also said it does not consider itself “subject to direction” from the NCPC for its own construction projects.

During his Senate testimony, Powell had taken issue with characterizations of the remodeling efforts. “Media reports are misleading and inaccurate in many respects,” Powell said. “All of the inflammatory things the media carried are either not in the current plan or just inaccurate.”

Spearheading much of the public criticism on the renovation are Vought and Kevin Hassett, director of the National Economic Council. In an interview, Vought called the project a “monstrosity.” A day later, Hassett said the president did have the authority to fire Powell for cause. Both top economic advisors to the Trump administration agree with the president’s allegations that interest rates should be lower and that Powell is solely responsible for their current levels. Interest rate levels are voted on by the 12-person Federal Open Market Committee during one of their eight meetings over the course of the calendar year. For his part, Powell has always maintained interest rates have not come down because the U.S. has the luxury of waiting to see what will happen in the economy during a period of high uncertainty.

Powell’s patience has incited Trump to no end since his second term began. The irony is much of the uncertainty spiked in the aftermath of Trump’s signature tariff policy. Powell said interest rates would likely were it not for tariffs. On Friday, Trump told reporters he would not fire Powell and interest rates should be “three points lower.”

With the construction plans now caught in the crossfire of D.C. politics, Powell told senators he realized the Eccles building needed refurbishing before he became chair. “No one in office wants to do a major renovation of a historic building during their term in office,” Powell said. “Much prefer to leave that to your successors. This is a great example why.”