U.S. President Donald Trump publicly scorns Federal Reserve Chair Jerome Powell for renovation costs as the two toured the building. Trump says the project cost US$3.1-billion as Powell figures out the new, higher figure includes a renovation that was finished five years ago.
The Associated Press
After months of criticizing Federal Reserve Chair Jerome Powell, President Donald Trump took the fight to the Fed’s front door on Thursday, publicly scorning the central bank chief over the ballooning costs of a long-planned building project. Powell pushed back, challenging the President’s latest price tag as incorrect.
Wearing hard hats and grim faces, standing in the middle of the construction project, Trump and Powell addressed the cameras. Trump charged that the renovation would cost US$3.1-billion, much higher than the Fed’s US$2.5-billion figure. Powell, standing next to him, shook his head.
The Fed Chair, after looking at a paper presented to him by Trump, said the President was including the cost of renovating a separate Fed building, known as the Martin building, that was finished five years ago.
The visit represented a significant ratcheting up of the president’s pressure on Powell to lower borrowing costs, which Trump says would accelerate economic growth and reduce the government’s borrowing costs. Presidents rarely visit the Fed’s offices, though they are just a few blocks from the White House, an example of the central bank’s independence from day-to-day politics.
U.S. President Donald Trump and Federal Reserve Chairman Jerome Powell during a visit to the Federal Reserve in Washington in Thursday.Julia Demaree Nikhinson/The Associated Press
“We have to get the interest rates down,” Trump said later after a short tour, addressing the cameras this time without Powell. “People are pretty much unable to buy houses.”
Trump is likely to be disappointed next week, however, when Fed officials will meet to decide its next steps on interest rates. Powell and other officials have signalled they will likely keep their key rate unchanged at about 4.3 per cent. However, economists and Wall Street investors expect the Fed may start cutting rates in September.
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Trump did step back a bit from some of his recent threats to fire Powell before his term ends May 26. Asked if the rising costs of the Fed’s renovation, estimated in 2022 to cost US$1.9-billion, was a “fireable offence,” Trump said, “I don’t want to put this in that category.”
“To do that is a big move, and I don’t think that’s necessary,” Trump added. “I just want to see one thing happen, very simple: Interest rates come down.”
The Fed allowed reporters to tour the building before the visit by Trump, who, in his real estate career, has bragged about his lavish spending on architectural accoutrements that gave a Versailles-like golden flair to his buildings.
U.S. presidents rarely visit the Fed’s offices, although they are just a few blocks from the White House.Kent Nishimura/Reuters
On Thursday, reporters wound through cement mixers, front loaders, and plastic pipes as they got a close-up view of the active construction site that encompasses the Fed’s historic headquarters, known as the Marriner S. Eccles building, and a second building across 20th Street in Washington.
Fed staff, who declined to be identified, said that greater security requirements, rising materials costs and tariffs, and the need to comply with historic preservation measures drove up the cost of the project, which was budgeted in 2022 at US$1.9-billion.
Renovations continue at the Marriner S. Eccles Building in Washington on Thursday, as part of the US$2.5-billion renovation of the U.S. Federal Reserve headquarters.Andrew Harnik/Reuters
The staff pointed out new blast-resistant windows and seismic walls that were needed to comply with modern building codes and security standards set out by the Department of Homeland Security. The Fed has to build with the highest level of security in mind, Fed staff said, including something called “progressive collapse,” in which only parts of the building would fall if hit with explosives.
Sensitivity to the President’s pending visit among Fed staff was high during the tour. Reporters were ushered into a small room outside the Fed’s boardroom, where 19 officials meet eight times a year to decide whether to change short-term interest rates. The room, which will have a security booth, is oval-shaped, and someone had written “oval office” on plywood walls.
The Fed staff played down the inscription as a joke. When reporters returned to the room later, it had been painted over.
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During the tour, Fed staff also showed the elevator shaft that congressional critics have said is for “VIPs” only. Powell has since said it will be open to all Fed staff. The renovation includes an 45-centimetre extension so the elevator reaches a slightly elevated area that is now accessible only by steps or a ramp. A planning document that said the elevator will only be for the Fed’s seven governors was erroneous and later amended, staff said.
Plans for the renovation were first approved by the Fed’s governing board in 2017. The project then wended its way through several local commissions for approval, at least one of which, the Commission for Fine Arts, included several Trump appointees. The commission pushed for more marble in the second of the two buildings the Fed is renovating, known as 1951 Constitution Avenue, specifically in a mostly glass extension that some of Trump’s appointees derided as a “glass box.”
Fed staff also said tariffs and inflationary increases in building material prices drove up costs. Trump in 2018 imposed a 25-per-cent duty on steel and 10 per cent on aluminum. He increased them this year to 50 per cent. Steel prices are up about 60 per cent since the plans were approved, while construction materials costs overall are up about 50 per cent, according to government data.
The Washington Monument is visible in the distance from the roof of the Marriner S. Eccles Federal Reserve Board Building.Andrew Harnik/Reuters
Fed staff also pointed to the complication of historic renovations – both buildings have significant preservation needs. Constructing a new building on an empty site would have been cheaper, they said.
As one example, the staff pointed reporters to where they had excavated beneath the Eccles building to add a floor of mechanical rooms, storage space, and some offices. The Fed staff acknowledged such structural additions underground are expensive, but said it was done to avoid adding HVAC equipment and other mechanics on the roof, which is historic.
The Fed has previously attributed much of the project’s cost to underground construction. It is also adding three underground levels of parking for its second building. Initially the central bank proposed building more above ground, but ran into Washington’s height restrictions, forcing more underground construction.
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The Associated Press