Trump escalates his attack on the Fed: From the Politics Desk

Welcome to the online version of From the Politics Desk, a newsletter that brings you the NBC News Politics team’s latest reporting and analysis from the White House, Capitol Hill and the campaign trail.

In today’s edition, Rob Wile breaks down the potential economic consequences of President Donald Trump’s latest attack on the Federal Reserve. Plus, Jonathan Allen explains what is — and isn’t — in Trump’s flag burning executive order.

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— Adam Wollner

Trump risks economic calamity by tampering with Fed independence

By Rob Wile

Economic and financial analysts are warning that President Donald Trump’s attempt to fire Lisa Cook as a Federal Reserve governor risks undermining the central bank’s independence — something that could ultimately put U.S. households’ finances at risk.

Late Monday, Trump moved to fire Cook over allegations of mortgage fraud. He cited a “criminal referral” from Federal Housing Finance Agency Director William Pulte that alleged discrepancies on Cook’s mortgage application documents. Cook has refused to step down, and on Tuesday she said she was planning to file a lawsuit challenging Trump’s move.

Cook serves on the Federal Reserve’s committee for setting interest rates throughout the economy. To determine where that rate should be, the committee members weigh risks to unemployment and inflation. When the job market starts to look weak, the Fed tends to lower rates. When the risk from inflation is greater, it tends to increase them. Both moves carry risks: Higher rates can stifle economic growth, while lower rates can lead to ballooning inflation.

Trump has called for lower rates since taking office, citing a general desire to bolster economic growth while dismissing concerns about inflation. While past presidents have expressed views about monetary policy, Trump’s attempts at influence are largely unprecedented — no Fed member has ever been removed for cause.

It’s setting off alarm bells, not simply over disagreements about interest rate levels, but for what undue influence on the Fed could do to the economy. Academics have consistently concluded that meddling with the independence of central banks like the Federal Reserve can lead to worsening inflation, since it removes a key check on the government’s tendency to borrow as much money as it can.

“Presidential capture of the Fed would signal to decision-makers throughout the economy that interest rates will no longer be set on the basis of sound data or economic conditions — but instead on the whims of the president,” the Economic Policy Institute said in a statement.

“Confidence that the Fed will respond wisely to future periods of macroeconomic stress — either excess inflation or unemployment — will evaporate,” it added.

Read more from Rob →

What Trump’s executive order on flag burning actually does

Analysis by Jonathan Allen

President Donald Trump touched off a tempest yesterday by announcing that he had signed an executive order banning flag burning and penalizing the act with a one-year prison sentence.

Some on the political right criticized the unilateral limitation of a liberty often associated with free speech.

“I would never in a million years harm the American flag,” conservative radio host Jesse Kelly wrote on X. “But a president telling me I can’t has me as close as I’ll ever be to lighting one on fire. I am a free American citizen. And if I ever feel like torching one, I will. This is garbage.”

It’s not surprising, given the president’s assertion, that some folks were confused about his powers. But he still does not have the authority to make laws or to create criminal penalties for violating them on his own. He needs Congress to do that.

As many of his critics noted, along with some of his allies, the Supreme Court has been very clear in the past that flag-burning is protected as free speech under the First Amendment. That interpretation of the law is considered so settled by elected officials that efforts to ban flag burning in Congress have taken the form of a proposed constitutional amendment.

And the idea that burning a flag is inherently criminal flies in the face of existing statute regarding Old Glory. Under federal law, burning is the preferred method of disposing of American flags.

Trump no doubt intended to ignite a controversy. His executive order instructs the attorney general to prosecute people who burn flags while committing other crimes — for the other crimes — and encourages the Justice Department to test the high court’s standing protection of flag burning.

But what it absolutely does not do is criminalize flag burning or establish a penalty for torching the Stars and Stripes. That would desecrate Article I of the Constitution — the part that details the powers of Congress.

And some of his Republican allies think that even suggesting a ban — in the face of the First Amendment — is playing with fire.

That’s all From the Politics Desk for now. Today’s newsletter was compiled by Adam Wollner and Ben Kamisar.

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