Forget Trump vs Powell — Ted Cruz wants to abolish the Fed as we know it

WASHINGTON — This week’s dust-up over the Justice Department investigation into Federal Reserve Chair Jerome Powell isn’t just unprecedented, it’s also unwarranted — at least according to Sen. Ted Cruz (R-TX) and other leading right-wing voices.

To Cruz and co, Powell should have gotten the boot on day one of President Donald Trump’s second term.

“The notion of independent agencies is inconsistent with the Constitution,” Cruz told Raw Story at the U.S. Capitol this week.

Cruz and others have Trump’s ear and they seem to have a sympathetic Supreme Court, even as more moderate Republicans and Democrats watch aghast at what they fear is the death of an independent central bank.

“This is a horrendous precedent,” Sen. Ron Wyden (D-OR) told Raw Story. “It's going to be something the country’s going to regret deeply. Terrible precedent.”

‘All executive power’

Powell is only the 16th chair since the Fed was established in 1914. He’s the first to be criminally investigated by the DOJ.

“No one — certainly not the chair of the Federal Reserve — is above the law,” Powell said Sunday.

“But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”

Trump has tried and failed to get Powell to rapidly lower interest rates.

Republicans have attacked Powell for overseeing renovations on its historic property that have ballooned from $1.9 billion to $2.5 billion.

On Friday, DOJ subpoenaed the Fed, as it investigates whether Powell lied about the renovations before the Senate Banking Committee last year.

The Fed chair says it’s all politics.

"The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President," Powell said.

More moderate Republicans have defended the Fed and criticized the DOJ.

Trump denies pressuring the DOJ to investigate. Asked about Republicans’ criticisms of a weaponized DOJ, Cruz defended the probe.

“Under Article II of the Constitution, all executive power is vested in the president,” Cruz told Raw Story.

Cruz and others on the far right view Powell as they do any other cabinet member: merely serving at the pleasure of the president.

Cruz, a Princeton grad who attended Harvard Law School and clerked for former U.S. Supreme Court Chief Justice William Rehnquist, is a champion of “unitary executive” theory.

He is closely watching Trump v. Slaughter, the Supreme Court case concerning Trump’s removal of FTC Commissioner Rebecca Slaughter.

If Trump wins, it would overturn the unanimous 1935 case Humphrey's Executor, which has protected commissioners and chairs of independent agencies from being fired without cause.

“I think Humphrey's Executor was wrongly decided,” Cruz said. “And I think it's likely the Supreme Court will overturn it this term.”

Cruz is joined by Sen. Eric Schmitt (R-MO), the libertarian CATO Institute, conservative Claremont Institute and the increasingly far-right Chamber of Commerce, among others who have urged the Court to give the president more power over independent agencies.

“If you stop and think about it, all the members are appointed by the president, and we have elections for a reason,” Sen. Rick Scott (R-FL) told Raw Story.

“So I think that they ought to take the data and use their best judgment and do the right things, but remember, they're appointed by political leaders.”

Other Republicans say Powell’s imagining the DOJ threat.

"I think that was all made up, to be honest with you," Sen. Tommy Tuberville (R-AL) told Raw Story. "I think Powell brought that up. I don't think there was anybody in DOJ that said, ‘We're going to prosecute, go after the Fed.’”

Like many Republicans, Tuberville says Powell’s “been political,” especially when the Fed cut interest rates by half a point seven weeks from the 2024 election.

“When he dropped interest rates during the election … he lost me,” Tuberville said.

‘Independence is important’

On the other side, 207 Democrats — from House Judiciary Committee Ranking Member Rep. Jamie Raskin (D-MD) and Rep. Jasmine Crockett (D-TX) to Sen. Adam Schiff (D-CA) and Sen. Bernie Sanders (I-VT) — have urged the Supreme Court to maintain the independence of agencies from the Federal Trade Commission to the Fed.

Moderate Republicans, like retiring Sen. Thom Tillis (R-NC) and House Financial Committee Services Chair French Hill, are also up in arms over what they fear is interference with the Fed.

“Do you fear for Fed independence and even DOJ independence?” Raw Story asked the chair of the Senate Agriculture Committee.

“Independence is important,” Sen. John Boozman (R-AR) replied.

“Do we have Fed independence?” Raw Story pressed.

“We have, yeah,” Boozman said. “We have had it. I think it's important to protect it.”

Other Republicans say this is much ado about nothing.

“Are you worried at all about Fed independence like some of your colleagues are?” Raw Story asked.

“No,” Sen. James Lankford (R-OK) said. “The Fed is independent and they’re going to continue to remain that way. That's in their DNA.”

“What do you think of Tillis who's charging that now there's no DOJ independence either, because they're going after Powell?” Raw Story pressed. “Are you worried about that at all or is this much ado about nothing?”

“I don't know, I can't tell yet,” Lankford said. “There are a lot of drug runners, illegal immigrants and other folks that DOJ needs to really make sure they're prioritizing.”

‘An offer he can't refuse’

The DOJ is prioritizing Powell, though officials say they can’t discuss an ongoing investigation. To critics, the unprecedented attack is testing the Fed and the Constitution itself.

“This is a Godfather Part I,” Sen. Ed Markey (D-MA) told Raw Story. “Trump is giving Powell an offer he can't refuse.

“It’s either succumb to the pressure for him to resign, or be indicted. To Powell's credit, he has refused that.”