How the Federal Reserve is fighting back as Trump threatens its independence

0:00Support for Here and Now Any Time comes from MathWorks, creator of MATLAB and Simulink software for technical computing and model-based design. MathWorks, accelerating the pace of discovery in engineering. MathWorks. dot com. WBUR podcasts, Boston. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions or whether instead monetary policy will be directed by political pressure or intimidation. Federal Reserve Chair Jerome Powell says the president is trying to intimidate him into lowering interest rates. It's Monday, January 12th. And this is Here and Now, Anytime from NPR and WBR.

0:45I'm Chris Bentley.

0:54Today on the show, we'll check in on Iran, where an American human rights group says more than 500 protesters have been killed, more than 10 ,000 arrested. President Trump said Tehran called him to negotiate after he threatened them with war. Also, as a candidate, Zoran Mamdani promised New Yorkers free child care. Now that he's the mayor, he's moving to make it happen. We will provide universal child care for three-year-olds, and we are going to start to provide universal child care for two-year-olds across the city beginning this fall with 2 ,000 children. How will free child care in New York work?

1:32That's coming up in about 10 minutes. Before we get to that, though, you normally have to read between the lines when a Fed chair makes a public statement. Not so when Jerome Powell said this after the Department of Justice threatened him with a criminal indictment over the weekend. 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. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation.

2:15Economists and politicians of both major parties are coming out to defend Powell and the independence of the Fed. That includes Jason Furman, who served as chair of the Council of Economic Advisers under President Obama. He's now a professor at Harvard, and he spoke to Indira Lakshmanan. So you joined Alan Greenspan, Janet Yellen, and others today in calling the Fed's independence critical. Now, it's normal, of course, for the president to influence his Treasury secretary and other economic advisors. But explain to us why the Fed needs to be free from any interference from the White House. The general view is that just about any president is going to do a worse job than the Fed at things that we all agree on.

2:58We'd all like lower and more stable inflation. We'd all like a more stable economy. We'd all like a higher stock market. And presidents just aren't that good at it. One, they just don't have the detailed knowledge. And two, they're really biased. They'd love to goose things up for the current moment, even if it causes more pain for everyone down the road. So, Jason, is there any precedent for a government launching a criminal investigation into the central bank and its chairman? There's absolutely a lot of precedent for it, but you have to look to countries like Argentina and Turkey to see those precedents.

3:34In the United States, I'm not aware of anything like this, and we obviously don't want our country to turn into one of those. Well, there are certainly examples in the past of U.S. presidents firing Fed chairs. I believe Harry S. Truman did this. Nixon certainly harassed his Fed chair, spread rumors about him. LBJ even physically threatened one. And Carter, you know, fired a Fed chairman. So there are times when the president doesn't like the direction that the central bank is taking. But explain to us how that's different from what we're seeing now. Well, first of all, a number of those episodes were actually considered by history to be quite bad.

4:17The pressure that Nixon put on his Fed chair, Arthur Burns, is part of why we ended up with double-digit inflation in the United States and ironically helped create and strengthen the degree of independence that the Federal Reserve has today. So you're right that it is not totally unprecedented for a president to feel this way, but you have to go back a really long time to find them acting on it. And almost all of the consequences of those actions have been really quite bad, which is why you've seen even a number of Republican senators, Republican members of the House, as well as the statement that I joined on a bipartisan basis, all speaking really with one voice.

5:03I'm trying to understand, though, this seems not to be getting Jerome Powell to back down and lower interest rates, but in fact to stand up and say, no way am I going to do this. So how is this – how does the White House think that this is actually going to work? I think this is going to be counterproductive. You have Jay Powell less likely to cut rates. He's more likely to stay on as a governor, even though his term as chair ends in May of this year. He could stay on as one of 12 voters through 2028. It's going to make it harder for the Supreme Court to allow Donald Trump to fire Lisa Cook, another governor, a case that they'll be hearing arguments on next week.

5:46It's going to make the people who sit at the Fed all want to dig in a little bit more. It's going to make it harder for Trump to confirm his next Fed chair. So right now, the system has some very, very strong antibodies, and I think the system is winning. All right. Well, the Department of Justice has pursued other Trump targets, former FBI Director James Comey, New York Attorney General Letitia James. Both of those cases were thrown out of court. I know you're not a lawyer, but I'm curious with your experience in Washington, where do you see this going and what do you make of the timing given that Jay Powell, his term was going to end as Fed chair anyway in May?

6:24Yeah, I think this is, I would hope, that I'm living in a country where a grand jury wouldn't indict or if they did, that a jury wouldn't convict for something as spurious as this. And, you know, it is a president who not just wants to take away the independence of the Fed, but in some ways maybe we're a tiny bit lucky, is doing it in a very ham-handed and unskilled manner, I think is more likely to lead to backlash and ultimately strengthen. the Federal Reserve. Jason Furman is a professor of economics at Harvard University and a former chair of the Council of Economic Advisors under President Obama.

7:03Jason, thank you so much for joining us. Thank you.

7:12Coming up next. An internet blackout failed to suppress protests in Iran, where a violent crackdown on dissent has reportedly killed more than 500 people so far. And now President Trump is threatening to attack the country. More after the break.

7:50for your unique needs. They shop, you save. In as little as 15 minutes, SelectQuote's licensed agents will compare policies from trusted top-rated insurance companies to find you the best fit for your health, your lifestyle, and your budget. And they work for you for free. Get the right life insurance for you and save more than 50 % at selectquote.com slash anytime. That's 50 % off at selectquote.com slash anytime. Iran's foreign minister said today the country is prepared for war, after President Trump said he's looking at military action in Iran, quote, very seriously. Trump also told reporters that Iran's leadership had called his administration, seeking to, quote, negotiate.

8:36Security forces have reportedly killed hundreds of people in Iran since protests broke out across the country in late December. For more, we called up Ali Reza Nader, an Iranian scholar who previously worked for American think tanks and the U.S. government. He told Indira Lakshmanan, there's a real possibility of international conflict. The big issue is that the regime in Iran has shut down the internet and is massacring thousands upon thousands of people. I think the official numbers we have from the Human Rights Activist News Agency is some more than 500. Of course, we haven't been able to independently verify that, but apparently at least 10 ,000 people have been detained.

9:19Yes, but beyond the official reports, I've seen videos and reports that suggest it's a huge massacre, very tragically. The regime is taking brutal force, using brutal force against the protesters. So I think dissidents and the opposition want the Trump administration to prevent the regime from shutting down the internet, restore communications, allow the truth to come out from Iran. So there's a spectrum of things the United States could do to get involved from somehow talking to them and getting them to turn the internet back on or stop using deadly force against protesters all the way up to military force.

10:07So what do you think the U.S. should do that would be helpful to protesters rather than risky or counterproductive? I think restoring internet usage in Iran, finding a way to prevent the regime from shutting down the internet, that's the number one thing the United States can do. It's not easy at all. It's not like pushing a button, but there are a number of things the United States can do in that regard. I think the United States should be very careful about armed conflict with Iran. We don't know what's going on in the ground. The U.S. should be very careful about anyone claiming to be leading this uprising in Iran or to be a leader of the opposition.

10:53Well, let me ask you that. What is the state of Iran's opposition now? Is it united and is there one leader? You know what? It's a huge mess right now. I've never seen the opposition more divided. You have, on one hand, the monarchists around Reza Pallavi claiming that he is the leader of the opposition. Let's remind listeners who Reza Pallavi is. Go ahead and remind them. The son of the Shah who was ousted in 1979. Yeah, he's a former crown prince of Iran. He has been in the United States for decades. I know him personally very well, actually. I was close to him at one time. I gave him advice on a number of issues.

11:39I think he really went the wrong direction. So you've broken with him now, and despite the fact that he has called on Iranians to go to the streets, to protest, to rise up, you don't see him as the man to lead this revolution. No, I don't. I think everybody should go into the streets, but there should be also a plan. Lots of people have been killed. What is the plan to help those people? Mr. Pahlavi had said that 50 ,000 of the regime's security forces and personnel had defected to him. What happened to that? I think the regime in Iran is evil and the people have a right to overthrow it. I've always advocated for protests and strikes.

12:29Some argue for armed action, but there has to be planning and organization and thought that goes behind all of this. This is the lives of people we are talking about here. Now, Ali Reza, there have been a series of major protests in Iran in recent years dating back to the Green Revolution that some listeners may remember from 2009, the Women Life Freedom Movement in 2022. Each of these ended with brutal crackdowns and the Islamic Republic continued on through all of these. Are these protests now in 2025-26 different? And are they enough to take down the regime? I think these are the biggest protests since the 2022 Women in Life Freedom uprising.

13:18The issue is that regime is very well dug in. It's highly armed. It still has a core support base. I don't think it's going to give up that easily and flee to Moscow. You might get concessions of the nuclear program, perhaps, if Khamenei isn't around. And I think that the regime is trying to play with the Trump administration and delay any sort of support for the uprising in Iran, because the Trump administration can play a very important role here. But will the Trump administration listen to the right people? Will it make the right decisions? If they listen to Reza Pahavi, I think they're going to get in trouble.

14:04Just knowing him and his staff and just lack of organization. Okay. Okay. We'll have to leave it there. Ali Reza Nader, independent researcher on Iran in Washington, D.C. Thanks for joining us. Thanks so much for having me. Thank you so much.

14:23coming up new yorkers with young kids could soon get help paying for child care some of them might even have the tab picked up entirely peter odoud has that story after the break

14:42$20 ,000. That is the average cost of child care for a toddler in New York City. And according to analysis by the New York Times, a family in the city would need to make more than$300 ,000 a year to afford it. This issue helped propel Mayor Zoran Mamdani to City Hall with a promise of free universal child care. And now the new mayor is getting some help from Governor Kathy Hochul. Together they unveiled a plan to start rolling out free programs for two-year-olds. This will be felt when our economy hums with the hard work of parents who are able to return to the jobs that they love rather than have to quit because they can't afford to pay for care.

15:25Grace Rau is the executive director of the Good Government Group Citizens Union and she advised the Mayor's Transition Committee on Child Care. Grace, nice to speak with you. Thank you for having me. Let's start with that number. More than$300 ,000. People listening might be saying, why in the world would a family in New York need to earn that much money every year to afford child care for just one kid? Well, it's a staggering figure, and it's one that families across the city know all too well, unfortunately. But the federal affordability benchmark says that a family should spend no more than 7 % of their income on child care.

16:03So under that rubric, that would mean you'd need to earn$334 ,000 a year just to afford the average cost of child care. And we know from speaking to parents across the five boroughs,$20 ,000 is really the average. It often can cost much more than that. What kind of hardship does that cause families living in the city? A huge one. I mean, we have a very high cost of living in New York. Housing costs certainly a big challenge for so many New Yorkers. But child care is such a specific and focused hit to families' bottom lines. And really what we have seen in the last several years in particular is that it's driving them from the city.

16:47So we are losing families with young children. We are seeing that exodus show up in declining public school enrollment in New York City. And then when you zoom out, this is really something that is affecting the city as a whole, not just parents of young children. Our economy is suffering as a result. The city's own figures show that in one year alone, New York lost an estimated$23 billion in economic activity from parents who were either leaving the workforce or downshifting their careers to deal with child care needs. So this is something that is having an economic impact on New York. Well, it's gotten the attention of the new mayor and the governor, who's a moderate up for election this year.

17:31They unveiled a plan to put the city on the path to universal child care. It does need to be signed off by the legislature. Just briefly summarize for us who it would help. So it would help primarily parents of young children. So anyone with children under the age of five in New York City and then across the state of New York stand to benefit from these investments. But again, anyone who cares about the economy of New York City, which is all of us who live here, we care about this bigger public investment in child care because it means that our economy can grow. It means that more people will come here and stay here to pursue their careers, to build companies.

18:19That's good for everyone in New York City, not just parents of young children. But as you know, it will be expensive. I'm just looking at some of the numbers here. It should cost$73 million in the coming year to create a limited program for two-year-olds. The cost is then expected to grow to more than$400 million in the second year. How do you fund it? That's the fundamental question. Well, that has been a question all along, always the case with any kind of program that does require big public investments. The governor has said that she is investing, prepared to invest,$4.5 billion statewide this year.

18:59That's an almost$2 billion increase, so a significant bump in terms of state dollars going into this. And she has said that she can do this with existing state funding as well as some positive projections that they're seeing in terms of taxes on Wall Street bonuses in particular. Okay, so the plan would be, would include eventually to raise taxes? So she has not said that directly, but to make an investment of the size will likely require a conversation about ongoing recurring revenue. That could mean a tax increase. It could also mean we have a very large state budget and city budget. It could also mean a reallocation of existing dollars to this program.

19:53If it is deemed enough of a priority, which I think this initial investment of$4.5 billion indicates that it is a top priority for this governor and mayor, they may say, we're not going to do tax increases. We are going to reallocate existing dollars to child care because we believe it's so important. So we have some options. Grace Rau, Executive Director of the group Citizens Union. Thank you very much. Thanks for having me.

20:43Peralta. Our theme music is by Mike Moschetto, Max Liebman, and me, Chris Bentley. Our digital producers are Alison Hagen and Grace Griffin. And here and now's executive producer is Alan Price. Thanks for listening. We'll be back with you tomorrow.