Trump’s immigration climbdown. Plus, a new Fed chair?

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1:04On Saturday, this is how Homeland Security Secretary Kristi Noem talked about Alex Preddy. Federal immigration agents killed him hours before. This individual who came with weapons and ammunition to stop a law enforcement operation of federal law enforcement officers committed an act of domestic terrorism. That's the facts. A few days later, U.S. President Donald Trump had a very different read on the incident. Well, I'm looking at that whole situation. I love everybody. I love all of our people. I love his family. And it's a very sad situation. Now the White House is trying to diffuse tensions in Minnesota.

1:41It's arguably the biggest climb down since Trump returned to office.

1:49This is Swamp Notes, the weekly podcast from the Financial Times, where we talk about everything happening in U.S. politics, finance and the economy. I'm Mark Filippino. And this week we're asking, is public outrage causing Trump to change course on his deportation campaign? And later in the show, we'll talk about the president's Fed chair nominee. Here with me to discuss that first question is James Politi. He's the FT's Washington bureau chief. Hi, James. Hi, Mark. Great to be with you. Good to have you back. And we've also got Lauren Fedor, the FT's deputy Washington bureau chief. Hi, Lauren.

2:20Hi, Mark. Lauren, give us the who, where, why. What was Kristi Noem talking about when she called Alex Preddy a domestic terrorist? So the clip that you played was Kristi Noem addressing the press in Minneapolis just hours after Alex Preddy was shot dead in the streets there. Alex Preddy was a 37-year-old intensive care unit nurse who was one of thousands of people protesting ISIS immigration enforcement tactics in Minneapolis. You know, we know that Minneapolis has been a place of really heightened tensions for weeks now. Less than a month ago, Renee Good, another protester, was shot dead by ICE agents while she was in her car.

3:06And that set off a wave of protests and really kind of ratcheted up tensions in that city. Now, Preddy was also shot quite startlingly in an incident that had been caught on camera that went viral that now millions of people and probably most of our listeners have seen. And Kristi Noem in that moment was really jumping to some conclusions about who Preddy was, what he was doing there at the time of his death. James, there are big consequences immediately after the shooting. Here's Minneapolis Mayor Jacob Frey. How many more residents, how many more Americans need to die or get badly hurt for this operation to end?

3:48Tell me a little bit about the fallout. Well, I mean, there was, you know, a lot of outrage, especially among Democrats. But polling showed that even independents felt like this was kind of the classic example of overreach, that the Trump administration's immigration enforcement efforts had really gone too far. And what was intended as a sort of as an effort to deport criminals and illegal immigrants who had either overstayed their visas or were here without authorization had turned into a campaign against dissenters and Americans who were protesting the policies. And so you saw a kind of groundswell of outrage on the left.

4:37You saw independents kind of also deeply uncomfortable. And you saw even some Republicans distancing themselves from the images of these kind of squads of federal agents cracking down so heavily on protests that it was even, you know, leading to the killing of some American citizens. And so combined, this has created a real crisis for the Trump administration, which kind of leads to where we are now, which is, you know, the White House and the president have tried to kind of tame the scandal and try to address some of the criticism. How far this goes, I think, remains to be seen. They're not going to row back completely.

5:23But this is where we are now. I think part of this is that this discourse has been hard to escape. It feels like it's penetrated all parts of life in a way that we haven't seen since the George Floyd murder in 2020 and the protests that followed it. And it may be large part because like in 2020 during COVID, much of the country is stuck at home maybe watching this video of Alex Preddy and Renee Good being killed over and over and over again on social media. But I'm curious, why do you guys think that this has become so ubiquitous? I think, you know, in all of those cases, Mark, there has been video, right, that has gone viral.

6:03And that means that the public can see with their own eyes what happened. And I think in all of the cases, but in the Petty case in particular, the majority of people saw someone who did not appear to be a domestic terrorist, did not appear to be an agitator, but was in fact someone who seemingly was trying to help another protester and was outnumbered, shoved to the ground and then shot repeatedly at close range. It didn't seem like someone who was a threat to these ICE agents in the way that Kristi Noem and others in the administration claimed that they were. And even if they were a threat, I think that kind of level of violence on the streets of an American city is extremely, extremely uncomfortable for people and something that a lot of people would not expect or want to see in this country.

6:54One thing that's interesting that I want to just pick apart for a second is that this has also opened up a conversation about Second Amendment rights, because, you know, Freddie was carrying a gun, but legally. And the dominant discourse from the right is that it's okay to carry a gun. And this seemingly was an excuse as to why he was being approached and handled the way he was by ICE officers. I'm curious if you guys have heard anything or have thoughts about that. Well, I mean, I think it's one of the twists of this case, which has been kind of the most fascinating to watch from a political point of view, because you've seen the Trump administration kind of get into the crosshairs of the gun rights activists who are saying, well, actually, you know, you shouldn't be considering someone who's carrying a concealed weapon as a threat, which is the excuse, basically, that administration officials and supporters of ICE have been offering.

7:51You know, DHS very quickly put up, posted a photo of the weapon that Preddy was carrying, even though there was no evidence that he brandished it or that he used it as a threat to the agents. And so you've got a situation where the Trump administration is at odds with the, you know, gun rights activists. And of course, the strange bedfellows go on the other side as well, because now there are some Democrats who are, of course, also taking the position that Freddie should not have been considered a threat, even though he was carrying a concealed weapon. And these are Democrats who, of course, are in favor of much tighter controls on the use of guns.

8:36So it's kind of another twist, and it just goes to show the extent to which the kind of groundswell of unhappiness with what happened in Minneapolis to pretty kind of crossed ideological lines. And I think it's a big reason about why we've seen so much change from the Rene Good killing to now. So let's back up. There have been a few things that have changed. There's been a personnel change, a rhetoric change, and then some actual substantive changes. Let's start with the big personnel change. Greg Bovino, this Border Patrol commander who was running things in Minneapolis, was replaced by Tom Homan, who is the administration's quote-unquote borders are.

9:19Can you tell me more about that? So Tom Homan is by no means known as someone who is lenient on immigration or on the border. He is a hardliner in many respects, but he is considered to be more pragmatic and more experienced, really, than Greg Bovino, who was truly the kind of face of the enforcement action in Minneapolis. But the subject was pronounced dead at the scene. The suspect also had two loaded magazines and no accessible ID. This looks like a situation where an individual wanted to do maximum damage and massacre law enforcement. And was kind of driving a lot of the behavior and the responses by the immigration enforcement officers that, you know, has led to the tensions and then ultimately the shooting and killing of both Renee Good and Alex Preddy.

10:22And so this was an attempt by the White House to kind of send a signal that they wanted a more pragmatic approach and they wanted to ease tensions. So Homan is now leading the operations there. The withdrawal of law enforcement resources here is dependent upon cooperation. We have some agreements. We got more to talk about how we're going to implement those agreements. But as we see that cooperation happen, then the redeployment will happen. I would say that Homan's deployment to Minneapolis, obviously there's that kind of sidelining of Bovino, but it was also, I think, widely seen in Washington as a rebuke or certainly an embarrassment maybe for Kristi Noem herself.

11:10Because as Homeland Security Secretary, she does sit above all of this kind of immigration enforcement activity. And it was seen as perhaps a rejection of her leadership, that she basically has been redirected away from being the face of immigration enforcement and overseeing the activities there. And while the administration insists that she still has a role to play in immigration enforcement across the country, they've also kind of played up the fact that she can focus on the other aspects of her job running DHS, things that, quite frankly, don't have much to do with immigration at all. Things like FEMA, disaster relief, or TSA, security at airports.

11:50So they are certainly sidelining her in a way, too, that is quite notable, I think. All right. So that's what's going on on the personnel side of things. Let's talk about rhetoric. How did the administration shift its language in the following days? So, you know, as we discussed, you had someone like Kristi Noem coming out hours after Preddy's shooting, alleging that he was committing domestic terrorism. You had Stephen Miller, the architect of the president's immigration enforcement, mass deportation effort, describing him as a would-be assassin. I think by the time Monday rolled around, and certainly later into the week, you saw a notable shift, not only from Caroline Leavitt at the podium in the White House briefing room.

12:30The most peaceful way to carry out this vital public safety mission is for Republicans and Democrats to do it together and for state and local law enforcement to work together with federal law enforcement. We want to let cops be cops. And you had the president himself adopting a much more complimentary tone when he was talking about the Democratic leaders on the ground in Minnesota. He posted on Truth Social after a phone call with Minnesota Governor Tim Walz, someone that not so long ago, he was referring to as a low IQ governor, among other things, saying they had a very good call and that they were on the same wavelength.

13:07He had similar praise for Jacob Frey, the mayor of Minneapolis, and again, another Democratic official with whom he'd kind of locked horns over the last couple of weeks and months. So there was a bit of an olive branch, I think, coming from the president and the administration in an effort to bring down the temperature in Minnesota. And there's one other thing that I would add, Lauren, which is although Trump changed his tone earlier in the week, late on Thursday, he came out with a very critical response to a video that had shown earlier this month, someone looking like Freddie aggressively confronting a vehicle with immigration officers and kicking the tires of it.

13:53And Trump came out and said, labeled pretty an insurrectionist and essentially kind of walked back some of his softer language from earlier. Okay, so we've hit personnel, we've hit rhetoric. What about policy? Any big changes there? I mean, I think on the policy front, there are a few things that are moving. I mean, there's one question, which is what kind of new approach to the immigration enforcement effort are we going to see from Tom Homan on the ground? Is it going to be, you know, less focused on confrontation with the protesters and more strictly focused on the arrests and deportations?

14:31Is there going to be a smaller scale of raids in the area? And ultimately, are, you know, the federal immigration agents going to be leaving Minnesota and Minneapolis at some point after having kind of declared that they did what they could? And, you know, of course, officials like Jacob Frey and Tim Walz have been calling for them to leave Minneapolis for a while. And I think ultimately that is likely to happen, assuming we remain on this track. I think the other thing that's happening is there's a big debate in Washington at the moment about whether to include funding for DHS in the current spending negotiations.

15:17ICE itself received a big boost in funding through last year's tax bill. That remains in place, but further funding and further kind of norms and rules of engagement will be determined by the funding that goes through the annual budget negotiations. And that discussion is all entirely coming to a head in the next few days and hours. Now, we should say that deadline is tonight, but on Thursday, yesterday, Democrats struck a deal with the White House to fund the rest of the government through the end of the fiscal year and the Department of Homeland Security for a couple of more weeks while negotiations continue.

15:59Lauren, what do you think is going to happen here? I hesitate to predict anything, but I do think it's notable that, you know, we're having this conversation not very long after the last government shutdown, which, if you recall, set a record for the longest shutdown in history. That only came to a resolution in November of last year. What's different this time around is that there is a willingness to negotiate on the part of both the White House and the lawmakers. So the Democrats in the Senate are seemingly very united in their belief that this is not an issue to capitulate on, that this is the moment to try to extract some sort of concessions from the White House and from the Republican Party when it comes to ICE, not only with the funding, but I think more importantly for the Democrats, it's about getting guarantees written into law about how ICE conducts itself and how these agents are operating as they go around the country.

16:56Because even if ICE is to withdraw from Minnesota, I don't think that spells the end of the president's deportation efforts. And so I think there's a real ambition on the part of the Democrats to make sure that ICE behaves differently going forward. And they see this as the moment to secure that. And I think it's notable that the White House is willing to engage with them on that. And I think it probably shows you this realization that what has happened thus far and the events of the last couple of days and weeks are a bridge too far for many Americans. And that includes independents and Republicans and people who voted for Donald Trump who say, this isn't what I voted for.

17:36I want to touch on what that immigration policy looks like going forward in a second. But Lauren, you talked about what Americans want from the administration when it comes to immigration enforcement. Do we have a sense of how these shootings in Minneapolis have impacted Americans and their views on the Trump administration? Yeah, the president's poll numbers have not been great as of late. His approval rating continues to fall, but his approval rating, particularly when it comes to immigration and the public's approval of DHS ICE has really taken a nosedive in the last couple of weeks. These were initiatives that, like I said, were not popular with Democrats, but they were reasonably popular with independents and Republicans.

18:17When it comes to a policy area, immigration has actually been, if not the strongest, among the strongest areas for the president into his second term. But now recent events might be changing that. And I think that is part of what is fueling this strategic shift that we've been talking about. So let's talk about what immigration policy looks like now that we've seen what happened in Minneapolis. Do we have a sense of what the Trump administration might scale back to? Well, I mean, I think that one of the pillars of their second term agenda has been the kind of sealing of the border. And I think that they're going to stick to that and just make sure that everybody knows that they've managed to prevent people from crossing the southern border and that that's still locked.

19:05And that is very popular as a policy. The other thing is they'll probably scale back to really the way that they framed the immigration crackdown during the 2024 campaign, which was, you know, they did say they wanted to do mass deportations. And they did signal that this would be kind of beyond the border areas. But they very clearly said that it would be focused on convicted criminals, people who are in prisons. They would start with the jails. They did not really tell the American people that it would be an across-the-board campaign in every city, in every state, that it would transcend individuals who had already been convicted of crimes, that it would be broader than that.

19:54They did not really indicate that protesters would be handled in the way that they have been so aggressively. So I think it'll still be, I think, a sort of pretty draconian immigration policy and deportation effort. but I think some of those like very, very hard edges are gonna come off. And I think they will be forced to scale back to going after individuals who have been already convicted of crimes and sort of more defensible targets, really. I wanna thank our guests. James Pleady is the FTE's Washington Bureau Chief. Thanks so much, James. Thanks, Mark. And Lauren Fidor, she's our Deputy Washington Bureau Chief.

20:35Thanks, Lauren. Thanks, Mark. Okay, we're gonna take a quick break And then when we come back, we're going to talk about Trump's pick to lead the Federal Reserve.

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22:00We're back. Federal Reserve Chair Jerome Powell had some advice for his predecessor when asked during Wednesday's press conference. Stay out of elected politics. Don't get pulled into elected politics. Don't do it. Well, now we know who will be receiving that advice. Early this morning, Donald Trump said he will nominate Kevin Walsh as Fed chair. Walsh is a former Fed governor and will take the position currently held by Powell if he's confirmed by the Senate in the coming months. Claire Jones, the FT's U.S. economics editor, is going to talk us through this news. Claire, you've been watching this news to come for a whole month now, maybe even longer.

22:37Absolutely, yeah. It's been a months-long ride as to who Trump will nominate as his pick for the most important job in central banking. Yeah, definitely. So tell us, who is Kevin Walsh? So Kevin Walsh is a former Fed governor who really made his name during the global financial crisis when he was the conduit between Fed policymakers in Washington and Wall Street. He's also pretty well connected in Washington political circles. So he's also a more mainstream pick than a lot of people have thought Trump would make. Walsh has been very clear that he would back Trump's calls for lower interest rates, but people don't think we're going to see the sorts of dramatic falls in borrowing costs that we may have seen other candidates for the role try to push through.

23:36Donald Trump has repeatedly threatened the independence of the Fed to lower interest rates. He's called current chair Jerome Powell stubborn for not lowering them faster and sooner. What does him picking Warsh signal to you about that Fed independence fight? I think a lot of people will see it as a welcome relief. I mean, I think that's certainly been the initial take of financial markets. We've seen the dollar edge up a little bit, which is usually seen as a sign of confidence in the US economy. So I think this looks like Trump is naming someone who does have a track record as a monetary policymaker, who is seen as being a little bit independent from the White House.

24:23However, the process has been so fraught and the actions against Fed independence from the US president and his administration so severe that I think question marks about whoever was going to get this job are going to remain as to how willing they're going to be to push through the sorts of measures that Trump has called for. Well, with those questions in mind, do you have any sense how likely it is Warsh is going to make it through the confirmation process? Because even though Trump picked him, Congress has got to approve. So coming into this, the Department of Justice probe against Jerome Powell led to a very fierce backlash in the Senate, including among quite a few Republicans who sit on the Senate Banking Committee, which plays a very influential role in ensuring that Trump's pick is confirmed by the Senate.

25:20We've seen Tom Tillis, the Republican senator for North Carolina, already say that he is unwilling to support Trump's nomination while the DOJ probe into Powell is still ongoing. So that really gives a sense that this is going to be a very, very tough confirmation hearing for Walsh in the Senate Banking Committee. However, as we mentioned earlier, he is quite a mainstream pick. It'd be quite difficult for senators to argue that he's not very well qualified for the role. So that gives me the sense that eventually he'll make it through. But it looks like he's going to face some very tough questions along the way as to what degree he agrees with some of the statements and actions the U.S.

26:15president has taken against the Fed in recent months. Well, that's the FT's U.S. economics editor, Claire Jones. Congratulations to you for making it through this process, too. Thanks very much. It's been a doozy. Thanks so much, Mark. Great to be here.

26:38This was Swamp Notes, the U.S. politics show from the FT. If you want to sign up for the Swamp Notes newsletter, we've got a link to that in the show notes. Our show was produced by Henry Larson. It was mixed by Sam Giovinco. Special thanks, as always, to Pierre Nicholson. I'm your host, Mark Filippino. Our executive producer is Topher Borges, and the FT's global head of audio is Cheryl Brumley. Original music by Hannes Brown. Check back next week for more U.S. political analysis from the Financial Times.

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