President Donald Trump‘s Treasury Secretary Scott Bessent said in his confirmation hearing in January that he didn’t plan to infringe on the autonomy of the Federal Reserve, the independent body that makes critical decisions on U.S. monetary policy (including, critically, interest rates) and which is currently led by Fed Chair Jerome Powell. (Trump appointed during his first term in the White House and now wants fired from the position.)
Bessent told Senators in January: “I think on monetary policy decisions, the FOMC should be independent.” (The FOMC is the Federal Open Market Committee within the Federal Reserve that votes on whether to raise or lower interest rates.)
Bessent is now calling for an examination of the Federal Reserve, although the Treasury Secretary did not directly target Powell’s interest rate stance, which the President has criticized.
On CNBC today, Powell said: “What we need to do is examine the entire Federal Reserve institution and whether they have been successful… All of these PhDs over there, I don’t know what they do, I don’t know what they do. This is like Universal Basic Income for academic economists.”
(According to its own website, the “Federal Reserve Board employs more than 500 researchers, including more than 400 Ph.D. economists, who represent an exceptionally diverse range of interests and specific areas of expertise.”)
.@SecScottBessent: “What we need to do is examine the entire Federal Reserve institution and whether they have been successful… All of these Ph.D.s over there, I don’t know what they do… This is like Universal Basic Income for academic economists.” pic.twitter.com/ITzSwQKpjS
— Rapid Response 47 (@RapidResponse47) July 21, 2025
The Federal Reserve Board of Governors is composed of seven Governors who are appointed by the POTUS and confirmed by the Senate, and serve 14-year terms. Currently led by Powell (a Republican who does not have a PhD), five of the seven Governors have earned PhDs, including Republican economist Christopher Waller.
It’s not the first time Republicans have pushed for a deeper audit of the Federal Reserve. In 2015, GOP lawmakers proposed the Federal Reserve Transparency Act, also known as “Audit the Fed,” to make the Fed’s interest rate decisions subject to congressional approval. In 2024, Sens. Chuck Grassley (R-IA) and Rand Paul (R-KY) tried to introduce a similar bill, also without success. And in January, Rep. Thomas Massie (R-KY) reintroduced the 2024 bill with 38 co-sponsors, all Republican.
Note: The Fed’s finances and operations are audited by the Government Accountability Office (GAO) and an independent accounting firm.
Former President of the Federal Reserve Bank of Cleveland, Loretta Mester, recently told NPR that an independent Fed is critical, as Bessent seemed to acknowledge in his confirmation hearing. Mester said that the Fed’s job is to create monetary policy that helps fulfill goals set by Congress, which creates the country’s fiscal policy.
“Monetary policymakers focus on hitting the dual mandate goals that Congress gave it, which are price stability and maximum employment. And they steer away from commenting on fiscal policy. And then the fiscal policy makers, including the president, try to steer away from commenting on monetary policy,” Mester said, explaining the traditional roles now under threat. “And that’s good because you don’t want the person who’s setting interest rates to be concerned about trying to inflate away the debt, which maybe a politician has in mind, or setting interest rates low to gin up the economy before an election without consideration of what the long run implications for inflation are.”