Trump, Powell Bicker Over Fed Renos    07/25 06:18

   

   WASHINGTON (AP) -- After months of criticizing Federal Reserve Chair Jerome 
Powell, President Donald Trump took the fight to the Fed's front door on 
Thursday, publicly scorning the central bank chief over the ballooning costs of 
a long-planned building project. Powell pushed back, challenging the 
president's latest price tag as incorrect.

   Wearing hard hats and grim faces, standing in the middle of the construction 
project, Trump and Powell addressed the assembled TV cameras. Trump charged 
that the renovation would cost $3.1 billion, much higher than the Fed's $2.5 
billion figure. Powell, standing next to him, shook his head.

   The Fed chair, after looking at a paper presented to him by Trump, said the 
president was including the cost of renovating a separate Fed building, known 
as the Martin building, that was finished five years ago.

   The visit represented a significant ratcheting up of the president's 
pressure on Powell to lower borrowing costs, which Trump says would accelerate 
economic growth and reduce the government's interest payments. Presidents 
rarely visit the Fed's offices, though they are just a few blocks from the 
White House, an example of the central bank's independence from day-to-day 
politics.

   "We have to get the interest rates down," Trump said later after a short 
tour, addressing the cameras this time without Powell. "People are pretty much 
unable to buy houses."

   Trump is likely to be disappointed next week, however, when Fed officials 
will meet to decide its next steps on interest rates. Powell and other 
officials have signaled they will likely keep their key rate unchanged at about 
4.3%. However, economists and Wall Street investors expect the Fed may start 
cutting rates in September.

   The Federal Reserve sets a short-term interest rate that influences other 
borrowing costs, such as mortgages, auto loans and credit card rates. Yet the 
Fed doesn't directly control those other rates, which are ultimately set in 
financial markets. Last September, when the Fed cut its rate a half-point, 
mortgage rates actually rose in response.

   Trump did step back a bit from some of his recent threats to fire Powell 
before his term ends May 26. Asked if the rising costs of the Fed's renovation, 
estimated in 2022 to cost $1.9 billion, was a "fireable offense," Trump said, 
"I don't want to put this in that category."

   "To do that is a big move, and I don't think that's necessary," Trump added. 
"I just want to see one thing happen, very simple: Interest rates come down."

   And on his Truth Social site, Trump said, "The cost overruns are substantial 
but, on the positive side, our Country is doing very well and can afford just 
about anything -- Even the cost of this building!"

   The Fed allowed reporters to tour the building before the visit by Trump, 
who, in his real estate career, bragged about his own lavish spending on 
architectural accoutrements that gave a Versailles-like golden flair to his 
buildings.

   Journalists get rare tour of Fed renovation

   On Thursday, reporters wound through cement mixers, front loaders and 
plastic pipes as they got a close-up view of the active construction site that 
encompasses the Fed's historic headquarters, known as the Marriner S. Eccles 
building, and a second building across 20th Street in Washington.

   Fed staff, who declined to be identified, said that greater security 
requirements, rising materials costs and tariffs, and the need to comply with 
historic preservation measures drove up the cost of the project, which was 
budgeted in 2022 at $1.9 billion.

   Trump in 2018 imposed a 25% duty on steel and 10% on aluminum. He increased 
them this year to 50%. Steel prices are up about 60% since the plans were 
approved, while construction materials costs overall are up about 50%, 
according to government data.

   The staff pointed out new blast-resistant windows and seismic walls that 
were needed to comply with modern building codes and security standards set out 
by the Department of Homeland Security. The Fed has to build with the highest 
level of security in mind, Fed staff said, including something called 
"progressive collapse," in which only parts of the building would fall if hit 
with explosives.

   Sensitivity to the president's pending visit among Fed staff was high during 
the tour. Reporters were ushered into a small room outside the Fed's boardroom, 
where 19 officials meet eight times a year to decide whether to change 
short-term interest rates. The room, which will have a security booth, is 
oval-shaped, and someone had written "oval office" on plywood walls.

   The Fed staff downplayed the inscription as a joke. When reporters returned 
to the room later, it had been painted over.

   During the tour, Fed staff also showed the elevator shaft that congressional 
critics have said is for "VIPs" only. Powell has since said it will be open to 
all Fed staff. The renovation includes an 18-inch (45-cm) extension so the 
elevator reaches a slightly elevated area that is now accessible only by steps 
or a ramp. A planning document that said the elevator will only be for the 
Fed's seven governors was erroneous and later amended, staff said.

   Renovations have been in the works for a while

   Plans for the renovation were first approved by the Fed's governing board in 
2017. The project then wended its way through several local commissions for 
approval, at least one of which, the Commission for Fine Arts, included several 
Trump appointees. The commission pushed for more marble in the second of the 
two buildings the Fed is renovating, known as 1951 Constitution Avenue, 
specifically in a mostly glass extension that some of Trump's appointees 
derided as a "glass box."

   Fed staff also pointed to the complication of historic renovations -- both 
buildings have significant preservation needs. Constructing a new building on 
an empty site would have been cheaper, they said.

   As one example, the staff pointed reporters to where they had excavated 
beneath the Eccles building to add a floor of mechanical rooms, storage space 
and some offices. The Fed staff acknowledged such structural additions 
underground are expensive, but said it was done to avoid adding HVAC equipment 
and other mechanics on the roof, which is historic.

   Trump, who said after his tour that "it feels very good to be back on a 
construction site," added that opening up a basement is "the most expensive 
place to build."

   The Fed has previously attributed much of the project's cost to underground 
construction. It is also adding three underground levels of parking for its 
second building. Initially the central bank proposed building more above 
ground, but ran into Washington, D.C.'s height restrictions, forcing more 
underground construction.