OPINION: A president at war with reality

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How far can presidential judgment depart from economic reality before the institutions designed to restrain it must act?

Trump has now threatened to stop trading with countries that run trade surpluses with the United States unless the Federal Reserve cuts interest rates, turning monetary policy into a presidential demand and raising a question far larger than the next Fed meeting.

Trump's threat to the Federal Reserve is not an isolated outburst. It is the latest example of a presidency in which personal certainty overrides evidence, expert judgment is treated as disloyalty and institutional limits are treated as obstacles to be overcome.

The pattern was unmistakable after the 2020 election. Trump wrongly continued to claim that the election had been stolen despite recounts, audits, court rulings and the conclusions of officials in his own administration.

Attorney General Barr said the Justice Department had found no evidence of widespread fraud that could have changed the election's outcome.

The pattern then moved from political rhetoric into economic policy.

Trump's tariffs have imposed costs on American farmers, consumers and businesses. Recent Federal Reserve research found that the 2025 tariffs raised prices on affected goods and that household spending on those goods fell substantially.

Then came Iran.

The conflict has added another economic burden.

The Federal Reserve reported that energy prices surged after the Middle East conflict began, contributing to higher inflation. By early September, oil prices were again moving sharply higher amid renewed tensions, adding pressure to an economy already confronting elevated prices: Inflation.

After the spectacle of reality detached from reason at the Reflection Pool, Trump has turned once again on the Federal Reserve and its refusal to bend to his demands for lower interest rates.

On Sept. 4, Trump said he would stop trading with countries where the United States runs trade deficits unless the Federal Reserve cuts interest rates; a nonsensical demand. His statement followed a stronger-than-expected August jobs report that led financial markets to raise the odds of a Federal Reserve rate hike at its September meeting to contain inflation.

That is where the argument becomes larger than any single policy dispute.

Congress established the Federal Reserve to pursue maximum employment and stable prices while giving it significant operational independence that Trump has recently challenged in court.

A president can criticize the Fed. He can argue for lower rates. He can make the case that borrowing costs are too high.

He cannot turn the Federal Reserve into an arm of the White House.

That distinction matters because the president does not control every economic variable. Interest rates cannot simply be ordered lower because a president wants cheaper borrowing. Inflation does not disappear because political leaders dislike it. Trade deficits cannot be eliminated merely by threatening trading partners.

Economic reality does not take orders.

The danger in Trump's latest threat is he is attempting to connect two separate instruments of economic policy, trade and monetary policy, and make one contingent on obedience by an institution.

That is a dangerous precedent.

The stronger the political pressure becomes, the greater the risk that economic decisions will be judged by their political usefulness rather than their economic consequences. Lower rates may stimulate borrowing and spending in the short term, but if inflation remains elevated, forcing rates down could make the problem worse.

The Federal Reserve's independence does not mean it is beyond criticism or accountability.

Congress sets its statutory objectives, and Fed officials regularly testify before Congress. But independence means the institution, not the president, makes monetary-policy decisions based on its assessment of employment, inflation and the broader economy.

That line matters.

A president who disagrees with the Fed is exercising political speech. A president who threatens America's trading relationships unless the Fed changes course is testing the boundary between presidential power and institutional independence.

The larger issue, therefore, is not whether Americans approve of Trump's economic policies.

It is whether a president can repeatedly disregard warnings, challenge independent institutions and make decisions with enormous economic consequences without eventually encountering meaningful institutional resistance.

A democracy depends on more than elections. It depends on officials willing to recognize limits, institutions willing to defend them and citizens willing to demand accountability when those limits are tested.

The Federal Reserve threat should not be dismissed as another presidential misjudgment.

It belongs to a larger record in which political preference repeatedly collides with expertise, institutional independence and economic reality.

A president may command attention.

He cannot command reality.

Van Abbott is a 36-year resident of Alaska having worked in Ketchikan, Fairbanks and Anchorage as a municipal, financial and utility manager. See his website: politicalwinds.org.

Distributed by Newsbank, inc.