As U.S. debt burgeons and the White House leans on the Federal Reserve to cut interest rates, people are beginning to talk about “fiscal dominance,” a scenario in which keeping government financing “cheap” eclipses the control of inflation.
The federal budget is set to add trillions onto the U.S. debt — raising the cost of servicing that obligation. President Trump, meanwhile, has made explicit calls for the Fed to cut rates, in part to further his tariff policies for increased industrial development, but also to lower the federal government’s interest costs — now at 14 percent of the budget — roughly $100 billion more than defense.
Cook also called on the University of Chicago to fire its economics professor, Harald Uhlig, in June 2020 after Uhlig criticized the Black Lives Matter movement.
The White House’s efforts have raised concerns that the administration wants the Fed to return to a bygone era when it kept rates low in order to allow for lower-cost borrowing.
A July article by David Beckworth asserts that the U.S. is “Drifting Toward Fiscal Dominance” — asserting that America’s mounting debt, political rhetoric, and quiet regulatory shifts suggest we are on a journey to that end.
The U.S. experienced the phenomenon during and shortly after WWII, when the Fed was required to keep interest rates low to finance the costs of the war. The inflation spike that followed led to the 1951 Treasury-Fed accord that restored central bank independence.
Trump Is ‘Quietly’ Altering the Fed, Even Without Firing Powell
Earlier this month, President Trump called for the Federal Reserve’s board of governors to override the power of Fed Chair Jerome Powell, criticizing the head of the central bank for not cutting short-term interest rates (in particular the Fed’s discount rate.)
Posting on his Truth Social platform, Trump called Powell “stubborn.” If Powell doesn’t “substantially” lower rates, Trump posted, “THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!”
Treasury Secretary Scott Bessent last week made it clear that the Trump administration intends to shake up the Federal Reserve — just as it has done with the rest of the federal government.
“What we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Bessent told CNBC on July 21. “All these Ph.D.s over there, I don’t know what they do.”
“This is like universal basic income for academic economists,” he said.
Change at the central bank will accelerate once Chair Jerome Powell steps aside at the end of his term in May 2026 — or earlier if he resigns. Those changes include the rules that affect the largest U.S. banks; these are already being reviewed.
The Senate Banking Committee is expected to soon consider Trump’s nomination of Stephen Miran, head of the president’s Council of Economic Advisers, to fill the vacancy on the central bank’s board left by Fed Governor Adriana Kugler, a Biden appointee. Miran, an advocate of lower rates, is Trump’s choice to fill a spot on the Federal Reserve in time for its next interest rate decision at its mid-September meeting.
Two Primary Residences?
President Trump on Wednesday called on Federal Reserve Governor Lisa Cook to resign after officials accused the Fed board member of mortgage fraud.
Bill Pulte, the chair of the Federal Housing Financing Agency (FHFA), posted a letter to Attorney General Pam Bondi, stating that it appears Cook “has falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud under the criminal statutes.”
Pulte refers to a mortgage Cook took out in June 2021 to purchase a property in Ann Arbor, Michigan, which stipulated it would be her home residence for at least a year. Cook then took out another mortgage in Georgia two weeks later, Pulte said, also declaring that property as her primary home address. Cook’s Georgia home was later listed as a rental, according to Pulte.
Cook indicated on the mortgage agreement in Ann Arbor that the property was to be her principal residence within 60 days after the mortgage was executed. And she was to continue to occupy the property for at least one year after the date of occupancy.
The Free Press independently found records for both properties referenced in Pulte’s letter. Property records for the Ann Arbor residence show the home was last sold in 2005. Under a tax portion of the records, there is a section called “Principal Residence Exemption %.” The records show 100 percent for 2025 and 2024.
Experts suggest that it’s possible the “one year” clause for the Ann Arbor residence would be where she could possibly be accused of “occupancy fraud.”
Trump took to Truth Social, stating, “Cook must resign, now!!!”
Cook responded saying, “I have no intention of being bullied to step down from my position.”
But There’s History With Cook
The Fed governor was widely criticized by Senate Republicans during the fight to confirm her to the Fed in April 2022. The Federal Reserve nominee agreed with calls to have the Federal Reserve focus on targeting its federal funds rate to improve the black unemployment rate instead of the national employment rate.
Cook also called on the University of Chicago to fire its economics professor, Harald Uhlig, in June 2020 after Uhlig criticized the Black Lives Matter movement for its support for defunding the police. Cook accused Uhlig of “racial harassment.”
She claimed that “free speech has its limits.”
If Cook were to resign from the Fed’s board, that would leave only two governors appointed solely by a Democratic president out of a total of seven seats: Fed Governor Michael Barr and Fed Vice Chair Philip Jefferson. Kugler stepped down from her governor position earlier this month. Powell has been appointed to Fed roles by Democratic and Republican presidents, and his term as chair ends in May 2026, though his position as a governor stretches to 2028.
The president has explicitly stated that he’ll only pick a new chair who agrees that rates should come down. So, are Trump’s actions with the Fed a step toward “fiscal dominance” or just a president doing what every resident in the White House does: make every effort to fulfill a political agenda while keeping interest rates low, so as to grow the economy, jobs, and personal income — as they always promise — during the campaign?
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