President Donald Trump’s on-again, off-again feud with Federal Reserve Chairman Jerome Powell has market observers apprehensive. Economists, policymakers, businessmen, and commentators are worried about growing threats to the Fed’s independence. If elected officials unduly influence the Fed, the conventional wisdom goes, rising inflation and financial-sector turbulence will surely follow.

America’s central bank is arguably the government’s most powerful and respected agency. For decades it has been relatively insulated from the rough-and-tumble realities of politics. Trump’s badgering of Powell for interest rate cuts transgresses an informal yet fundamental norm of public life. Fed decisions are supposed to be guided by disinterested experts, not demagogic politicians.

But does central bank independence deserve the near-unanimous respect it currently enjoys? There are reasons to be skeptical. Recent scholarship on central bank independence suggests a more nuanced view than the one adopted by the popular and financial press. And in the United States, central bank independence is legally questionable at best, and unconstitutional at worst. We have good reasons to question the feasibility and desirability of central bank independence.

In my new AIER Explainer on central bank independence, I discuss the theory and history behind this tricky concept. I go over the arguments for and against central bank independence, survey important works of scholarship on the topic, and consider the legal and constitutional standing of the Fed. 

The case for central bank independence seems obvious. Rather than hand the reins of monetary policy to politicians, it is better to entrust them to experts and technocrats, who by design are unanswerable to politics. This is supposed to guarantee monetary policymakers are disinterested.

The vast majority of economists think it is a good thing the Fed has a wide berth to operate. And while they acknowledge the Fed’s legal accountability to Congress, they are pleased Congress has been unwilling to specify narrower and more observable goals than “full” employment, “stable” prices, and “moderate” interest rates. 

There is a plausible link in economic theory between central bank independence and good macroeconomic outcomes, such as low and stable inflation. Come election season, politicians have an incentive to run the printing presses to make themselves look better. Bureaucrats, who aren’t elected, don’t. Hence the public and its representatives might rationally choose to remove this specific power (monetary policy) from elected officials’ hands.

It is a compelling argument. But it has several weak spots. Both scholarly investigations and legal realities complicate the triumphalist narrative of central bank independence.

While classic studies of central bank independence find a strong link between political protections for central bankers and low, predictable inflation, more recent scholarship is mixed. As I detail in the Explainer, many of the desirable economic outcomes we associate with an independent central bank are plausibly attributable to strong background commitments to constitutionalism and the rule of law. Good political institutions and a strong civic culture, rather than tenure for monetary technocrats, is how we get good economic outcomes.

As for the law, the US Constitution (art. I, § 8, cl. 5) is quite clear: Congress controls monetary policy. Whatever authority Congress gives to the Fed is not the Fed’s by right. It is a delegation. As I note in the Explainer, “The Fed’s operational independence de facto depends on Congress’s continued goodwill. Congress controls the Fed de jure and can intervene at any time to restrict goal, instrument, financial, or personnel independence.”

A totally independent central bank would violate our commitments to democratic self-governance. Although Congress has often been reluctant to discipline Fed officials, the fact remains that the legislature has the first and last word. Given the Fed’s rather poor performance since 2008 — a global financial crisis, a laboriously slow recovery, and recent sky-high inflation — it’s past time for Congress to act.

Rather than chase the mirage of independence, we should find ways to make Congressional oversight of the Fed more productive. There are many ways legislators could increase central banker accountability without politicizing the central bank. Congress could specify a more concrete monetary policy target for the Fed, put it on appropriations for non-monetary policy duties, change the conditions of continuing service for premier Fed officers, or make a host of other changes to promote responsible behavior. Let us not forget that a mere three years ago, the Fed allowed inflation to reach 9 percent, in clear violation of its price stability mandate. As of this writing, nobody at the Fed has been subject to any professional consequences for this monumental error.

It’s time to put the myths of central bank independence behind us. That includes the boogeyman of politicized monetary policy. Just because Congress can and should discipline the Fed doesn’t mean we want the House Financial Services Committee making interest rate decisions. That’s a false alternative. Instead, Congress must draw up a better framework for our central bank and make sure those who run it do their jobs.

Download the Explainer: What is Central Bank Independence?

The teachers unions, led by figures like Chicago Teachers Union (CTU) president Stacy Davis Gates, believe they own your children, and they’re not shy about admitting it. Their fierce resistance to school choice and their brazen claims over the minds of America’s youth reveal a chilling agenda.  

They don’t just want a monopoly on education funding — they want control over the hearts and minds of nearly 50 million students. But the Supreme Court has long affirmed that parents, not unions or the state, hold the fundamental right to direct their children’s upbringing, a principle that exposes the unions’ overreach as an assault on liberty. 

This week, Gates’ hubris was on full display at the City Club of Chicago, where she declared, “The children are always ours. Every single one of them. All over the globe.” She admitted her critics are right when they say her union believes it owns the children in public schools.  

This moment wasn’t a gaffe — it was a confession. Last year, she led a CTU rally chant: “Whose children? Our children!” Vice President Kamala Harris, whom Gates supported in her presidential run, echoed this socialist sentiment in 2022: “When you see our kids, and I truly believe that they are our children, they are the children of our country, of our communities.”  

As bestselling author Michael Malice put it, “Socialists regard your property as their property, but even more nefariously regard your children as their property.” 

The irony is glaring: if the CTU were a parent, it would lose custody for educational neglect and abuse, given the catastrophic failure of Chicago’s public schools. 

In 2023, data revealed that 55 Chicago Public Schools had zero students proficient in either math or reading. Zero. If a parent allowed their child to languish in such an environment, child protective services would intervene. Yet Gates has the audacity to claim these children “belong” to her union, as if their abysmal outcomes are a point of pride rather than a damning indictment.  

The CTU’s fight against school choice exposes their true motives: not to educate, but to control. They work to trap other people’s children in failing government schools, not out of faith in those schools, but to maintain a monopoly on funding and, more sinisterly, on the minds of students for 13 years, seven hours a day. The more kids they keep captive, the more money they can funnel to far-left political agendas and Democratic campaign coffers.  

In 2023, the CTU fought to kill the Invest in Kids Act, an Illinois scholarship program that gave thousands of low-income students access to better schools. Every child who escapes their grip threatens their power. 

The Supreme Court has consistently rejected this kind of authoritarianism. In Pierce v. Society of Sisters (1925), the Court struck down an Oregon law that banned private education to enforce ideological conformity, declaring, “The child is not the mere creature of the State.” This landmark ruling affirmed that parents have a fundamental right to direct their children’s education and upbringing.  

Similarly, Meyer v. Nebraska (1923) overturned a state law prohibiting foreign language instruction in schools, protecting parents’ rights to choose educational content that aligns with their values. In Wisconsin v. Yoder (1972), the Court exempted Amish families from compulsory schooling laws, upholding their right to educate their children according to their religious beliefs. These precedents make clear that children belong to their parents, not to unions or government bureaucrats. Yet the CTU’s rhetoric and actions defy this settled law, treating students as pawns in an ideological crusade. 

The hypocrisy is galling. Gates, who claims public school children “belong” to her union, sends her own son to a private Catholic school. She once called school choice “racist” — before her personal choices were exposed. This double standard is the union playbook: control your kids while opting out for their own. Meanwhile, Illinois Democrats, allied with the unions, pushed to regulate homeschooling in 2025. Their bill, which passed out of committee on a party-line vote despite over 40,000 registered opponents, aimed to curb parents’ freedom to educate their children independently. Though the bill died, the message was unmistakable: the war on parental rights continues. 

Gates can wield such uncontrolled influence because the CTU is a public sector union, a structure even Franklin D. Roosevelt warned against. Unlike private sector unions, public sector unions like the CTU bargain with government entities funded by taxpayers, using taxpayer dollars — collected through mandatory dues — to lobby against the public’s interests. And if you don’t like it, your kids are held hostage without an escape hatch. 

Emboldened by decades of unchecked power, unions now say the quiet part out loud. But their arrogance is backfiring — it’s free advertising for school choice and homeschooling. Parents are awakening to the reality that unions see their children as political tools, not individuals with unique needs. The Pierce, Meyer, and Yoder rulings remind us that the state — and by extension, its union surrogates — has no claim over our kids. The CTU’s claim of ownership is particularly hollow when 55 of its schools produce zero proficient students, a failure that would disqualify any parent from custody. 

A school choice revolution is already underway. Over the past four years, 17 red states have embraced universal school choice policies, empowering parents to direct education funding to schools or programs that fit their children’s needs. These states understand that dollars should follow students, not prop up failing systems. The Educational Choice for Children Act, included in the Big Beautiful Bill, will supercharge this movement, expanding opportunities in blue states like Illinois, where unions and their allies have stifled families’ options. 

The stakes are immense. Teachers unions aren’t just fighting for funding — they’re battling for ideological dominance. They’ve infiltrated public schools, turning them into machines for shaping the country’s future without raising children of their own. By trapping kids in unionized schools — especially those where zero students meet basic proficiency — they secure both funds and influence to push their agenda.  

But parents aren’t powerless. School choice, backed by Supreme Court precedent, is the key to breaking this monopoly. 

Gates’ chutzpah should rally every parent and citizen who values liberty. The unions’ claim over “our children,” coupled with their educational failures, violates the principle, enshrined in Pierce, that children are not the state’s property.  

Eternal vigilance is the price of liberty, and the unions will keep targeting homeschoolers, private school families, and anyone who defies their control. It’s time to unleash school choice nationwide and free families from the depraved clutches of the teachers unions once and for all.

In game theory, a “first-mover advantage” gives the opening player the power to set the rules of engagement. President Donald Trump built much of his political brand — and his Art of the Deal persona — on this idea: act big, set the tone, make others play defense. The strategy is simple: push hard up front, frame the deal, and only backtrack if necessary. It’s a tactic that can yield results in business, where individual stakes are limited and profit-and-loss signals keep players accountable.

But politics and governance aren’t business transactions. They’re repeated, dynamic games with millions of stakeholders, unclear incentives, and no bottom-line feedback. In this setting, the first-mover tactic, combined with erratic unpredictability, doesn’t create leverage — it creates dysfunction.

As Trump himself recently said on the White House lawn:

“I may do it… I may not do it. I mean, nobody knows what I’m going to do.”

That kind of uncertainty may work in a poker game — but it’s catastrophic for the economy. It undermines trust, destabilizes markets, and delays investment. And we’ve seen the consequences of this “nobody knows” governing style play out across nearly every major policy initiative — from trade and taxes to tariffs and pandemics.

Strategic Blunders in Economic Policy

Take trade policy. The United States–Mexico–Canada Agreement (USMCA) didn’t improve on NAFTA — it layered on more restrictions, mandates, and regulatory hurdles, making trade less free. It imposed stricter rules of origin, weakened investor protections, and made regional auto manufacturing more expensive. Rather than liberalizing trade, it entrenched protectionism under a new name.

Meanwhile, Trump’s tariffs are one of the largest tax increases on Americans. The Tax Foundation estimated that US tariffs imposed from 2018–2020 raised tax revenues by over $80 billion annually and increased consumer costs by an average of $1,277 per household. Retaliatory tariffs from China, the EU, and others directly harmed US exporters, especially in agriculture and manufacturing.

Even the widely publicized “Phase One” trade deal with China fell short. China failed to meet its purchase commitments, and the structural reforms promised — on intellectual property theft and forced technology transfers — never materialized. Strategic ambiguity resulted in economic underperformance.

Uncertainty Is a Tax on Growth

In economics, uncertainty acts like a tax on business decisions. Research shows that policy uncertainty reduces private investment, hiring, and innovation. The Hoover Institution noted that by 2019, Trump’s trade war and erratic regulatory threats were already slowing business investment before COVID hit.

Tax reform followed the same chaotic path. The 2017 Tax Cuts and Jobs Act (TCJA) made some positive moves — cutting the corporate tax rate from 35 percent to 21 percent, doubling the standard deduction, and improving full expensing. But it was undermined by temporary provisions and a lack of spending restraint. The Manhattan Institute found that despite strong pre-COVID growth, the Trump administration added $4.7 trillion to the national debt, including $3.9 trillion in new borrowing from legislation signed into law. 

Why? As I found while working at the White House then, sending fiscal progressives like Steven Mnuchin to negotiate massive spending bills was a mistake. At the White House Office of Management and Budget, we saw how Mnuchin consistently prioritized deal-making over fiscal discipline — resulting in bloated omnibus bills and exploding deficits.

Pandemic Panic and Government Overreach

COVID-19 response amplified these failures. What began as “15 days to slow the spread” became 15 months of federal overreach, lockdowns, and more than $5 trillion in COVID-related spending. Much of it — like enhanced unemployment benefits and state bailouts — was extended long after the emergency faded.

This was not a market correction. It was a government overreaction to previous government failures. The Congressional Budget Office reported that federal spending reached 31 percent of GDP in 2020 — exceeding even World War II levels as a share of the economy. That’s not “stimulus” — it’s control.

The Wrong Game, the Wrong Incentives

In business, unpredictability might create bargaining power. In government, it creates instability. That’s because public policy affects long-term decisions across millions of households and firms. Public choice theory explains how politicians often respond to the wrong incentives — seeking short-term wins instead of long-term outcomes.

We saw it with proposals to block Nippon Steel’s acquisition of U.S. Steel. It’s a private deal, but political posturing — under both Trump and Biden — has turned it into a nationalist spectacle. It’s great that Trump recently approved it, but not after making it politically-charged, more restrictive, and an agreement that presidents shouldn’t get involved in. Likewise, new tariffs on $18 billion in Chinese imports will raise prices, reduce output, not solve perceived trade problems, and be a drag on other pro-growth efforts by Trump.

The outcome? Higher costs. More uncertainty. Less investment. Slower growth.

The Way Forward: Economic Freedom Over Erratic Power

There’s still time to get it right. The presidency is a powerful platform — but it should be used to unleash markets, not micromanage them. That starts with credible first moves that restore fiscal sanity, reduce tax burdens, lift regulatory burdens, and build trust through policy stability.

We should learn from bold reformers like Argentina’s Javier Milei, who are shrinking government and restoring trust in free markets. In the US, we have the tools — we just lack the direction and leadership to a brighter future.

What America needs isn’t another flawed deal. It needs a direction rooted in liberty, stability, and prosperity. As I often say, let people prosper. That’s the real art of leadership.