The tension between former President Donald Trump and Federal Reserve Chair Jerome Powell has reignited, following the Fed’s recent decision to hold interest rates steady. President Trump stated again that he might consider firing Powell, something he had previously ruled out. With unemployment still low and output not yet showing signs of contraction, the Fed has judged that the current policy stance is appropriate. Inflation, while lower than its peak, remains above target, leaving little room for interest rate cuts without risking renewed price pressures. Yet Trump prefers a lower interest rate, a policy that might, in the short run, counteract his policy on tariffs.

Trump’s push for lower interest rates creates economic and institutional problems. The first is macroeconomic. By lowering rates in the face of still-stubborn inflation, the Fed risks undoing the fragile progress made since the post-pandemic surge in prices. While lower rates could offer some short-term relief from the economic drag caused by trade tensions and the recent spike in tariffs — many of Trump’s own making — they would do so at the risk of future inflationary pressure. That’s a dangerous trade-off. Monetary easing in a context of persistent inflation is more likely to produce stagflation than sustainable growth.

The second problem is institutional, which is arguably more damaging in the long run. Political interference in monetary policy compromises the independence and credibility of the central bank. The Fed’s legitimacy rests on its ability to act according to economic data, not political pressure. If monetary policymakers can be cajoled into taking actions that align with electoral timelines or partisan agendas, the public will likely expect higher inflation. That would put the Fed in a difficult position: deliver the higher inflation expected by the public or risk a recession. 

Two historical precedents underscore the importance of central bank independence in very different ways. Fed Chair Arthur Burns gave in to President Nixon’s pressure campaign: he lowered interest rates ahead of the 1972 election, when doing so was unwarranted by the economic data, contributing to the high inflation of the 1970s. Fed Chair Paul Volcker refused to give in to pressure from President Reagan, who wanted the Fed chair to commit to not raise rates ahead of the 1984 election. Volcker was not planning to raise rates any further at the time, but refused to commit nonetheless. Volcker’s approach helped restore price stability and solidified the Fed’s reputation for independence. That legacy is now at risk.

President Trump’s calls for the Fed to cut rates risks undermining the institution, regardless of how the Fed responds. If the Fed were to cut rates today, the public might view the decision as a capitulation to political demands. If the Fed refuses to cut rates, as it has done since December 2024, the public might wonder whether the decision was at least partially driven by Fed officials’ desire to avoid the perception of yielding to political pressure. In either case, therefore, the public might come to believe the Fed is responding to political factors rather than economic data. Hence, the integrity of monetary policy suffers either way.

Credibility is hard earned and easily lost. That credibility is especially important in the international context. As the issuer of the world’s primary reserve currency, the U.S. dollar’s value depends not only on the economic fundamentals in the United States, but also on the belief that the Fed will conduct policy in accordance with the economic fundamentals. Political meddling undermines that belief. A politicized central bank is one that foreign investors and trading partners may learn to doubt. Additionally, it can have a negative impact on the US Treasury’s international market.With signs of disagreement emerging within the Fed’s Board of Governors on whether to pivot toward rate cuts later this year, the institution finds itself in a difficult position. Even if the eventual decision is economically justified, it risks being interpreted through a political lens. It is also likely that the Trump administration will publicly claim a victory over the Fed when cuts eventually begin, encouraging the political interpretation. In sum, the damage is already done: not necessarily to inflation or employment, but to the foundational principle of sound money itself.

On May 1, 2025, President Donald Trump signed an executive order instructing the Corporation for Public Broadcasting (CPB) and all executive departments and agencies to cease federal funding for National Public Radio (NPR) and the Public Broadcasting Service (PBS). (The administration seeks to rescind $1 billion in CPB funding). 

The two broadcasters, said the order, still “receive taxpayer funds,” but the situation has changed drastically. Since 1967, when the CPB was created, the media landscape has become “filled with abundant, diverse, and innovative news options.  Government funding of news media in this environment is not only outdated and unnecessary but corrosive to the appearance of journalistic independence.” 

The order unnecessarily charged both broadcasters with bias: “…Americans have the right to expect that if their tax dollars fund public broadcasting at all, they fund only fair, accurate, unbiased, and nonpartisan news coverage…” And “CPB’s governing statute requires “principles of impartiality.”  The CPB may not “contribute to or otherwise support any political party…. The CPB fails to abide by these principles to the extent it subsidizes NPR and PBS.”  

PBS and NPR reacted with predictable outrage, claiming the action was illegal, and the left-liberal media at large rallied to the icon of “non-commercial” programming in “the public interest” — all hoary premises of a soft socialism deemed inherently superior to the commercial world of profits. 

It is decades overdue. President Trump has not merely shifted a budgetary line item. He has struck a major blow against a deep-rooted violation of America’s constitutional and cultural principles — the idea that the government should “establish” its own television and radio stations not the “captive” of private, commercial interests. 

We scarcely could have hoped for this moment, one that strips away the illusion, cherished since the late 1960s, that in a free country with a free press, government can somehow act as a neutral arbiter of public information. But any claim to act “in the public interest” always means to advance the interests of some against the interests of others. In short: interest-group politics. 

Birth of a Constitutional Contradiction 

In the 1960s, with television still relatively new, with only three major television networks— ABC, CBS, and NBC — advocates claimed that the private, commercial media landscape could not adequately serve the public. News had become commercialized. Educational programming was spotty (the commercial stations had declined the Children’s Television Workshop series, “Sesame Street”). Journalism, they argued, needed a “public” alternative, unsullied by the profit motive. It was pure anti-capitalism. 

One must be a New Yorker of the baby boom generation to fully comprehend the reverence for PBS. We always knew what our kids would be doing when “Mr. Rogers’ Neighborhood” was on, then “Sesame Street”: sitting in front of the TV. Then, “Nature” virtually introduced us and our kids to the nature documentary genre, until it became a routine on TV.  And then, great original drama — not “soaps” but literary — “Masterpiece Theatre” and “Great Performances” — stuff we used to see only on Broadway, at Lincoln Center, or on London’s West End. The generation I am talking about here offered big support to Trump in 2024, but postmortems on the election make it clear this was not the bicoastal, urban intelligentsia who grew up having an affair with “PBS NewsHour” and “NOVA.” 

It is an uphill battle to convince the typical welfare-state liberal that the quality of PBS programming, in a very real sense “highbrow”  — educational, literary, scientific, with no commercials — does not in itself justify a government-subsidized broadcaster. What PBS’s record does show is that such programming does have a lasting audience — as demonstrated by PBS’s fundraising successes.  

But how can the government, forbidden to “establish” a church or to censor speech, presume to establish a taxpayer-supported broadcasting system? This system, unsurprisingly, soon became the voice of the political establishment, offering a consistent narrative in favor of more government action, government programs, and government solutions. 

In his executive order, President Trump weakened his argument from principle, even implying that in some circumstances the government may legitimately control the media. To revert to the passage quoted earlier: Government funding of news media in this environment is …not only outdated and unnecessary…” Then the return to principle: “…but corrosive to the appearance of journalistic independence.” 

The “pragmatic” argument is true but irrelevant. Yes, today there are hundreds of cable channels, thousands of podcasts, streaming platforms, independent radio stations, digital news outlets, and citizen journalism initiatives. The “public interest” is never singular; it is nothing more than the many interests of individuals. But the practical argument invites rejoinders about what is still missing, even today, and the media immediately said, for example, “access to education” would be weakened. It is much harder to argue with the principle that government never had a legitimate role in favoring one news source over another. If anything, federal funding of one set of media institutions in this environment creates the appearance — and often the reality — of favoritism, institutional bias, and dependence. Public broadcasting has, predictably, evolved into a haven of government advocacy, portraying private profit-making enterprises with suspicion while celebrating the expansion of public programs and regulation. 

The issue is freedom: free minds, free judgments, freely expressed opinions, and freedom in interpreting and reporting events. Freedom means no government supervision, no subsidies, and no anointed “public” channels. 

Media Sacred Cows Are Constitutional 

PBS and NPR are readying lawsuits even as they invoke the public affection for “Big Bird” and Ken Burns documentaries. (In fact, Mr. Burns created a documentary with the catastrophic effect of advancing the “exoneration” of the infamous Central Park 5.)  All right, but, in 2023, the Media Research Center found that while PBS journalists referred to politicians as “far right” 162 times in 18 months, they labeled politicians as “far left” only six times. 

President Trump refuses to allow the federal government to act as the grand editor-in-chief. He has rejected the paternalistic assumption that without federal funding, the American people will be left ignorant, uncultured, or misled. 

Matters of principle aside, being cut off from federal funds will not silence PBS and NPR and their viewpoints or destroy beloved programs. Sesame Street, Ken Burns, and countless others have proven that philanthropic, corporate, and viewer support can and will sustain what the public truly values. (More than 40 million Americans listen to NPR public radio each week, and 36 million watch a local television station from the PBS network each month, according to their estimates.) PBS CEO Paula Berger said government funding of PBS “…amounts to about $1.60 per person a year [half a billion dollars]…When the Public Broadcasting Act was signed back in the late ’60s, it was envisioned that public broadcasting would be a public-private partnership. 

“This is different than many other public broadcasters around the world, which are state-supported. We are not. About 15 percent…of the budget for public broadcasting comes from the federal government. The rest of it comes from contributed money from viewers like you.” 

Oh, But the BBC Works So Well! 

From the start, advocates of the CPB cited the British Broadcasting Corporation (BBC), founded in 1922, as a model. But it is a model of a successful government media “establishment.” It led the way in exemplifying how government-funded media reflects the ideological leanings of the political and cultural class that sponsors them. For decades, British conservatives have accused the BBC of liberal-left bias — reflexive hostility to Brexit, nationalism, and traditional values. In 2020, a report commissioned by the BBC itself, The Future of Public Service Broadcasting, warned that the corporation risked losing public trust because it no longer reflected “a broad spectrum of opinion” and failed to represent “the whole UK.” This is a phony “self-criticism.” No broadcaster can represent the perspective of the whole country; and if it has no perspective, it is dull. The real criticism is that tax-dollars are sponsoring a particular political perspective. 

A year earlier, former BBC journalist Robin Aitken, in The Noble Liar, chronicled the BBC’s systematic marginalizing of conservative perspectives and viewed traditional British institutions — like the monarchy, the Church of England, and capitalism — with reflexive skepticism or disdain. A former BBC director-general, Mark Thompson, conceded that the corporation had suffered from a “liberal bias” in its earlier years. 

The BBC’s dominance is backed by law. Any household or organization watching or recording television transmissions at the same time they are being broadcast is required by law to hold a television license. This applies regardless of the transmission method and is used to raise revenue to fund the BBC’s $8 billion annual budget. This has made it a gatekeeper of British culture and politics, a state-backed media behemoth that as polished and professional though it may be, distorts the marketplace of ideas by crowding out dissent and entrenching a consensus set by cultural elites. For the United States, where the First Amendment forbids government establishment of favored ideas or institutions in public discourse, the BBC is not a model but a cautionary tale. Americans should not aspire to replicate a system where government-backed journalism becomes indistinguishable from official ideology. 

An Assertion of Principle — At Last? 

Of course, the architects of the CPB knew that they must evade the First Amendment. Thus, Congress structured and funded the CPB as a “private nonprofit corporation” wholly independent of the federal government. It forbade “any department, agency, officer, or employee of the United States to exercise any direction, supervision, or control over educational television or radio broadcasting.” 

“Wholly independent”  — except for funding. Government cannot spend tax dollars decade after decade and disclaim responsibility for the quality of what they buy. Or rather, it can disclaim responsibility only as long as criticism remains muted. Executives of public television and radio know that. They know, too, that the government still holds the purse strings and that their future depends upon keeping the politicians happy. 

So, will much change? Can we expect that government returns to a constitutional role well known all along, even by the advocates of public funding  — protecting freedom of speech, not subsidizing one source of speech? No media outlet should be “the elect” of Washington. No broadcaster should be elevated as the official voice of “the public.” In a free country, the people, through millions of choices made freely, determine what interests them, educates them, and inspires them. For a significant segment, it is PBS and NPR. 

That makes Trump’s decision to end taxpayer support for government media far more than a budget cut. It is a philosophical reassertion of freedom. So, relax. PBS and NPR will survive and thrive. This may be the best boost in years to their funding campaigns. The media landscape is vast. The First Amendment is vibrant. And we have a president who seems, at least this time, to have remembered government’s role in the realms of information, ideas, opinions, artistic judgments, and entertainment: Get out of the way.