Trump Challenges WSJ Account of Bessent Advising Against Firing Powell

Summary

Donald Trump, the 45th President of the United States, publicly disputed a July 2025 Wall Street Journal (WSJ) report that claimed Treasury Secretary Scott Bessent advised him against firing Federal Reserve Chair Jerome Powell before the end of Powell’s term in May 2026. The WSJ article, based on unnamed sources, portrayed Bessent as a moderating influence within the Trump administration who warned that removing Powell prematurely could trigger significant legal challenges, political backlash, and financial market instability. This account emerged amid mounting tensions over Powell’s leadership, including criticism of a costly $2.5 billion renovation project at the Federal Reserve headquarters, which Trump and some administration officials characterized as mismanagement warranting Powell’s dismissal.
Trump vehemently denied the WSJ’s reporting, labeling it “typically untruthful” and accusing the newspaper of fabricating the story to damage his reputation. He threatened legal action against the WSJ, its parent company NewsCorp, and its owner Rupert Murdoch, claiming the key piece of evidence—a purported letter linking Trump to Jeffrey Epstein—was fraudulent and that the paper ignored his warnings before publication. This dispute highlighted Trump’s ongoing combative relationship with major media outlets and underscored broader political controversies surrounding his administration’s approach to Federal Reserve independence and economic policy.
Internally, Bessent’s stance contrasted with other Trump officials who openly criticized Powell and advocated for his removal, including Budget Director Russell Vought, who accused Powell of misleading Congress about renovation costs. Bessent instead promoted a strategy known as the “shadow Fed chair,” suggesting the early nomination and Senate confirmation of Powell’s successor to provide forward guidance and maintain policy continuity without abrupt disruption. Despite public and private pressures, Powell remained in his position, with Bessent’s counsel seen as a key factor in deterring Trump from firing the Fed chair amid a politically charged environment.
The episode reflects deep divisions within the Trump administration over monetary policy leadership and the politicization of Federal Reserve decisions. Economists and analysts warned that attempts to remove Powell could undermine market confidence and threaten the Fed’s independence, signaling a shift toward “fiscal dominance” where political considerations increasingly influence central banking. The controversy also intertwined with ongoing legal and political battles involving Trump, particularly concerning allegations related to Jeffrey Epstein, amplifying scrutiny of his administration’s governance and media relations.

Background

Scott Bessent, an economic advisor and major donor to Donald Trump’s 2024 presidential campaign, was nominated by President-elect Trump as Treasury Secretary and confirmed by the Senate in January 2025. During the campaign and early Trump administration, Bessent emerged as a notable voice advocating for continuity in Federal Reserve leadership, particularly concerning Jerome Powell’s role as Fed chair. Bessent proposed a unique succession strategy involving the early nomination and Senate confirmation of Powell’s replacement well over a year before Powell’s term ended in May 2026, a concept referred to as the “shadow Fed chair” to provide forward guidance while Powell managed current policies.
This stance marked a departure from other top Trump officials who had publicly criticized Powell for his reluctance to cut interest rates and perceived mismanagement of Federal Reserve actions. Despite persistent speculation and pressure within the administration about possibly firing Powell, Trump publicly denied plans to do so multiple times, including after reports surfaced suggesting Bessent had advised against such a move. Powell’s term officially expires in 2026, though he may remain on the Board of Governors until 2028 if he chooses.
The tension around Powell’s position intensified amidst broader political controversies facing Trump, including disputes over files related to Jeffrey Epstein and administration criticisms of Federal Reserve projects. Bessent’s counsel, which reportedly included warnings about legal, political, and economic fallout from firing Powell, contrasted with more aggressive rhetoric from other Trump officials, adding complexity to the administration’s stance on monetary policy leadership.

The Wall Street Journal Report in Detail

In July 2025, The Wall Street Journal (WSJ) published a report detailing Treasury Secretary Scott Bessent’s counsel to President Donald Trump against firing Federal Reserve Chair Jerome Powell before the completion of his term in May 2026. According to unnamed sources cited by the WSJ, Bessent warned Trump about the significant legal, political, and financial consequences that such a dismissal could trigger, cautioning that removing Powell prematurely could destabilize financial markets and adversely affect economic confidence. The article depicted Bessent as a moderating voice within the administration, advocating for a cautious approach amid increasing criticism of Powell from Trump and other White House officials.
The report also emerged amid escalating tensions surrounding Powell’s management of a costly $2.5 billion renovation project for the Federal Reserve’s Washington headquarters. Trump and his allies had publicly accused Powell of mismanaging the project, which reportedly exceeded its budget by $700 million. Despite these criticisms, the WSJ article suggested that Bessent argued against firing Powell based on broader market implications rather than the renovation controversy alone. The notion of firing a Fed chair is legally untested, as federal law stipulates that the chair may only be removed “for cause,” making Bessent’s warning particularly salient.
In response to the WSJ story, Trump vehemently denied the account, labeling it “typically untruthful” and asserting that no one needed to explain to him why firing Powell would be detrimental to the markets. Trump also accused the WSJ of running a “false, malicious, and defamatory story” and stated that both he and White House Press Secretary Karoline Leavitt had warned WSJ editor Emma Tucker that the letter linking Trump to Jeffrey Epstein—another focus of the WSJ’s recent reporting—was fabricated, but that the paper ignored these denials and proceeded with publication. Trump’s pushback included threats of litigation against the WSJ and its owner, Rupert Murdoch, accusing the paper of publishing fabricated material and calling it a “pile of garbage newspaper”.
Beyond the immediate dispute, the WSJ report highlighted Bessent’s broader role in shaping economic policy within the Trump administration. Bessent reportedly advised on alternatives to firing Powell, including the proposal of nominating and confirming a successor well in advance of Powell’s term expiration, a strategy dubbed the “shadow Fed chair.” This approach aimed to provide forward guidance to markets while maintaining continuity in Fed policymaking. Bessent’s position contrasted with other Trump allies who had intensified their criticisms of Powell in recent weeks.

Trump’s Public Response and Denial

Following the Wall Street Journal’s report linking Donald Trump to a controversial letter addressed to Jeffrey Epstein, Trump launched a vehement public denial and legal challenge against the newspaper and its affiliates. Prior to the article’s publication, Trump reportedly made extensive efforts to prevent the story from being printed, including direct pressure on the Journal’s editor-in-chief, Emma Tucker, and Rupert Murdoch, the paper’s owner. Trump claimed the story was a hoax and threatened to sue if it was published.
After the article was released, Trump doubled down on his denial through multiple posts on his social media platform, Truth Social. He described the key piece of evidence—a letter purportedly written by him to Epstein, featuring a lewd drawing—as fake, insisting that neither the words nor the handwriting were his. Trump asserted that both he and White House press secretary Karoline Leavitt had informed the Journal’s editor that the letter was fraudulent, but that the paper chose to proceed with what he called a “false, malicious, and defamatory story”. Trump called the Wall Street Journal a “pile of garbage newspaper” and specifically named Rupert Murdoch as a target of his legal action, reiterating his intent to sue.
On the legal front, Trump filed an $10 billion defamation lawsuit in the Southern District Court of Florida against the Wall Street Journal, its parent company NewsCorp, Rupert Murdoch, CEO Robert Thomson, and the reporters behind the story. The complaint accused the Journal of fabricating the story to damage Trump’s character and integrity by portraying him in a false light. In his Truth Social posts, Trump framed the lawsuit as not only a defense of himself but also a stand against what he termed the “Fake News Media” and their abusive practices toward the American public.
Simultaneously, Trump ordered the Justice Department to seek the public release of grand jury transcripts related to the Epstein sex-trafficking case, citing “extensive public interest” and the “ridiculous amount of publicity” the matter had garnered. DOJ officials filed motions to unseal federal court transcripts from the investigations into Epstein and Ghislane Maxwell, who was convicted of sex trafficking in 2021. This directive was seen as part of Trump’s broader effort to control the narrative amid growing political uproar over the Epstein case.
Despite mounting political pressure and accusations from some supporters that certain officials mishandled the release of Epstein-related documents, Trump maintained his denials and legal posture, continuing to characterize the Wall Street Journal’s reporting as baseless and defamatory. The episode exemplified Trump’s ongoing combative relationship with major news outlets and his strategic use of social media to mobilize his base and challenge unfavorable coverage.

Internal Administration Dynamics and Other Advisors’ Positions

Within the Trump administration, there were significant internal divisions regarding the potential firing of Federal Reserve Chair Jerome Powell. While some officials, such as Office of Management and Budget Director Russell Vought, publicly criticized Powell—alleging he misled Congress about the costly $2.5 billion renovation of the Federal Reserve’s headquarters—others exerted considerable influence to prevent his removal. Vought’s attacks contributed to a broader administration effort targeting Powell’s leadership, especially focusing on the renovation project’s budget overruns.
In contrast, Treasury Secretary Scott Bessent played a pivotal behind-the-scenes role in dissuading President Trump from firing Powell. According to multiple reports, Bessent warned the president of the legal, political, and economic consequences that could arise from removing Powell before his term ended in May 2026. His counsel reportedly emphasized that firing Powell would create market instability and complex legal challenges, a position that contrasted with the more confrontational stances of other administration members. Bessent’s intervention was instrumental in maintaining Powell’s position despite mounting pressure, marking a notable departure from the increasingly vocal criticism Powell faced elsewhere within the administration.
Despite Bessent’s efforts, the atmosphere within the White House remained fraught with tension. President Trump publicly expressed frustration with Powell’s reluctance to cut interest rates amid ongoing market turmoil and trade conflicts, once stating that Powell’s “termination cannot come fast enough”. Nevertheless, Trump simultaneously conveyed ambivalence about actually firing the Fed chair, publicly stating that he did not intend to remove Powell despite ongoing calls for his resignation before the end of his term.
Other officials privately acknowledged the uncertainty surrounding the viability of using the renovation project as legal grounds for firing Powell, with some cautioning that such a strategy might not hold up in court. This internal discord reflected broader debates about the balance of economic policy control and the implications of what some economists termed “fiscal dominance,” where the Federal Reserve holds wide discretion amid executive branch pressures.

Economic and Political Implications

The controversy surrounding the potential firing of Federal Reserve Chair Jerome Powell by former President Donald Trump sparked significant economic and political debates. Trump’s public assertion that he could remove Powell “real fast” created unease in financial markets, raising concerns about the politicization of monetary policy decisions traditionally insulated from direct political influence. Market analysts warned that such actions could introduce volatility, as investors might struggle to determine which Fed leader would wield actual influence over the Federal Open Market Committee’s decisions, thereby unsettling market expectations and stability.
Scott Bessent, an economic advisor with ties to the Trump administration, reportedly counseled Trump against firing Powell, highlighting several critical obstacles. These included the legal challenges Powell could mount if removed before his term ended, which might result in protracted litigation and further economic uncertainty. Bessent also emphasized the potential negative impact on market confidence and the economy, arguing that maintaining stability should be a priority. He suggested that Powell consider stepping down voluntarily at the end of his chairmanship to preserve market clarity and avoid confusion about the Fed’s leadership.
Politically, the episode underscored tensions between the Trump administration and the Federal Reserve. Trump and his allies publicly criticized Powell’s management of a costly $2.5 billion renovation project for Fed headquarters, framing the budget overruns as a “fireable offence” and using the issue as part of broader efforts to discredit the Fed chair. Administration officials, including Budget Director Russell Vought, accused Powell of misleading Congress regarding the project’s costs, intensifying the political pressure on the Fed leadership.
Economists across the political spectrum characterized these developments as indicative of “fiscal dominance,” where rising public debt and political considerations increasingly influence monetary policy decisions, potentially undermining the Federal Reserve’s independence. The interplay between Trump’s fiscal policies, such as the $3.3 trillion tax-and-spending bill, and his public disputes with the Fed suggested a shift in economic governance dynamics, with growing risks that monetary policy could be subordinated to short-term political objectives.

Timeline of Key Events

In response to a Wall Street Journal (WSJ) report alleging that former President Donald Trump contributed a lewd letter featuring a sketch of a naked woman to Jeffrey Epstein’s 50th birthday album, Trump vehemently denied the claims and labeled the letter a fake. Trump publicly threatened to sue the WSJ and its parent company, NewsCorp, as well as Rupert Murdoch, the company’s chairman, over the publication of the story. He reiterated his denial and threat of legal action on his social media platform, Truth Social, accusing the WSJ of publishing defamatory and false information despite his warnings.
The controversy around the letter occurred amid wider political tensions involving Trump’s criticisms of Federal Reserve Chair Jerome Powell. Trump was reported to have shown a draft letter of Powell’s firing during a meeting with House Republicans, signaling his dissatisfaction and intent to remove Powell, though it remained unclear if he would follow through with the threat. This tension was further amplified by administration officials publicly criticizing the Federal Reserve’s handling of a multibillion-dollar renovation project, accusations Powell denied.
Scott Bessent, a senior advisor to Trump, diverged from the public criticism of Powell, warning of possible legal, political, and economic consequences if Powell were fired, marking a departure from the stance of other Trump administration officials. Bessent’s cautionary position highlighted internal divisions within the administration concerning the Federal Reserve leadership and Trump’s potential moves against Powell.
The timeline reflects a period of escalating conflict both between Trump and the WSJ over the Epstein-related letter and within the Trump administration regarding the future of Federal Reserve Chair Jerome Powell. The legal battle over the alleged letter and the political maneuvering around Powell’s position overlapped, intensifying scrutiny of Trump’s actions and statements in both arenas.

Media Coverage and Public Perception

The media coverage surrounding President Donald Trump’s conflict with the Wall Street Journal (WSJ) intensified as Trump publicly challenged the newspaper’s reporting on Scott Bessent’s advice against firing Federal Reserve Chair Jerome Powell. Prior to the WSJ’s publication, Trump reportedly exerted considerable pressure on the paper’s top editor, Emma Tucker, and even Rupert Murdoch, the controlling figure on the WSJ’s business side, asserting that the story was fabricated and threatening legal action if it was published. Following the article’s release, Trump reiterated on his social media platform, Truth Social, that the key letter cited in the report was “FAKE” and described the WSJ as a “pile of garbage newspaper,” warning that he would sue both the paper and Murdoch personally.
Trump’s vehement public denouncement of the WSJ reflected a broader pattern of clashes with the newspaper over its coverage of his administration and policies. Despite the president and White House press secretary Karoline Leavitt informing WSJ editor-in-chief Emma Tucker that the purported letter was false, the paper proceeded with the story, which Trump labeled as “false, malicious, and defamatory”.
The story and subsequent dispute attracted attention not only for its political implications but also for its potential impact on public confidence in financial markets. Ed Yardeni, president of Yardeni Research, noted that the controversy could generate significant market noise by creating

Subsequent Developments

Following the initial reports regarding Scott Bessent’s suggestions about Federal Reserve Chair Jerome Powell’s potential departure, several significant developments emerged. Ed Yardeni, president of Yardeni Research, highlighted that the discourse around Powell’s replacement would likely generate considerable market volatility, as investors might grapple with assessing the influence of both the current and prospective Fed chairs on the Federal Open Market Committee’s decisions. Bessent himself further advocated on “Bloomberg Surveillance” that Powell should fully step down from the Federal Reserve once his term as chair concludes, emphasizing that such a move would prevent market confusion and uphold stability. He noted that it has been traditional for the Fed chair to also resign as a governor.
Meanwhile, tensions between the Trump administration and Powell escalated amid accusations of mismanagement related to a multibillion-dollar renovation of Federal Reserve headquarters in Washington, D.C. The administration, including Budget Director Russell Vought, publicly called for investigations into cost overruns and suggested that Powell may have misled Congress about the project’s expenses. President Trump echoed these concerns, describing the situation as a potential “fireable offence”. Despite these attacks, Powell refuted claims of mismanagement, describing some accounts of the renovation as “misleading and inaccurate” during Senate testimony.
These disputes unfolded within a broader context of political and economic friction. The Trump administration reportedly explored the possibility of a for-cause firing of Powell, although no formal legal grounds had been established at that time. Economists across the political spectrum criticized the ongoing ad hoc adjustments to monetary policy influenced by the administration’s actions and the resulting pressures on the Fed, characterizing the situation as an instance of “fiscal dominance,” where a single entity exerts substantial control over economic policy.
Powell’s stance during this period included signaling that the Federal Reserve would maintain its key interest rate amidst uncertainties regarding the effects of policies on immigration, taxation, regulation, and tariffs. He also reiterated that Trump’s tariffs were likely to increase inflation and slow economic growth, complicating the Fed’s ability to reduce rates in the near term. These developments underscored the complex interplay between political pressures and monetary policy decision-making during the final phase of Powell’s chairmanship.

The content is provided by Blake Sterling, 11 Minute Read