Chapter 1: What recent comments did Trump make about affordability?
President Trump has taken flak recently for not appearing to get that Americans think life is too expensive. At a rally in Pennsylvania on Tuesday that was supposed to be about the economy, he made fun of Joe Biden.
What state? What state is it? It's Pennsylvania.
Oh. He ranted about immigration. He reminisced. He returned to old chestnuts.
You don't need $37 for your daughter. Two or three is nice.
But he offered little in the way of acknowledgement. They say... Affordability.
And everyone says, oh, that must mean Trump has high prices. No, our prices are coming down tremendously.
When he's not denying the problem, Trump is often pinning the blame on his favorite target, the Federal Reserve, for not cutting interest rates. Trump has always dismissed technocrats. In his second term, he's relying more on instincts than experts. And it is starting to damage his presidency. That's coming up on Today Explained.
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Chapter 2: How is Trump pressuring the Federal Reserve regarding interest rates?
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Today Explained. Today Explained. Today Explained.
I'm Neil Irwin. I'm the chief economic correspondent at Axios.
Yesterday, before the Fed made its decision on interest rates, it seemed like a lot of people were watching very carefully, including people who are not normally interested in, particularly interested in what the Fed does. What were the stakes yesterday?
question has been, how much do you cut interest rates? You know, the Fed, when inflation was roaring, they raised interest rates a lot, up to almost 5.5%. And then they've been kind of steadily bringing them back down.
And what we have is this moment where there's still high inflation, there's tariffs coming through the system, the economy looks a little shaky, the job market looks a little shaky. The president is hammering the Fed every other day to cut rates, cut rates, cut rates. And the challenge for Jay Powell and the Federal Reserve is, do we do it? Do we do a third interest rate cut this year?
And does that give consumers and businesses some relief from these high interest rates of the last few years?
All right. So tell me what the Fed did yesterday and why you think they did it. Good afternoon.
My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people.
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Chapter 3: What were the stakes of the recent Federal Reserve meeting?
And so we've got lots of good news to report to the American people.
He's worked at think tanks and kind of conservative policy circles. So he's a credible candidate for this job. This is not some complete crank. At the same time, he is somebody who has become very political and has really made it his centerpiece of his job in the last 10 months to be somebody who's out there speaking on behalf of, defending, arguing on behalf of the president.
in a way that he is more politically intertwined with the president than we've seen in recent Fed chair appointments.
What are the stakes of having a Fed chair who's very loyal to the president, to a president like Trump?
So the real question is, you know, the Fed is set up to have all these levels of independence. So the governors are appointed for 14-year terms. They cut across presidential administrations. The Reserve Bank presidents around the country have their own weird selection process through which they're selected. So it's meant to be insulated from day-to-day politics.
The question is, would Kevin Hassett or whoever ends up being the next Fed chair be more directly responsive to what the White House wants, what the president wants, than has been the modern norm? And where that rubber hits the road is, let's say we have an inflation problem a year or two from now.
Does Fed Chair Hassett or whoever ends up in that job, are they willing to do what it takes to raise interest rates to try and bring inflation down the way the Fed did in 2022, the way the Fed did in the early 1980s? And that's something that no president wants to see. They don't want to see higher interest rates. They don't want to see the economy kind of choked off by the Fed.
At the same time, the reason the Fed has this independence is so that they will be willing to do that, to do whatever it takes to keep inflation in check. Will a Chair Hassett or whoever it ends up being be willing to do that.
Will he or won't he? We're going to keep our third eye open. Neil Irwin is the chief economics correspondent for Axios. Coming up, why American presidents don't listen to economists anymore.
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Chapter 4: What decision did the Federal Reserve make about interest rates?
What produces it is too much government spending and too much government creation of money and nothing else.
So the neoliberals seem to really have cracked the code for a while.
Money.
Politicians in both parties really did kind of gravitate towards this analysis, which seemed to be effective to many in producing economic prosperity throughout, you know, the Reagan administration.
When I sign this bill into law, America will have the lowest marginal tax rates and the most modern tax code among major industrialized nations.
The Clinton administration.
In a few moments, I will sign the North American Free Trade Act into law. NAFTA will tear down trade barriers between our three nations.
The beginning of George W. Bush's administration.
I think we ought to focus our efforts on three great forces for economic growth. Free markets, free trade. and free people.
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Chapter 5: Who are the dissenters in the Federal Reserve's recent decision?
Often, politics or the demands of interest groups kind of came first, and there wasn't really the same elevation of... wonky economic debates among economists.
There have always been jokes about economists, things like these are people who can be wrong half the time and still keep their jobs. Like the skepticism is nothing new. And in a lot of ways that, you know, fair points have been made about what economists actually bring to the table. But here we are in 2025, and we've got a crisis of affordability.
We've got interest rates that are a lot higher than most people would like. We've got inflation that's higher than a lot of people would like. Do you think what this year and this time is proving is that the economists actually were the ones holding us back from the brink in some sense?
Yeah, it's really interesting. In the 2010s, there was the left critics and the right critics of economists. But now people are positively nostalgic for the economy of the late 2010s. Of course, what then happened was the pandemic, inflation, war in Ukraine, producing a new series of problems in the 2020s. And the economists argue that, you know, if...
if people had listened to us a little more, if Joe Biden had listened to us when we were warning about inflation in early 2021, then perhaps we wouldn't have sunk to this pretty bad place where the public is just absolutely furious about affordability and high prices that wrecked Biden's popularity, wrecked Democrats' 2024 chances, and now are imperiling Trump's own popularity as well.
The problem is that now that we are in 2025 and facing the problems of 2025, economists don't really have a consensus quick fix to the mess that we're in. You know, they don't really have a superior quick fix alternative they're proposing. And if they don't, then the political system is going to turn to the people who are offering those quick fixes.
That was Vox's Andrew Prokop. Miles Bryan and Dustin DeSoto produced today's show. Jolie Myers is our editor. Laura Bullard checked the facts and Patrick Boyd engineered. The rest of our team, Hadi Mouagdi, Amina El-Sadi, Danielle Hewitt, Kelly Wessinger, Ariana Espudo, David Tatasciore, Peter Balanon-Rosen, Avishai Artsy, Miranda Kennedy, Ested Herndon, and Sean Ramosferm.
We use music by Breakmaster Cylinder. I'm Noelle King. Today Explained is distributed by WNYC. The show is a part of the Vox Media Podcast Network, podcast.voxmedia.com. You can listen ad-free by joining our membership program, vox.com slash members to join.
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