Office of Management and Budget Director Russ Vought launched a scathing attack on Federal Reserve Chair Jerome Powell on Thursday, accusing him of gross fiscal mismanagement over cost overruns on the Fed’s headquarters renovation project.
What Happened: The renovation costs have ballooned to $2.5 billion, roughly $700 million over initial estimates, according to Vought’s letter to Powell. The project includes terrace rooftop gardens, water features, VIP elevators, and premium marble fixtures at $1,923 per square foot—double the cost of renovating ordinary federal buildings.
“The Palace of Versailles would have cost $3 billion in today’s dollars,” Vought wrote on X, highlighting the project’s extravagant scope.
The controversy centers on apparent contradictions between Powell’s June 25 Senate Banking Committee testimony and the original renovation plans approved by the National Capital Planning Commission in September 2021. Powell testified there were “no VIP dining rooms” and “no new marble,” claiming inflammatory media reports were inaccurate.
However, Vought’s letter references specific pages in the NCPC-approved plans detailing private dining rooms, marble features, and elevator extensions that directly contradict Powell’s testimony. The project allocates 512 square feet per employee, significantly exceeding OMB’s recommended 150 square feet.
Why It Matters: The timing compounds political tensions as President Donald Trump continues pressuring Powell to slash interest rates by 3 percentage points. Trump has repeatedly called for Powell’s resignation, dubbing him “Too Late” for maintaining the federal funds rate at 4.25%-4.5%.
The Fed has maintained elevated rates partly due to uncertainty over Trump’s tariff policies, with “uncertainty” appearing 28 times in the June meeting minutes. Powell acknowledged that tariffs deterred the Fed from easing monetary policy this year.
Vought demanded Powell respond within seven business days, raising questions about potential National Capital Planning Act violations if construction proceeded without proper approvals for plan changes.
The controversy adds fuel to Trump’s campaign to replace Powell when his term expires in May 2026, with Treasury Secretary Scott Bessent suggesting a replacement could be nominated as early as October.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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