George Bernard Shaw quipped that if you lined up every economist, they would never reach a conclusion. Pshaw has always been my response to this. In August Donald Trump decisively proved Shaw wrong. He fired Erika McEntarfer, Commissioner of the Bureau of Labor Statistics, and claimed to fire (its legality is being litigated) Federal Reserve Governor Lisa Cook. The outcry from economists was nearly unanimous in both cases.
While agreeing with my colleagues that these actions will hurt the US economy, I worry most about the consequences of these firings for Social Security, the most successful of all US government programs. The first firing threatens annual Social Security benefit hikes; the second threatens to increase US inflation. Together these will substantially reduce the purchasing power of Social Security checks for all Americans.
The Bureau of Labor Statistics (BLS) compiles nonpartisan data on employment and unemployment, inflation, and wages. These numbers provide information about how the economy is doing and how people are doing (wage growth should exceed inflation). Businesses and policymakers rely on BLS figures to make decisions; voters need them to hold politicians accountable for a bad economy.
Trump fired McEntarfer on August 1 after release of the BLS July jobs report, which revised down estimates of job growth in May and June by 258,000. What looked like a healthy labor market suddenly appeared weak. Trump claimed the BLS cooked the books to make him look bad, and that this was a political act. He provided no evidence for his claim. Revising employment data is standard operating procedure and the BLS Commissioner can’t revise numbers. A computer algorithm is the guilty party. As far as I know that algorithm is still employed.
This does not mean data cannot be manipulated for political ends. Trump nominated E.J. Antoni of the Heritage Foundation (where he contributed to Project 2025) to run the BLS, calling him “competent” and “qualified”—unusually faint praise from Trump. Economists at conservative think tanks called him “eminently unqualified.” Antoni wants to end Social Security and has criticized BLS data despite having little experience with data or statistics. Mazie Chin, a University of Wisconsin economist, found quantitative errors in his dissertation and could not replicate its empirical results. They were likely fabricated. As BLS head Antoni would be Trump’s Sharpie, making up numbers to please the President. Fortunately, bi-partisan opposition to Antoni was so great that the President withdrew his nomination at the end of September.
Still, I am only moderately worried about unreliable BLS data. Good alternatives already exist. Data from payroll processing companies can provide good estimates of employment; surveys of purchasing managers give us a good measure of inflation. Even better alternative measures are surely coming.
More disconcerting is the threat to Social Security, where benefits rise each January based on the official inflation rate over the previous year. This ensures that beneficiaries can buy the same goods and services from year to year with their checks. However, if prices rise 5%, while the BLS says they went up 3%, Social Security checks will be able to purchase 2% less. Annual losses will quickly add up. Every decade each person’s Social Security check will lose around 20% of its purchasing power. When Social Security recipients are in their 90s, their check will be able to buy only half of what it could purchase initially.
The central bank presents another headache for Trump because of its tradition of independence, including 14-year terms for Fed Governors. Trump bullied Fed Chair Jerome Powell to lower rates or resign, calling him “TOO LATE Powell” and then threatening to prosecute him due to the high cost of renovating Fed headquarters in Washington, DC. When Powell held firm, Trump move on to Lisa Cook, accusing her of mortgage fraud. We seem to have a hostile takeover of the Fed in the making.
Central banks around the world have the job of controlling inflation. Even in the US, where the Fed must also deal with high unemployment, they mainly focus on inflation. The Fed has an inflation target (2%) but no unemployment target. This has come about by default. Elected officials can’t seem to deal with inflation because the fiscal remedy (increasing taxes, cutting government spending, or both) will likely cost them their jobs.
Already Trump 2.0 has put added pressure on prices. His tariffs are a sales tax that raise prices for consumers. His tax bill gives the wealthy more money to spend; its Medicaid cuts will increase medical costs for everyone (see my article “One Big Bad Bill” in the July-August 2025 Washington Spectator). His deportations reduce the US labor force, increasing production costs and prices.
Nonetheless Trump wants short-term interest rates near 1%. This will goose the stock market, and hide the budgetary consequences of his tax bill as well as the fact that his tariffs are not bringing in the trillions of dollars this year that he and his minions have proclaimed. It also puts upward pressure on prices.
Trump already has appointed 3 of the 7 Fed Governors. Four is a majority, which is why getting rid of Cook is so important for him. If the Supreme Court lets Trump fire Cook, he could control the Board of Governors.
I see several flaws in this plan, or several grounds for hope. First, the Supreme Court may ultimately rule that Trump can’t fire Cook.
Second, a majority of Governors doesn’t ensure excessively low interest rates. Trump’s first-term appointees did not support the half percentage point cut pushed by Trump’s most recent appointee, Stephen Miran (who took a leave of absence as Trump’s top economic advisor and whose confirmation was rushed through Congress so he could attend the September meeting of the Fed). Further, interest rates are set by the Open Market Committee, which is comprised of the 7 Fed Governors and 5 (of 12) Regional Federal Reserve Bank Presidents (mostly on a rotating basis). To get a majority (7 votes) and near 1% short-term interest rates, Trump needs the support of his 4 Governors plus 3 Regional Federal Reserve Bank Presidents.
A final flaw in Trump’s takeover attempt is that the Fed controls only the overnight lending rate among banks. If Trump insists on a 1% rate, something appropriate for a serious recession, long-term interest rates will soar. Regardless of what the Bureau of Labor Statistics (BLS) reports as US inflation, lenders will demand considerably more than 6% interest on loans if actual inflation is 6%. These longer-term rates impact government borrowing costs as well as the cost of business and consumer loans, including rates on car loans and mortgages. Sky-high long-term rates may lead Trump to chicken out on his plan to control the Fed and short-term rates.
That being said, a long-standing Republican goal is to kill Social Security (see my article “Retirement is Up for Grabs in November” in the May-June 2024 Washington Spectator). Having the BLS report inflation numbers that are too low, in conjunction with controlling the Fed, is one way to accomplish this. Trump Accounts, a provision in the President’s 2025 tax bill, are another way. They give $1,000 to each baby born between 2025 and 2028. Employers and relatives can add another $4,000. Administration officials hope this money will earn high returns and provide a source of retirement income. Another motive is likely. As Treasury Secretary Scott Bessent noted, they are a surreptitious way to privatize Social Security and reward Wall Street.
Social Security is clearly in Trump’s crosshairs. He is not just breaking a campaign promise not to touch Social Security, he seems to be engineering its funeral.
Steven Pressman is part-time professor of economics at the New School for Social Research, professor emeritus of economics and finance at Monmouth University, and author of Fifty Major Economists (Routledge, 2013)
