Morning Report is The Hill’s a.m. newsletter. Subscribe here.
In today’s issue:
▪ Fed drama lands in court
▪ Meet the next MAGA generation
▪ Trump yanks funding for wind projects
President Trump is expected to get his wish on lower interest rates within weeks, but his brass-knuckled battle with the Federal Reserve will likely drag on much longer.
The president signaled Tuesday he is not backing off his decision to fire Federal Reserve board governor Lisa Cook, who has refused to step down from her position after Trump announced her firing the day prior.
The economist is challenging Trump’s move in court, seeking a judicial green light to continue in her Senate-confirmed position until the end of her term in 2038. The Federal Reserve said in a Tuesday statement it would “abide by any court decision.”
Trump, who hopes to make his own appointment to the central bank’s board, has pointed to allegations that Cook, the first Black woman on the board, committed mortgage fraud before she arrived at the Fed in 2022 by listing two different primary residences.
The president has spent months working to bulk up his executive muscle by relentlessly testing his policies in the courts, and his move to challenge the Fed’s independence is likely to land before the Supreme Court too. The institutional and economic impact of the challenge could last years.
▪ The Hill: Republicans skeptical but quiet on Trump’s attempt to fire a Fed board member.
▪ The Hill: Five questions surrounding the president’s attempted ouster of Cook.
ECONOMIC REPORT CARD: The president’s job approval hovers near 40 percent, considered history’s warning threshold for candidates headed into midterm elections representing the party in power. As Americans wrestle with rising grocery prices, high borrowing costs and shrinking paychecks, Trump chafes at his poll numbers.
In a recent Gallup survey, his 37 percent approval rating on the economy was 15 points below his average of 52 percent on that issue from 2017 to 2020.
Trump’s blistering criticisms have escalated for months as he blamed Fed Chair Jerome Powell for holding interest rates steady instead of lowering borrowing costs to try to tame inflation. He called on the chair to resign.
Powell sidestepped the president and GOP critics in Congress, defended the importance of the central bank’s independence and said he and Fed governors remain focused on supporting the goals of price stability and full employment.
A central bank that was inclined to follow policy decisions by the White House might hesitate to act on price pressures, which could escalate inflation and mean higher long-term interest rates.
Many investors and Wall Street analysts who dissected Powell’s speech last week at Jackson Hole, Wyo., are betting the Fed board at its next meeting in mid-September will vote to trim benchmark interest rates by a quarter point.
“The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” the Fed chair said.
COURTS AND CAUSE: Firing Powell, whose term as chair is up in May, or Cook would trigger negative market reactions. An unprecedented presidential firing requires “cause,” which is legally vague but is generally understood to cover gross misconduct.
It’s unclear if Trump’s allegations against Cook, which are tied to the terms of mortgage documents before she joined the Fed and have not been adjudicated, would meet such a threshold. The Fed governor has not been charged with a crime and has said she has no plans to resign.
“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” she said Monday in a statement.
“She seems to have had a legal infraction,” Trump told reporters on Tuesday. “And she can’t have an infraction.”
The Supreme Court in May in an unsigned majority opinion volunteered that the Fed may warrant special protection for independence. “The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the opinion said.
Democrats have criticized Trump’s attempt at firing Cook. Former Treasury Secretary Larry Summers called the president’s move “chilling.” Senate Minority Leader Chuck Schumer (D-N.Y.) said Trump’s “brazen power grab must be stopped by the courts.” The Congressional Black Caucus also came to Cook’s defense.
“This is going to cause tremors in the foundation that underpins monetary policy in the United States, and those tremors will be felt in financial markets domestically and around the world,” predicted David Wilcox, an economist at Bloomberg Economics and the Peterson Institute for International Economics who previously directed research for the Federal Reserve board.
Smart Take by Blake Burman
The White House could be creating another vacancy on the Federal Reserve, as President Trump announced the firing of Fed board member Lisa Cook for alleged mortgage fraud. Cook vowed to fight the move and hired a big-name attorney. The Federal Reserve said it will follow the court’s decision.
I asked White House senior counselor Peter Navarro if Cook’s firing could pave the way for ousting Fed Chair Jerome Powell. He said he didn’t think that move would necessarily follow, but he did mention Trump’s new appointments to the Fed.
“Powell should see the tea leaves here,” Navarro told me. “I mean, interestingly enough, he’s beginning, grudgingly, to come over to the idea that he shouldn’t be holding rates up because of tariffs,” the White House official added.
Navarro contends the administration isn’t trying to put its thumb on the scale when it comes to the Fed but instead wants to appoint the right people to the nation’s central bank. Regardless of the administration’s intention, the courts are likely to be the next chapter in this ongoing feud between the president and the central bank.
Burman hosts “The Hill” weeknights, 6p/5c on NewsNation.
3 Things to Know Today
1. U.S. tariffs of 50 percent on a range of Indian products took effect Wednesday, threatening a steep blow to India’s overseas trade in its largest export market.
2. Cracker Barrel saysit willretain its former logo following a storm of public backlash (and hours after advice from Trump on social media).
3. The Trump administration is seeking to reshape the way U.S. parks and museums teach history. Critics describe the moves as an effort to whitewash the nation’s past.
Leading the Day
THE NEXT GENERATION: The MAGA movement has its sights set on expansion into governors’ mansions around the country, The Hill’s Brett Samuels reports.
A handful of prominent Trump allies are pursuing GOP gubernatorial bids, a path that offers a way to expand the MAGA agenda beyond Washington and set themselves up for potential future bids for higher office.
Rep. Byron Donalds is running for governor in Florida, Sen. Marsha Blackburn is running for governor in Tennessee, Vivek Ramaswamy is campaigning for governor in Ohio, Rep. Andy Biggs is seeking the GOP nomination for governor in Arizona and Rep. Nancy Mace is part of a crowded primary field for governor in South Carolina.
“I think it’s like the next stage of the movement,” said one GOP operative close to the White House. “A lot of people who came up in the movement are looking to build off of that and understand it’s not staying in Congress another 20 years; it’s running a state.”
That means the party must look beyond 2028, when Vice President Vance and Secretary of State Marco Rubio are viewed as the heavy favorites to lead the GOP presidential ticket.
CALLS FROM INSIDE THE HOUSE: As MAGA sets its sights on 2028 and beyond, Trump is dealing with rare compounding pushback from within his own party.
Some Republicans this week expressed concerns about government overreach, as the president received blowback on issues including immigration, corporate mergers, free speech and crime, The Hill’s Jonathan Easley reports.
From a crackdown on flag-burning — which caused the vice president to mount a public rebuke of the late Supreme Court Justice Antonin Scalia — to National Guard deployments and the federal government’s new 10 percent stake in Intel, Republicans are finding points of contention with the White House.
The various friction points will be thrown into stark relief when lawmakers return to Washington next week.
Look out for tough questions about “blue slips” for senators, and a rocky road ahead as both chambers have just 14 legislative days to resolve a potential shutdown fight.
EQUITY STAKES: On the heels of the president’s unusual deal with Intel to take a 10 percent government-held equity stake in the company, Commerce Secretary Howard Lutnick on Tuesday told CNBC the Pentagon is weighing other security equity stakes in defense companies, such as Lockheed Martin. Trump, an advocate for a U.S. sovereign wealth fund, sees the corporate holdings as part of that endeavor, his White House economic adviser said on Monday.
D.C. DEATH PENALTY? The administrationwill seek the death penalty as punishment for homicides in Washington, D.C., Trump said on Tuesday. Capital punishment was nullified by the Supreme Court in 1972 in the nation’s capital and repealed by the D.C. Council in 1981. In a 1992 referendum ordered by Congress, D.C. residents voted 2-1 against the death penalty.
More than 60 percent of Americans polled in recent years do not believe the death penalty is a deterrent to the commitment of homicides, according to Gallup.
▪ The Hill: Trump today said he’s working with GOP House and Senate leaders on a “comprehensive crime bill.” He offered no details in his social media post.
SPECIAL ELECTIONS: Democrats continued their winning streak in key special elections on Tuesday with a victory in a contested state Senate seat in Iowa.
The party eyed the seat as a pickup opportunity to break up a Republican supermajority and demonstrate further enthusiasm among their base in an off-year election. The party’s candidate in a Georgia state Senate election also appears poised to advance to a runoff against a Republican opponent in a deeply conservative district.
▪ The Hill: Democrats outlined their first steps as the party considers its 2028 calendar.
When & Where
• The president and the vice president will have lunch at 12:30 p.m.
• The House willhold a pro forma session on Friday at 1:30 p.m. and will return to work in Washington on Sept. 2.
• The Senate willhold a pro forma session on Friday at 7 a.m.
Zoom In
TILTING AT WINDMILLS: The Trump administration is planning to cancel the approval of yet another offshore wind farm. On the heels of its move to block a major project off the coast of Rhode Island, court filings indicate the Interior Department plans to block another off the coast of Maryland.
The administration has sought to crack down on renewable energy and especially wind, which the president has long disliked.
“We’re not allowing any windmills to go up,” Trump said at Tuesday’s Cabinet meeting. “They’re ruining our country. They’re ugly, they don’t work, they kill your birds.”
The White House on Friday declared a stop to a massive wind farm off Rhode Island that is 80 percent complete. Shares of Orsted, the project’s developer, plunged Monday by 16 percent and thousands of jobs are at risk. The move has drawn warnings of broad impacts from regional grid operators and power companies.
EMERGENCY LEAVE: More than a dozen staffers from the Federal Emergency Management Agency (FEMA) were placed on leave after they warned that the Trump administration is weakening the disaster response agency’s capacity and preventing it from carrying out its mission.
In a letter, 181 current and former staffers had pointed to an administration policy requiring Homeland Security Secretary Kristi Noem to conduct a review of all contracts and grants over $100,000, which they said “reduces FEMA’s authorities and capabilities to swiftly deliver our mission.”
IMMIGRATION: A federal judge on Tuesday threw out the Trump administration’s unprecedented lawsuit against Maryland’s entire federal bench over an order by the chief judge that stopped the immediate deportation of migrants challenging their removals.
“Although some tension between the coordinate branches of government is a hallmark of our constitutional system, this concerted effort by the Executive to smear and impugn individual judges who rule against it is both unprecedented and unfortunate,” U.S. District Judge Thomas Cullen, an appointee of Trump who sits on a federal court in Virginia, wrote in his ruling. The Justice Department has launched an appeal.
▪ NPR: What a day in immigration court is like now.
AUTISM: Health and Human Services Secretary Robert F. Kennedy Jr., a nonscientist with a controversial perspective on autism, vowed Tuesday to unveil the causes of the spectrum disorder by next month. Kennedy said the administration is “doing very well” in its progress and will announce “certain interventions.” The announcement came as Trump pressed for an update on the issue during a televised Cabinet meeting.
SEX ED: The administration is threatening to strip millions of dollars in federal grants from dozens of states that have sex education programs that include information about transgender people. Within 60 days, 46 states, territories and Washington, D.C., must remove “all references to gender ideology” from their Personal Responsibility Education Program, a teen pregnancy prevention and sexual health initiative created by the Affordable Care Act.
SOCIAL SECURITY DATABASE: Reacting to a whistleblower report released on Tuesday, Senate Finance Committee ranking member Ron Wyden (D-Ore.) criticized the Department of Government Efficiency (DOGE) for what he said was endangerment of personal information about millions of Americans after the alleged uploading of a Social Security database to an unsecured cloud server.
“This account is a clear example of how the Trump administration is playing fast and loose with Americans’ most sensitive personal information,” Wyden said. “Trump and DOGE’s reckless treatment of Social Security data jeopardizes the financial security and personal safety of every single American.”
▪ The New York Times: Trump wants Europe to stop regulating Big Tech. Will it bend?
Elsewhere
GAZA: Steve Witkoff, Trump’s special envoy for the Middle East, said the war in Gaza will come to an end by the end of the year “one way or another.”
“We think that we’re going to settle this one way or another, certainly before the end of this year,” Witkoff said Tuesday on Fox News, adding that Trump will chair a meeting on Gaza at the White House today. Secretary of State Marco Rubio will meet today with Israeli Foreign Minister Gideon Saar.
The Israeli government is ramping up its offensive in the enclave, where the 18-month war has displaced most of the population and caused a dire humanitarian and hunger crisis.
An Israeli strike killing five journalists in Gaza on Monday marked one of the deadliest events for media working in the war, a toll that some organizations say reaches nearly 300 reporters killed and with little to no accountability for their deaths. Two Israeli strikes on the Nasser Hospital in Khan Yunis killed at least 20 people, including health care workers and journalists.
The Hill’s Laura Kelly reports Israeli Prime Minister Benjamin Netanyahu called the hospital attack a “tragic mishap,” and the Israeli military launched an investigation, claiming Hamas militants were killed in the strike. Clayton Weimers, executive director of Reporters Without Borders USA, said it was notable that Netanyahu came out calling the strike a “mishap,” but he criticized the remarks as being “as disingenuous as you can get.”
Israelis held a day of nationwide protests on Tuesday, calling for an end to the war and the release of the remaining hostages, while more Palestinians left Gaza City after a night of Israeli shelling.
▪ The New York Times: Journalists endure the same harrowing reality as other Gazans: hunger and the constant threat of death. Those challenges risk further stifling what the world hears about the war.
▪ The Wall Street Journal: Egypt has begun training hundreds of Palestinians to be part of a force of up to 10,000 to provide post-war security in Gaza.
EMPTY PROMISES? Ten days after the U.S. said Russia was willing to allow “NATO-like” security guarantees for Ukraine as part of any comprehensive peace deal, both a peace plan and guarantees appear to be empty commitments.
Trump’s Ukraine envoy Keith Kellogg said in Kyiv on Monday that officials are “working very, very hard” on efforts to end the three-year war between Russia and Ukraine. But a lack of progress is fueling doubts about the process.
Moscow is now demanding an effective veto over what international guarantees to bolster Ukraine’s security would look like. The Kremlin also drew a red line on any potential involvement of foreign forces in Ukraine, effectively ruling out a security pact similar to NATO’s Article 5.
Witkoff said Russian President Vladimir Putin put forward a peace proposal to end the war that involves the Donetsk region in eastern Ukraine, an offer that Ukraine is unlikely to accept.
▪ Al Jazeera: Despite huge manpower losses, how is Russia replenishing its military?
Opinion
• What’s your evidence, Mr. President? by The New York Times editorial board.
• Firing Cook won’t be enough for what Trump wants, by John Authers, columnist, Bloomberg Opinion.
The Closer
And finally … 🪞AI-generated images in fashion advertising — described as faster-to-achieve, undetectable to the eye and cheaper to create for publishing — are among this summer’s controversies about the future of work as well as diversity. In this case, the at-risk livelihoods of models, photographers, make-up artists and art directors.
Clothing company Guess lit a fuse on social media by picturing its clothing on a curvaceous blonde woman in the pages of the August issue of Vogue. The ad was labeled an AI invention — the creation of a London-based AI-driven marketing agency. Irate reactions and calls for boycotts dotted social media.
“We’ve always struggled with appetite and demand, and this is how the industry keeps up. The fact that you can create an image and reproduce that across thousands of products is very mass. But does it feel premium? No,” Lara Ferris, strategy director of Spring Studios, a global creative agency, told CNN while discussing AI trends.
▪ The Los Angeles Times: Fashion models reckon with AI models and digital clones after controversial ad appears in Vogue.
▪ Forbes: The AI models replacing fashion models and business models.
