Senate Republicans face a surprise new Fed dilemma

Senate Republicans have been grappling with a barrage of questions about threats to the Federal Reserve's independence. Now, Fed board nominee Stephen Miran is throwing another surprise at them.

Miran’s plan to take an unpaid leave of absence from his current role as a top economic adviser to President Donald Trump instead of resigning from the post, revealed during his confirmation hearing on Thursday, caught key senators by surprise.

The issue is the latest example of how Trump's no-holds-barred approach toward the central bank is testing long-held GOP orthodoxy regarding the importance of the Fed's independence. Despite that, Republican lawmakers are continuing to give the White House the benefit of the doubt.

GOP lawmakers who have emphasized the importance of an independent central bank are standing by Miran, who currently chairs Trump’s Council of Economic Advisers, saying the arrangement will work for the temporary short-term vacancy that he is seeking to fill.

The unpaid leave arrangement Miran outlined “was a surprise to me,” said Sen. Mike Rounds, a senior GOP member of the Senate Banking Committee, which hosted Miran’s confirmation hearing.

“The fact that it would be an unpaid leave and the fact that he’s going to be there for four months — it’s kind of a unique situation,” the South Dakota lawmaker said. “And so the one thing I won’t do is exclude him from the possibility of picking up this position simply because of that decision.”

Republican lawmakers who are strong advocates of Fed independence have largely shied away from criticizing Trump's tactics as they have been thrust into the middle of his efforts to reshape the Fed's board.

Trump has escalated his public criticism of Fed Chair Jerome Powell, whom he appointed to lead the board during his first term, for not cutting interest rates and for his handling of the renovation of the central bank's Washington headquarters. Last week, Trump moved to fire Fed Gov. Lisa Cook, an appointee of President Joe Biden, over allegations of mortgage fraud. Several GOP lawmakers have voiced skepticism over advancing a nominee to replace Cook before a legal challenge of her ouster is decided in the courts.

The president, in a recent White House Cabinet meeting, proclaimed that "we'll have a majority very shortly" on the Fed board.

The White House has lobbied Senate Republicans to confirm Miran quickly this month so he can take part in the board's next meeting. The Senate Banking Committee is eyeing a vote on his nomination next week, according to a person with knowledge of the planning granted anonymity to discuss internal deliberations. The timeline, previously reported by Semafor, would send his nomination to the Senate floor, but GOP leaders would need to move quickly to confirm him in time for the Fed board's next meeting, scheduled to start on Sept. 16.

Miran has previously proposed Fed reforms that would give the president more control over the central bank’s board of governors, but he said he believed in independent monetary policy decision-making during his confirmation hearing Thursday. Banking Committee Republicans are satisfied with his approach.

“I think he’s a solid choice and I think he’ll be objective, and I’m convinced that he respects the independence of the Federal Reserve,” said Sen. John Kennedy (R-La.).

Retiring GOP Sen. Thom Tillis of North Carolina, who said he plans to vote for Miran, said that if he goes back to the White House after his tenure at the Fed, “that'll be the last time that I would support a surf in and out."

“It doesn't make sense to me, because you know how I feel about Fed independence,” he said.

Miran, who earned unanimous GOP support when he was confirmed for his White House job, was tapped to fill the remainder of Fed Gov. Adriana Kugler’s term, which expires on Jan. 31, 2026. He said he would resign from the Council of Economic Advisers if he were nominated for a longer-term vacancy.

“I have received advice from counsel that what is required is an unpaid leave of absence from the Council of Economic Advisers,” Miran said during the hearing. “And so, considering the term for which I’m being nominated is a little bit more than four months, that is what I will be taking.”

Democrats seized on the issue. Sen. Jack Reed, whose questioning prompted the revelation, called the arrangement “ridiculous.”

Pressed about the status of Miran’s White House job, Kennedy told reporters that if “it were for longer than four months, it might be an issue.”

“But I understand where he’s coming from,” he said. “It’s only for four months, and he is taking a leave of absence. Now, if it’s longer than four months, I have a feeling that he’ll come back and talk to us about it. But I don’t see that as disqualifying him.”

Jordain Carney contributed to this report.