Elon Musk has focused his cost-cutting attention on the Federal Reserve, raising concerns about the ongoing $2.5 billion refurbishment of the central bank’s headquarters and implying that the so-called Department of Government Efficiency, or DOGE, may be looking closely at it.
Musk jokingly told reporters on Wednesday, “We should definitely look to see if the Fed is spending $2.5 billion on their interior designer,” “That’s an eyebrow raiser.”
The remarks hint at a possible political conflict over the independence of the Federal Reserve at a time when President Donald Trump has already questioned it by threatening to replace Fed Chair Jerome Powell.
The Fed’s multi-year, comprehensive campus renovation in Washington, D.C., which includes the Marriner S. Eccles Building and the nearby FRB East Building, aims to improve operating efficiency, lower lease costs by moving the majority of staff into Fed-owned buildings, and update infrastructure.
The project, which started out as a $1.9 billion proposal but has since grown to $2.5 billion, has drawn criticism from conservatives who claim that the project’s size and opulence—which includes rooftop gardens and a glass atrium—are out of proportion to the economic realities that Americans face.
The Fed, which has historically contributed a net amount to federal coffers, has been losing money recently due to attempts to boost the economy out of the Great Recession and the COVID-19 issue, as well as the ensuing steep interest rate hikes, according to critics.
The Federal Reserve refrained from providing a statement.
The project’s comparatively high expenditures are attributed by proponents of the Fed’s plan to the elderly age of the buildings, local historic architecture rules, and inflated building expenses.
The FRB East building was finished in 1933, while the Marriner Eccles Building was finished in 1937. Since they were constructed almost 90 years ago, neither has undergone extensive renovations.
After years of underutilization, the Fed moved into the FRB East facility in 2018.
According to Daniel Matthews, who was the commissioner of the Public facility Service of the General Services Administration at the time, the “transfer will put a vacant building back in productive use, allow the Federal Reserve Board to consolidate several leases, and result in savings for taxpayers.”
Since then, the Fed’s usage of the property has been criticized for reflecting government bloat. The Fed’s $2.5 billion capital expenditure exceeds similar ventures, according to a report by the libertarian think tank Mercatus Center.
According to the paper, which was written by economist and former Fed employee Andrew Levin, the refurbishment of the Department of Homeland Security’s portion of the Ronald Reagan Building cost less than $200 million.
According to Levin, “The Federal Reserve Board is spending more than 10 times that amount,” during a Monday podcast interview.
Since the Ronald Reagan building opened in 1998 and the Fed buildings are almost a century old, the two projects are not totally comparable. Costs associated with the Fed effort have also increased since, in contrast to the Reagan building, modifications to their facilities must adhere to National Capitol Planning Commission-mandated historical preservation requirements.
However, most government renovation projects are directly under the control of Congress, and there is a political motive to keep prices low. In the meantime, the Fed’s effort is under a lot of criticism because there isn’t any official control over Federal Reserve spending.
The Fed does not depend on congressional funding like cabinet agencies do, and its inspector general answers to the Fed chair rather than the president and Congress. The statute prohibits the Government Accountability Office from examining many aspects of the Fed’s activities, including capital projects such as this one.
The optics of a luxurious headquarters extension at a time when the Fed is posting massive operating deficits, however, are less than ideal, according to opponents like Musk, who contend that independence must be accompanied by some accountability.
As the central bank works to guide the economy through the biggest restructuring of the world trade system in decades, it is another indication that its long-standing independence from political pressure may be eroding.
