Tester Expects Fed Chair Uncertainty to Hamper Inflation Actions
(Bloomberg) -- A senior Senate Democrat suggested that uncertainty over who will run the Federal Reserve has limited action to rein in U.S. inflation and urged President Joe Biden to renominate Fed Chair Jerome Powell for another term.
“I think we’ve got issues revolving around inflation that he can’t do much about as long as he’s not confirmed,” Montana Senator Jon Tester said on NBC’s “Meet the Press” on Sunday.
Powell “needs to be appointed,” said Tester. “We need to confirm him. I think he would be confirmed by a large margin if the president appointed him. And then he can get to work as chairman of the Fed and do a good job as he’s done in the past.”
Tester has previously backed Powell, along with a number of other senators in both parties, including a majority of Republicans on the Senate Banking Committee. Democrats are divided, with three senators -- Elizabeth Warren, Sheldon Whitehouse and Jeff Merkley -- publicly urging Biden to pick someone else.
Bloomberg has reported that Biden has interviewed both Powell and Fed Governor Lael Brainard for the job, and his decision is expected before Thanksgiving. A CBS poll published Sunday said 67% disapprove of Biden’s handling of inflation, while 84% say they blame accelerating price increases on supply and manufacturing bottlenecks related to the Covid-19 pandemic.
White House economic aide Brian Deese said on “Fox News Sunday” that Biden “has been spending a lot of time” on the Fed and cited multiple openings at the central bank that need to be filled, but said he would leave it to Biden to announce.
Tester predicted Senate Democrats would make changes to Biden’s big spending and tax package but would ultimate pass a version of it.
“We’re dealing with reasonable people here,” he said. “I think we can come up with a bill that’s a very, very good bill that works for states like Montana and other states in the union.”
Deese separately acknowledged high inflation and argued that’s a reason for the Senate to quickly pass Biden’s plan, known as Build Back Better.
“There’s no question inflation is high and it’s affecting American consumers and it’s affecting their outlook, but that’s actually why we need to move on this Build Back Better bill right now,” Deese said.
Deese cited administration estimates that the House-passed bill would cut the budget deficit by $112 billion over a decade and trillions over 20 years. Some outside groups and Republicans have criticized those numbers and noted that many of the spending provisions and tax cuts expire early while the tax hikes on high-earners and corporations don’t.
“It will cut costs for families almost immediately,” Deese said. He mentioned provisions to help reduce costs for child care, health care and prescription drugs, among others.
Deese said Biden would want any extensions of programs that expire in the legislation to avoid adding to the deficit.
“A future Congress will have the choice of whether to extend those or not,” he said.
He also argued that because the bill doesn’t add to the deficit, it won’t increase aggregate demand in the economy or inflation pressures, citing outside analysts. In addition, child care and elder care assistance would help more people, particularly women, join the work force, he said.
Deese said the administration has “broad agreement” among Congressional Democrats on provisions that would lower costs for families and restructure the tax code so corporations can’t avoid paying taxes.
Paid Leave at Issue
Senator Kirsten Gillibrand of New York said Sunday that she has continued to negotiate for a paid family-leave benefit with key West Virginia Senator Joe Manchin, who has been opposed to including one.
Manchin supports the idea of “an earned benefit” and said they might start with “something modest” in this bill, Gillibrand said CBS’s “Face the Nation.”
She argued providing an earned benefit would help people stay in the labor force rather than quitting for a family emergency.
“I’m just hopeful that he can remain open-minded to include some provisions for paid leave because this is the only moment to get paid leave done,” she said.
She predicted there was no bipartisan path to a universal paid-leave benefit, making the Democratic-only reconciliation package the only way to enact it.
House Minority Leader Kevin McCarthy, who spoke for more than eight hours against the Biden-backed bill last week, said on Fox’s “Sunday Morning Futures” that “big government socialism isn’t working” and cited polling showing sentiment shifting in Republican Party’s direction ahead of next year’s midterms.
“It’s not working when we have the highest inflation in 31 years, these gas prices, when this big government cripples American energy industry, but begs OPEC and Russia to produce more,” he said.
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