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tv   Treasury Secretary and Federal Reserve Chair Testify on CARES Act Oversight  CSPAN  November 30, 2021 8:09pm-10:44pm EST

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online at or watch full coverage on c-span now, our new video app. >> c-span is your buns filled review of government. we are funded by these television companies and more including mediacom. >> the world changed in an instant but mediacom was ready. internet traffic soared and we never slowed down. schools and businesses went virtual and we powered a new reality because at mediacom we are built to keep you ahead. >> mediacom supports c-span as a public service along with these other television providers giving you a front-row seat to democracy. >> treasure secretary janet yellen and the chair of the federal reserve jerome powell were on capitol hill to testify on covid-19 relief and the state of the economy. they were asked about workforce participation, inflation and
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supply chain challenges. secretary yellen also called on congress to act on the debt ceiling, warning failure to raise it would quote eviscerate the economic recovery. the treasury department estimates the u.s. will reach its borrowing limit on december december 15. [inaudible conversations] [inaudible conversations] >> the committee on banking, housing and urban affairs will come to today's hearing is in the hybrid format. eyewitnesses are in person. members have the option to appear either in person or virtually. for those joining remotely a few
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reminders. once you start speaking there would be a slight delay before your displayed on the screen. please put the mute button to minimize background noise. you have been come all of you been through this before so don't need i need to lay this out all that we are doing. are speaking order will be as usual if that is by seniority members have checked in before the gavel came down either in person or virtually and then by seniority of members arriving later alternating between democrats and republicans. last week, many americans sat down with family and friends to celebrate thanksgiving. i start with taking a moment to thank the workers who made that possible, many of whom didn't get the day off, farm workers, grocery store workers, restaurant workers, auto workers comp delivery comp longshore workers, and some others who touched our lives. these are the people who makeny our economy work. it's something to treasury secretary andk. the fed chair nd to always keep in mind. under the biden-harris
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administration, our economy iske bouncing back, and getting stronger every day. we created 5.6 million jobs this year. the unemployment rate has dropped to 4.6%, and weekly unemployment claims dropped to under 200,000 last week, the lowest level not just since thee pandemic began, but in over 50 years, since 1969. of course raw jobs numbers alone don't tell the whole story, they don't tell you how good the job is, what kind of wage it pays. and on that front, the news is even better. workers are starting to finally get a little bit more power in our economy. last year, corporations calledo their workers essential, and then many turned around and cut hazard pay, if they ever offered it at all, and cut corners on safety, to make sure their t profits didn't take a hit. or worse, they laid off loyal, long-time employees in the midst of a public health crisis. but they can't make those record profits without someone to actually do the work. and today american workers are demanding what they've earned.
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after years of stagnant wages, shrinking benefits, and no control over their schedules, workers are standing up for themselves and for each other, and asking for their fair share of the profits they create. we just saw the united auto workers win better pay and better retirement benefits after a five-week strike of john deere, and it was good for non-union employees, who got a bump in pay, too. for too long, corporate greed has kept paychecks down and prices up. corporations cut costs at workers' expense to juice their quarterly earnings numbers, even when they're already plenty profitable. executives reward themselves with record profits and stock buybacks, while arguing they can't afford to pay higher wages to anyone else, or can't afford to lower prices. during a once in a generation global pandemic, despite thein supposed labor shortages and inflation fears, wall street banks and corporations still managed to rake in record profits.
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profits at the biggest companies shot above $3 trillion this year, and the margins keep growing. and now, while working families are just starting to get back on their feet, mega corporations would rather pass higher costs onto consumers than cut into their profits. to continue the progress we've made, we need to rethink that old system. the biden administration is creating jobs and bringing down costs for families to build a resilient economy for the long run. the biggest costs families face have been rising for years, in many cases decades, housing, health care, prescription drugs, child care, preschool. democrats' agenda will bring down all these costs. we passed the american rescue plan, which got shots in arms and money in pockets, including the child tax credit, the largest tax cut for working families ever that's helping millions of families afford child care and keep up with the cost of living.
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90% of kids' families in ohio are getting a $3,000 tax credit. we passed the bipartisan infrastructure bill to upgrade our ports and transit systems, revitalize manufacturing here ih the united states, secure supply chains, and create millions of good jobs. two weeks ago, the house passed build back better, which willl bring down child care, housing, health care and other household costs. and extend the child tax credit, the biggest tax cut as i said. now, the senate must act. the ongoing pandemic has also exposed longstanding weaknesses in our supply chain. global supply chain disruptions and increased demand as our economy rebounds are causing higher prices in certainns sectors. secretary yellen and chairir powell are keeping an eye on this, and the more we can get the virus under control and understand its variants, the faster we will see those disruptions subside. we're already seeing some
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progress. the bipartisan infrastructure plan's investment in our ports will help speed up our supply chains in the long-run. and passing my supply chain resiliency act would further reshore and strengthen u.s. supply chains. there's also an even simpler short-term fix available, corporations could lower their prices. executives could get a slightly smaller pay bump this year and stock buyback plans could be put on hold, instead of raising costs for customers. again, that's the choice they face. they can take a slightly smaller payli bump this year, they could cut back on their stock buyback plans, put them on hold instead of raising costs for consumers. there's no inexorable law that says profits for those at the top must continue to rise in perpetuity, even at the expense of everyone and everything else in the economy. corporations can get away with
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it, we know this, i've had conversations with chair powell and secretary yellen, because they have too much power in our economy. that makes it all the more vital that we not pull back on empowering workers. the fed cannot pump the brakes on our economic recovery too soon, before workers get a chance to fully rebound. and i mean all workers. women, who finally started to make significant job gains last month, were disproportionately forced out of the labor market, as many took on the extra jobs of full-time caregiver and homeschool teacher. the black unemployment rate is still twice that of white workers. that's increasingly unacceptable. a resilient economy is an economy where full employment means everyone can get a job, a good job, that pays a living wage and allows you to build a career and raise a family. and it's an economy where everyone shares in the benefits of growth, and where our progress isn't gambled away by wall street greed. instead of doing wall street's bidding, we all, the fed, the treasury department, congress, need to support the institutions that are hard at work serving their neighbors and contributing to the real economy.
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that means supporting small business and creating pathways to homeownership. that means supporting institutions like mdis and cdfis, that serve communities that the banks ignore. that means making sure workers have power in our economy and share in the prosperity they create. corporations and their allies in this building want you to believe that we have to choose between high wages and low prices. that's a false choice. we can have an economy where you earn a living wage and you can afford the things you need to live, childcare, healthcare, education, housing, groceries. our economy can be a reflection of our values as americans, one that recognizes every worker's potential, from all walks of life and from every corner of r our country. president biden recently announced his intention to renominate chair powell to lead the federal reserve, and governor lael brainard to be vice chair.nt they have helped lead our economy through the pandemic, and i will continue to work with both of them, and the next federal reserve nominees that
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reflect the diversity of our country. i look forward to hearing from secretary yellen and chair powell on how they plan to help us build a resilient economy that works for everyone. senator toomey. >> thank you, mr. chairman. secretary yellen and chairman powell, welcome. chairman powell, congratulations on your renomination. despite our disagreements, i look forward to supporting your confirmation. when the pandemic hit in 2020, chairman powell acted swiftly to help stabilize financial markets and the economy. he also implemented a number of sensible regulatory reforms that helped to spur economic growth. and for those who would criticize those efforts, i suggest they look at the past two years. our economy experienced a severe real-world stress test during the worst days of the pandemic, but we've come out of it with the best capitalized bankingng system in american history. while i support chairman powell's renomination, i'm very concerned about whom president biden may nominate to fill other
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seats on the fed's board given some of the radical financial regulators he's nominated so far. just consider his radical nominee to serve as the comptroller of the currency, the nation's top banking regulator. members of the fed board ought to have exceptional qualifications and appreciation for the fed's narrow statutory role on monetary policy and banking supervision. we need fed nominees who are focused not on social policy, but rather the alarming bout of inflation that we are currently experiencing. inflation is at a 31-year high. just last month the consumer price index increased by 6.2% year over year. price hikes are everywhere, from the cost of a thanksgiving meal, which rose by 14% over last year, to the pump, where gas has reached as high as $6 a gallon in some places. inflation is a tax that is eroding americans' paychecks every day. even though wages are growing, inflation is growing faster and causing workers to fall further
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and further behind. i've been warning about the risks of higher and more persistent inflation since january. unfortunately, the fed has decided to continue its emergency monetary policy, adding fuel to the inflationary fire, long after the economic emergency had passed. earlier this month, i was glad to see the fed finally announce a long overdue taper of its bond-buying program. quantitative easing should bee used in emergencies only, and we are well past the need for such support.qu our economy took a nose dive ind the second quarter of last year. but by the third quarter of 2020 it had largely recovered. yet, here we are in november 2021 and the fed's still buying more than $100 billion in bonds. the fed should have started tapering nearly a year ago. but instead it's expected to continue buying bonds through next june. and on interest rates, which are currently near zero, the fed is still maintaining a wait-and-see approach. i am somewhat relieved that
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chairman powell has recently recognized the heightened risks of higher and more persistentnt inflation and has indicated his determination to control it. unfortunately, the biden administration and manydi democrats in congress are not willing to do their part to limit inflation. instead, they're exacerbating the problem and blaming inflation on their usual suspects, greedy corporations. apparently, some of my colleagues believe companies were for years generously leaving money on the table and only now have thought to raise prices to maximize profit. this is a cynical fib meant to distract from the fact that congressional democrats' extreme leftist policies are contributing to the price hikes hitting americans' wallets. take energy prices for example. president biden kicked off his presidency by taking measures to curb our nation's energy supply. he terminated construction of the keystone pipeline, a tremendous source of oil. he placed an indefinite ban on new oil and gas leases on federal land. meanwhile, on the demand side, the administration and democrats
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in congress have propped up demand for energy with their march 2021 $1.9 trillion stimulus bill. it's no wonder then that americans are seeing skyrocketing energy prices. when you decrease supply, but subsidize demand, prices go up. it's basic economics. unfortunately, the administration has not learned its lesson. it's still pushing a multi-trillion dollar reckless tax-and-spend plan that will contribute to more inflation and damage our economy. its plan is a massive expansion of the welfare state and will be partially paid for by large tax increases that hurt american families, and make the u.s. a less competitive place to do business. the intent of this plan is toat fundamentally transform the relationship between the federal government and the middle class. it's about socializing many ordinary responsibilities that families have always assumed, including by providing free preschool, free paid leave, and free child care. just to name a few.
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democrats are attempting to hide the unprecedented enormity of this tax-and-spending spree through budget gimmicks. according to the nonpartisan penn-wharton budget model, the house version of the build back better plan will cost $4.6 trillion over 10 years if the bill's temporary provisions are made permanent, as the democrats plan. as senator manchin has noted, democrats are using shell games to hide the true cost of this inflation. i hope that democrats will reconsider their misguided efforts to doubledown on the reckless spending that has contributed to the highest inflation that americans have experienced in 31 years. >> thank you, senator toomey. i'll introduce today's witnesses. we'll hear from treasury secretary yellen, federal reserve chair powell and agencies continued actions to recover from the pandemic and build a result he economy that works all-americans. thank yourv both for your servi. congratulations again to you, chair powell, thank you for your testimony today.
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madam secretary, if you could begin, thank you. >> chairman powell -- sorry. chairman brown, ranking member toomey, members of the committee, it is a pleasure to testify today. november has been a very significant month for our economy, and congress is a large part of the reason why. our economy has needed updated roads, ports, and broadbandd networks for many years now, and i am very grateful that on the night of november 5, members of both parties came together to pass the largest infrastructure package in american history. november 5th, it turned out, was a particularly consequential day because earlier that morning we received a very favorable jobs report, 531,000 jobs added.
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it's never wise to make too much of one piece of economic data, but in this case, it was an addition to a mounting body of evidence that points to a clear conclusion, our economic recovery is on track. t we're averaging half a million new jobs per month since january. gdp now exceeds its pre-pandemic levels. our unemployment rate is at its lowest level since the start of the pandemic, and our economy is on pace to reach full employment two years faster than the congressional budget office had estimated. of course, the progress of our economic recovery can't be separated from our progress against the pandemic, and i know that we're all following the news about the omicron variant. as the president said yesterday, we're still waiting for more
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data, but what remains true is that our best protection against the virus is the vaccine. people should get vaccinated and boosted. at this point, i am confident that our recovery remains strong and is even quite remarkable when put it in context. we should not forget that lastt. winter, there was a risk that our economy was going to slip into a prolonged recession, and there is an alternate reality where, right now, millions more people cannot find a job or are losing the roofs over their heads. it's clear that what has separated us from that counterfactual are the bold relief measures congress has enacted during the crisis, theas cares act, the consolidated appropriations act, and the american rescue plan act. and it is not just the passage of these laws that has made the difference, but their effective implementation.
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treasury, as you know, was tasked with administering a large portion of the relief funds provided by congress under those bills.a during our last quarterly hearing, i spoke extensively about the state and local relief program, but i wanted to update you on some other measures. first, the american rescue plan's expanded child tax credit has been sent out every month since july, putting about $77 billion in the pockets of families of more than 61 million children. families are using these funds for essential needs like food, and in fact, according to the census bureau, food insecurity among families with children dropped 24% after the july payments, which is a profound economic and moral victory for
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the country. meanwhile, the emergency rentalo assistance program has significantly expanded, providing much-needed assistance to over 2 million households. this assistance has helped keep eviction rates below prepandemic levels. this month we also released guidelines for the $10 billion state small business credit initiative program, which will provide targeted lending and investments that will help small businesses grow and create well-paying jobs. as consequential as november was, december promises to be more so. there are two decisions facing congress that could send our economy in very different directions. the first is the debt limit. i cannot overstate how critical it is that congress address this issue. america must pay its bills on
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time and in full. if we do not, we will eviscerate our current recovery. in a matter of days, the majority of americans would suffer financial pain as critical payments, like social security checks and military paychecks, would not reach their bank accounts, and that would likely be followed by a deep recession. the second action involves the build back better legislation. i applaud the house for passing the bill and am hopeful that the senate will soon follow. build back better is the right economic decision for many reasons. it will, for example, end the childcare crisis in this country, letting parents return to work. these investments, we expect, will lead to a gdp increase over the long-term without increasing the national debt or deficit by a dollar. in fact, the offsets in these bills mean they actually reduce
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annual deficits over time. thanks to your work, we've ensured that america will recover from this pandemic. now, with this bill, we have the chance to ensure america thrives in a post-pandemic world. with that, i'm happy to take your questions. >> thank you, secretary yellen. chair powell, you'll recognize. thank you for joining us. >> chairman brown, ranking member toomey, and other members of the committee, thank you for the opportunity to testify today. the economy has continued to strengthen. the rise in delta variant cases temporarily slowed progress this past summer, restraining previously rapid growth in household and business spending intensifying supply chain disruptions, and, in some cases, keeping people from returning to work or looking for a job. fiscal and monetary policy and the healthy financial positions of households and businesses continue to support aggregate demand. recent data suggest that the
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post-september decline in cases corresponded to a pickup in economic growth. gross domestic product appears on track to grow about 5% in 2021, the fastest pace in many years. as with overall economic activity, conditions in the labor market have continued to improve. the delta variant contributed to slower job growth this summer, as factors related to the pandemic, such as caregiving needs and fears of the virus, kept some people out of the labor force despite strongds demand for workers. nonetheless, october saw job growth of 531,000, and the unemployment rate fell to 4.6%, indicating a rebound in the pace of labor market improvement.%, there is still ground to cover to reach maximum employment for both employment and labor force participation, and we expect progress to continue. the economic downturn has not fallen equally, and those least able to shoulder the burden have been the hardest hit.
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in particular, despite progress, joblessness continues to fall disproportionately on african americans and hispanics. pandemic-related supply and demand imbalances have contributed to notable price increases in some areas. supply chain problems have made it difficult for producers to meet strong demand, particularly for goods. increases in energy prices and rents are also pushing inflation upward. as a result, overall inflation is running well above our 2% longer-run goal, with the price index for personal consumption expenditures up 5% over the 12he months ending in october. u most forecasters, including at the fed, continue to expect that inflation will move down significantly over the next year as supply and demand imbalances abate. it is difficult to predict the persistence and effects of supply constraints, but it now appears that factors pushing inflation upward will linger well into next year. in addition, with the rapid improvement in the labor market,
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slack is diminishing, and wageso are rising at a brisk pace. we understand that high inflation imposes significant burdens, especially on those less able to meet the higherin costs of essentials like food, housing, and transportation. we are committed to our price-stability goal. we will use our tools both to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched. the recent rise in covid-19 cases and the emergence of the omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation. greater concerns about the virus could reduce people's willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions. to conclude, we understand that our actions affect communities, families, and businesses across the country. everything we do is in service to our public mission.mi we at the fed will do everything we can to support a full
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recovery in employment and achieve our price-stability goal.c thank >> thank you, chair. secretary yellen, thank you for your comments on the debt ceiling. we have two more weeks. we know failing to get this done will hurt families and small business and our whole economy. i want to ask you about something else though. companies had larger profit margins in 2021 and 2020 and then 2019 before covid-19. in 2020, top ceos made 351 times the income that a typical worker made, even during an ongoing pandemic when faced with increased demand, big corporations refused to cut their own profits. they raised prices on people and complained about having to pay workers more. never mind the fact they have been giving themselves raises for years.
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the cost of housing and medical care and almost everything else for most workers has been rising for years. you have said the bipartisan if the structure bill and build back better bill will bring costs down. can you explain that? sec. yellen: yes, the build back a better plan contains support for households to help address some of the most burdensome and most rapidly rising costs that they face. for example, the cost of childcare, which is virtually unaffordable for many american families. there are subsidies for quality childcare that will bring down the cost for the great majority of american families. universal pre-k for three and four-year-olds, and a child tax
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credit. all of that will bring down the cost of childcare and for families that are facing crushing burdens, for example very high rental costs in many areas, the additional money they get through the child tax credit will help them keep a roof over their family's heads. it is already helping them put food on the table. with respect to the costs of caring for the elderly, build back better contains support for those who are disabled and the elderly to get care in their homes. there are subsidies and an increase in the pell grant and
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money for education and workforce training that will make that more affordable and reductions in the cost of prescription drugs. these are some of the most burdensome items in family budgets, that has risen more rapidly than prices over time, and the bill will help families meet those burdensome expenditures. >> chairman powell, is it still your belief that higher races in certain sectors are chiefly caused by the people we are experiencing as a result of the global pandemic and as it eases so should inflationary pressure? chrm. powell: i guess i would say it this way. generally, the higher prices we are seeing due to the imbalances
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that can be traced directly back to the pandemic and the reopening of the pandemic. but it is also the case that price increases has spread more broadly in the recent few months. but i think the price has increased. chair sherrod: this is a question for both, the dollars controlled by american but controlled by opaque secretive technology companies over and over on issue after issue. we have tech funds putting profits in front of people with the election and our markets. is it risky to let control over our money falling into the hands of these companies? sec. yellen: i believe that stable coins can result in some greater efficiencies in the payment system and could
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contribute to easier and more efficient payments, but only if they are adequately regulated and the president's working group that i chaired recently issued a report indicating that there are significant risks associated with these currencies, risks to the payment system, risks of runs and risks related to the concentration of economic power, and we have called upon congress to put in place the stable coins, regulatory framework that would make them safe and protect consumers and put them on a level playing field with other providers of similar services, such as banks. chair sherrod: chairman powell, do you agree with that? chrm. powell: yes, i do.
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chair sherrod: i think it is important to look at historical perspective as both of you have explained to me. in the late 1990's and early 2000, over-the-counter derivatives and subprime mortgages were billed as financial innovations. financial regulators pushed to weaken safeguards, saying that a cloud of legal uncertainty hung over the derivatives markets and regulations, and the words could discourage innovation and growth and drive transactions offshore. later, the baking lobby argue that regulating subprime mortgages would decrease borrower to an reduce access to capital. an inquiry commission cited derivatives and subprime mortgages as key factors in the crisis. it looks again, again like the financial industry uses the same arguments for stable coins and decentralized finance platforms. all of us on this committee and
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both parties should be concerned about that and understand the historical parallels and listen to this very bipartisan panel. sen. toomey: since the top of the debt ceiling came out, let us be reminded that our democratic colleagues have raised the debt limit all by themselves, anytime they want and there is nothing republicans could do to stop them. the tools have been available all year long, and republicans have offered to expedite the process. there is only one reason the democratic politics refused to use reconciliation to raise the debt limit, and that is because they would have to specify the amount of debt want to inflect on the american -- inflict on the american economy. they want to deflect from this spending they are on and not specifying a dollar amount. i think we should be very clear about what is going on here.
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under the fed's new flexible average targeting, the inflation target remains at 2% but now it is on an average over an unspecified timeframe. the preferred inflation metric is running above 2% over the past five years, nearly 3% over the past two years and 4.1% over the past year. it is about target and has been above target and accelerating. yet the fed has maintained an extraordinarily monetary policy stance. it looks to me like this framework appears to be awaking of the fed' s commitment. how long does inflation have to run above your target before the fed decides maybe it is not so transitory? chrm. powell: first of all, the
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task we have articulated has clearly been met. inflation has run well above 2% for long enough that if you look back a few years, inflation averages 2%. i think we can say that here it was not the case going into this episode of many years we had inflation at 2%. the word transitory has different meanings to different people. to many it carries a sense of short-lived -- we tend to use it to mean that it won't leave a permanent mark in the form of higher inflation. it is probably a good time to retire that word and try to slain clearly what we mean. sen. toomey: it still strikes me as extraordinary that the economy, long past recovery, flown expansion. unappointed is down, record high asset prices, housing is leading the way that in many areas
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houses are unaffordable for people and yet the fed will purchase $35 billion in mortgage-backed securities in december alone and scheduled to continue more for the months on end. i would strongly urge you to reconsider the pace of the tapering. secretary yellen, i want to follow-up on the stable coins. payment stable coins were defined and the definition is, and i quote, though stable coins designed to maintain a stable value relative to a currency and therefore have the potential to be used as a widespread means of payment." that certainly covers every coin that exists. what is perplexing is the working group recordation is all stable coins be required to be
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issued by depository institutions only, yet as you know, the mechanism by which the the value of the coin is very significantly. -- coins vary significantly. why suggest they all must be regulated the same way and treated as depository institutions? sec. yellen: well, they all have the potential to be used as a means of payment, regardless of how they are used at the outset when they are introduced. antistructure and adhere to which is that they have a stable value relative -- and to structure and inherent to which is that they have a stable
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value relative is what they adhere to. sen. toomey: i think we should think this through. the very different designs suggest there might be different regulatory approaches. mr. chairman, i want to note that pillar one of the biden administration's international tax agreement will be the most significant tax change in 100 years. to implement it, everyone of our bilateral tax treaties need to be modified. there is no historical precedent for bypassing the senate treaty process to implement pillar one. secretary yellen, during a recent briefing i asked you to acknowledge the administration would need to come to the senate for treaty approval to implement pillar one. he responded that treasury has yet to determine whether a treaty will be needed or not. in my view and that of many of my colleagues, and lamenting pillar one would require modifications to our existing bilateral tax treaties and those modifications must be approved
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by two thirds of the senate. executive branch cannot ignore the senate on the matter that is clearly our constitutional responsibility. chair brown: senator reid is recognized from rhode island. sen. reed: let me thank secretary yellen for being at the sick care congress. i learned something there. she is only person who has been the chairman of the federal reserve and secretary of the treasury, so thank you for your work. and let me, chairman powell, congratulate you on your appointment to the fed. we have seen as you have discussed, steady job growth. what is troubling is the labor participation rate has remained depressed. until we get that participation
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rate up higher, we are going to have the complaint we received the inability to get workers, etc. how do we do that, and what do you think is the cause of the follow-up in participation rate. how do we rectify those causes? chrm. powell: it is very surprising, since june of last year the unemployment rate has dropped 6.5% and participation has moved up 2/10. when unclaimed insurance ran off and schools reopened and vaccinations, we thought there would be a significant increase in labor supply and it hasn't happened. there is tremendous uncertainty around why but a big part is clearly linked to the ongoing pandemic. people are reluctant to go back
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to work and reluctant to leave their caregiving responsibilities and go back to work because they feel like schools to be closing, things like that. what i am taking on board is it is going to take longer to get labor force participation back. there are not going back to the same economy. really it is going -- often labor force participation is a lagging and follows big improvements in the on employment rate. that means to get back to the kind of great labor market we had before the pandemic, we will need along extension to get that and we need price stability and the risk of persistent high inflation is a major risk to getting back to such a labor market. senator reid: madam secretary, let me thank you for your work on the rental assistance
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program. steps like bulk utility payments have been helpful to rhode islanders trying to get the returns. one area is very difficult and that is the homeless population. can you look at and try to develop the guidelines to emphasize how funds can be used for homelessness? sec. yellen: that is an extremely important area. we would be happy to work with you on it. funds can be used to provide housing stability services and a range of services to the homeless to help them find stable shelter.
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something that treasury did, a flexibility we built in to the guidelines is e.r.a. statute requires the eligible for assistance, household has to have a so-called rental obligation, recognizing that would be something that would be challenging for families experiencing homelessness. we created an opportunity for e.r.a. grantees to provide individuals with a letter of intent to pay a rental obligation. so with this letter of intent, that would make it easier for the homeless to be able to secure housing. those are two forms of flexibility we think will help and would be glad to work with you to see if we can identify more.
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sen. reed: thank you it would be helpful. just a final point, with the homeowner assistance fund, i know you are looking at the state plans and if you could accelerate that to get the money out, because as you well know, a lot of these moratoriums on eviction are either gone or going, and it would be very helpful to get the money now. chair brown: the senator from idaho is recognized. >> some to believe you have announced that unless a debt limit increase or suspension occurs before december 15, that the treasury faces imminent default. that is not how i read your comments. it would be helpful for you to clarify what your current projection is for when treasury would run out of headroom and
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run dangerously low of operating cash. i also request that projections to the finance committee and look forward to receiving those projections. sec. yellen: let me clarify what i said. what i indicated in my most recent letter to congress is that i have a high degree of confidence the treasury will be able to finance the u.s. government through december 15, but there would be scenarios in which treasury would not have sufficient funds to continue to finance the operations of the u.s. government beyond that date. i would note that on december 15, treasury will invest funds from the infrastructure bill and
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that will use up $118 million worth of capacity when those funds from the highway trust fund are ingested in government securities. i didn't say there is no way that we can make it past december 15. there is a range, there is uncertainty about whether cash balance will be -- and our resources right now, there is uncertainty about where we will be on december 15, and there are scenarios in which we can see it would not be possible to finance the government. that doesn't mean that they are not also scenarios in which we can, but we think it is important for congress to
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recognize that we may not be able to and therefore to raise the debt ceiling expeditiously. sen. crapo: thank you for that clarification. chairman powell, inflation hit 6.2% last month, highest in more than three decades. still, the administration is pushing for support of a nearly $2 trillion social spending package, and that number even accepts their budget gimmick that hide real costs that could mean several trillion more in spending over the next 10 years. most of that spending does nothing to a mill urate problems -- ameliorate the problems. i am concerned the administration is not taking those threats seriously and with energy prices is enacting regular -- regulatory that is
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dangerous. how do you went to address inflation? chrm. powell: i do think that the threat of persistently higher inflation has grown. my baseline expectation is still that inflation will move back down over the course of year, closer to our target. the risk of more inflation has risen. you have seen our policy adapt and you will continue to see it adapt. we will use our tools to make sure higher inflation does not become entrenched. sen. crapo: i noted in the opening statement you indicated that inflation pressures will linger well into next year. you do stand by that? chrm. powell: yes, i think we can now see is certainly through the middle of next year it is an expectation. forecasting is not a perfect
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art, as you may have noticed. but right into the middle of next year. that is the expectation, but what has happened is the day has been pushed out repeatedly as supply-side problems have not really improved. sen. crapo: if congress were to pass an additional 2 trillion plus in spending mixed with a number of increases in taxes, would that add to inflationary pressures? chrm. powell: i am sorry, i will just note that we had a long-standing policy of not commenting on active legislation , as you aren't surprised to hear. sen. crapo: one last question. you have indicated there would be a report by the fed on this discussion paper related to digital currencies, and that has been delayed several times. when can we expect the report and other reasons for that delay? chrm. powell: i would think very
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soon. certainly in coming weeks. the reason is they are just trying to get it right and find the time to get it right. sen. crapo: thank you. chair brown: senator warren of virginia is recognized. sen. warren: thank you. congratulations, chair powell, on your reappointment. i want to start with you. i think the fed's activities during the pandemic which included extensive use of 13 facilities and aggressive bond researches help to stave off what could've been a complete economic meltdown. and while we did spend in excess of all on recovery from covid, i think history will treat those
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actions. from a historical perspective it will be well regarded both to the american economy and for the world economy. but as you have indicated, i think we are seeing our economy come back. we will differ on the bipartisan infrastructure plan, that is part of our job. i have seen since the fomc meeting that the fed signals a shift, announcing starting to move back from the very aggressive means you've used, and announcing tapering on the pace of bond purchases month by month as the economy continues to strengthen. which factors most influence that decision for a gradual change in course and how long do you think it will take the fed to gradually wind down these purchases? chrm. powell: we haven't made a decision on that.
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the most recent data, particularly since the november fomc meeting show elevated inflation pressures, a rapid improvement in labor market indicators labor market indicators without an accompanying addition of labor supply, and also strong spending that signals growth, mosignificant growth in the comg months. remember every dollar of asset purchasesn adds accommodation t at this point the economy is very strong and inflationary pressures are high therefore it is appropriate in my view to consider wrapping up which we announced at the november meeting i expect we will discuss that at the upcoming meeting of course between now and then we will see another labor market report and inflation report and get a better sense of the new covid variant.
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you say you were surprised. i think most of us were, coming back in september we didn't see more folks reenter the labor force. i believe that tapering and accelerating serves as kind of insurance policy if we don't get this return and we see these potential overheating of the economy, so i do hope that you willve move more aggressive on this. i would also like to touch again you mentioned the new variants. what factors, one of the things we have to maintain is the ability to move quickly and obviously congress moves very quickly president trump and the secretary. hopefully we don't have to come back to those kind of actions to this entity but with these new variants coming on board, what
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are the markers you're going to look at to determine how that might influence thenc activity? >> at this point i think we are all looking at the same thing and listening to the experts, which i'm certainly not one of those but it's about transmissibility and the ability of the existing vaccines to address any new variant once it is contracted, and we don't know, i think we are going to know what i'm toldto by expertss we will know quite a bit about those answers within about a month. we will know something within a week or ten days and then and only then can we make an assessment of what the impact would be on the economy. i pointed out, for now it's a risk to the baseline, it's not really baked into the forecast. >> i'm down to my last 20 seconds. i'm not going to let it get away without raising an issue i
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always raise, and i've raised this with you as well. a smart action that took place again under president trump and the investment minority depository institutions and i want to thank so many others including the secretary that we made that investment and you now are implementing that and we have seen a greatt. take-up rat. i guess with this demand exceeding the money we had, what else can we do to shore up these institutions and i would like to press both of you and maybe you can take this for the record how we might even be able to look at the security so that again we can increase the liquidity briefly recognizing i've gone over. >> thank you mr. chairman.
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>> we would be glad to work with you to discuss possibilities. i think that the infusion of funds is historic and it's going to make a tremendouse differene to their ability to support businesses, particularly in minority areas. we've seen a huge take-up of the funds that have been provided. it's $4 billion subscribed. we are looking throughpl applications and we will try to make decisions on investments, but it certainly shows that it's a program that has the potential to make an enormous difference to this lending we would be happy to work with you to find ways to make it more effective. >> if you could just say yes you will work with me, that would be
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great. >> i will work with you to read. >> the senator is recognized for five minutes. j >> thank you mr. chairman. first of all, chairman powell, congratulations on your nomination. i think you've provided stability during a very challenging time. it's good to see you once again and i think you for your service to the country. in september i asked you when you would say enough is enough. you acknowledge that the data becomes an issue when inked receives a level that we have already hit but since it's been negative, it's been less burdensome. due to the skyrocketing inflation i think it's a matter of time before we enter this low interest rate environment. do you think it's finally time
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to start sounding some alarm bells with regards tobe the financing of the national debt? >> i wouldn't want to sound alarm bells. i think we are in a sustainable pass, but president biden was very clear when he proposed the build back better plan that it should be fully financed as the infrastructure bill was and that is what they found a fact the fiscal plans that the biden administration have put forth an infrastructure and build back better will not worsen the debt or deficit path, and indeed by the end of the ten year horizon, build back better lowers
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deficits and a yields great benefits beyond the ten year horizon, particularly from the investmentrs to enhance its ability to close tax cap and collect revenues that are due under the tax code so it is a fiscally responsible plan that makes matters better rather than worse. >> the reason for my question is it's not just a matter of whether or not we have half a trillion dollars that will have to be financed or more during a ten year time period as the money comes back in for paying for programs that are four to five years in duration under the proposal, but rather, we have 29 trillion plus dollars and it will be refinanced at a higher rate and in fact treasury has run anywhere from 1.54 to 1.42
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the last couple of days. but they are going to trend upwards and there are some that would suggest treasuries may hit 3.5% over the next 18 months. do you think that would be a reasonable expectation? >> the forecasts that were included most recently in the midsession review assumed that interest rates would move up overtime over the ten year horizon in line with the forecast of other private-sector forecasters, and even then, given the expectation that real interest rates are likely to remain low and below levels that prevailed for the postwar period
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for important structural reasons that we've seen plentiful savings at the global level and week investment demand even with interest rates moving up, the interest burden of the debt remains quite manageable. of course there are scenarios in which interest rates could move up more than that, and we could be in the position. there's a chance that the interest burden would become difficult for us to manage, but i believe we could have this decision -- >> chairman powell, i recognize, and you've been very consistent you manage based on the direction that is full unemployment and a 2% interest rate goal what to do they take into account the debt servicing and credit worthiness when it deconsiders the interest rate
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decisions? >> i think certainly the cost of programs it all goes into the model. you mentioned credit risk. there isn't any credit risk baked into treasuries at this time, and i wouldn't expect that there would be certainly in the foreseeable future. >> when you look at this, do you project that treasuries will rise over the next 18 months? >> generally that is something theg staff has been forecasting ever since i got to the fed ten years ago and it really hasn't happened. what has happened is as the secretary mentioned, you have a global series of long-running global forces that are leading to lower sustained interest rates. how long will they last it is hard to say but right now, we have lower inflation trend, currently the moment the markets
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arear baking in the return to te lower inflation. >> mr. charan, thank you for your time. >> thank you for your answers. >> senator from new jersey is recognized. >> one of the central pillars of the house version of the build back better act is an expanded childcare support program that would provide direct support to families with high quality childcare. madam secretary, but expanding access to child care services improve the labor force participation rate and overall economic outcomes? >> senator, i believe that it will succeed in having that impact. one of the reasons the labor force participation, especially of women in the unitedis statess now lower than that in many
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developed countries once upon a time we were the leader and now we've fallen behind in a major difference between the united states and other developed countries is our support for child care and things that enable women to participate in the labor markets, so i believe that provisions, the subsidy for child care and the universal two years of pre-k, both of those things i believe will enhance labor force participation. there are a number of studies that show that the treasury office of economic policy recently issued a paper that summarized some of the evidence and recently the congressional budget office in assessing build back better issued a statement
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that indicated this was likely to boost labor force participation. >> i agree one study suggests the rising cost of childcare resulted in an estimated 13% decline in the employment of mothers with children under the age of five and another study found one major city started offering two years of free public preschool the percentage of mothers with young children participated in the labor force increasedd by 10%, so you had a real life reality of that. one of the things i'm looking forward to on this is the effect on minority families. a study from october and the "washington post" showed a black men and women are twice as likely as their white peers to report that they are unable to look for work because they cannot find childcare, so there's evidence that the
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currently broken childcare system especially harmful to the most vulnerable memberso of our society, chairman powell, earlier this month i sent you a letter along with chair man brown and several of our senate colleagues asking you to work closelyk with the boston and dallas board of directors into the search committees to find and select diverse candidates in the open presidents position. we hadn't had a hispanic in this role. can you give an update on how that is going including what specific steps you take to ensure the diverse candidates are being considered? >> the searches are just getting going now. i believe they've hired i headhunters and i know the process well and we will involve extensive outreach to all kinds of communities and an openness to different kinds ofpe candidates. it's essential, we believe, that of the diverse candidates be identified and given every
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chance to do well and when the processes as they go forward. so i can take you through the details if you would like off-line but it's something we are pretty committed to. i would very much like to see that, because as you and i have discussed on several occasions, the federal reserve has a serious problem particularly at the leadership level into the lack of minority representation hurts the fed's ability to do its job, especially when we talk about promoting maximum unemployment and price stability. it's essential that the fed has in place individuals that understand how an uneven recovery will impact minority communities. so, i look at this as the beginning of i hope and effort as it relates to diversity, and i hope that we will have a successful result.i i understand a process that hopefully includes good qualified candidates to be considered, but i hope it will lead to a successful result. madam secretary, let me turn to
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you on the same question. how have you empowered the treasury's first counselor for the racial equity to diversify the treasury departments. this is something i've raised with you several times, and i can understand what her first goals will be. w what are the immediate goals for the racial -- >> briefly, she's empowered to review and look for ways to enhance not only the internal hiring and diversity efforts within treasury, but also to review the programs that we conduct, whether it's the emergency programs that were authorized by the arp or the tax code in the way that it's administered more broadly. we've asked her to undertake the review of ways in which these
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programs can be changed or they may have unintended negative consequences on diversity or minority communities, and we are asking her to look for ways to improve what we do both internally at the treasury and with respect to the many programs we conduct. >> i look forward to seeing the effects of her work. thank you. >> senator telus is recognized from his office perhaps. he may have turned his camera off. senator kennedy from louisiana is recognized. >> madam secretary, welcome. mr. chairman, welcome. congratulations. mr. chair man, i want to start with you. i realize that no one is
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clairvoyant, but i think it's fair to say that the experts that have been advising you about the future rate of inflationre have pretty much the same credibility as those late night psychic hotlines you see on tv. is the fed considering increasing the pace of its tapering? we've got to get control of inflation. it's ravaging our people. >> i think what we missed about miinflation, we didn't predict e supply-side problems, and those are highly unusual and very difficult and nonlinear. it's hard to predict those
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things, but that's what we miss and that's why the professional forecasters had lower projections. you asked about the paper, so yes as i mentioned earlier with the labor supplypp and we have seen strong spending data and remembering that every dollar of asset purchases does increase accommodation. we now look at the economy that isha very strong and inflationay pressures that are high and that means that it's appropriate i think for us to discuss that at the next meeting in a couple of weeks whether we will be appropriate to wrap up the purchases. >> at the end of the two weeksks we will get more data and learn more about the new variant. >> thank you, mr. chair. madam secretary, you and i don't agree on everything, but i have
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great respect for your intellect and experience, and i understand you have a job to do, but i would be remiss if i didn't point out that in my opinion, there is no fair-minded person in the milky way that believes the infrastructure bill and the build back better bill are not going to require the american people to incur a substantial debt. i am looking for a number. how much in the biden administration's opinion is too much debt? at what point as you incur debt
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will the biden administration say okay, that's it? we can't borrow anymore nor it's going to hurt the american people. >> first of all, i want to say that i disagree with your assessment of build back better. it is fully paid for or even more than fully paid for and cdo just completed a comprehensive review in which they found essentially the same thing, and tai believe it is important that it be fully paid for. i think no single metric is appropriate for evaluating whether or not the level of debt in the economy is reasonable and sustainable. we are accustomed to looking at the debt to gdp ratios and using
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those kind of metrics and looking around the world. many economists have found the debt to gdp ratios of 100 or more tend to been associated wih significant problems. we are in very different times, and that's why it's important to recognize there is no single metric that's right, especially in a world of very low interest rates. it's appropriate to look at the burden of the debt on society, which is better measured by the real interest burden of the debt, and that is exceptionally low, negative currently but as they normalize -- >> i'm going to ask you this, madam chair. you gave a great speech back in september of 2019. it was actually an interview,
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and i ordered a copy at the time. you, i'm trying to find my copy. this is what you said. i thought this was such a wise statement. the former fed chair said she isn't worried about the ratio in the united states right now but added, and i quote, i am worried about the trajectory of where it's going. the debt is going to escalate and create problems down the road, but most important in the demographic way that lies ahead of us is going to essentially over the next 30 years there will be spending on three programs, social security, medicare and medicaid. this was the share of gdp and the increases both because of the aging population and on the healthcare side, medical o
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expenses those things put us on a trajectory of a completely sustainable budget path. that is when the debt was 17 trillion. it's 29 trillion. you're going to add trillions more to the build back better. why is that not true today? >> i want to repeat again, build back batteries fully paid for and will not add to the debt or deficits. >> you and i don't agree on that. >> cdo certainly agrees with what i said, and we do have tuproblems eventually in financg medicare and social security, which need to be addressed. >> thank you, mr. chairman. >> senator van holland is recognized for five minutes from maryland. >> thank you mr. chair man and both of you for your service. chairman powell, congratulations on your nomination. i really want to pick up where
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you just left off. i remember three years ago in this committee and the budget kennedy talking about the republican tax breaks for big corporations. >> that is my recollection that that was the kind ofll member. >> it's interesting to hear so many of my colleagues who didn't give a damn about adding to trillion dollars to the debt now talking about the build back better bill, which as you said doesn't added to the debt at the end of the ten years and in fact the congressional budget office has already done itse analysis and one of the ways that it doesn't add to the debt is that we close some of those tax breaks from the multinational corporations who like to park their profits and tax havens and
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we got rid of some of the incentives and that a bill that actually encouraged u.s. companies to ship jobs and equipment overseas; is and that the case? >> that c is the case. >> and can you talk about your successful efforts to establish a sort of 15% global minimum rate in order to prevent the race to the bottom? >> yes. over decades, whatve we have sen is the countries have been engaged in a race to try to attract more multinational firms to do business in their countries by cutting corporate tax rates, and if you look at the pattern of course you see the big corporate tax rates have simply been trending down. the consequence of that is that the corporations have paid less and less tax in the united states and elsewhere.
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countries like the united states and other countries are raising less andnd less money through taxation on corporations. in the united states, corporate taxes have fallen to around 1%of of gdp as a consequence of this and this international tax agreement that's been endorsed by i think 137 countries, countries have agreed to hold hands and say enough is enough, we need to raise taxes to support infrastructure spending and to support investments and people, to make our economy is productive to grow over time. corporations that are profitable and successful need to pay their fair share, so we want to be able to tax companies that are reasonable and to stop this race toan the bottom, and that is wht
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the 15% global minimum tax achieves. from our point of view, the difference, we are the only country right now that has a globalal minimum tax and/or taxs 10.5%. it's half what companies base with and operate of only the united states or multinationals pay on their u.s. income, and that big differential encourages multinational companies based in the u.s. to shift their profits abroad, so by raising our own rate from 10.5 to 15, we narrowed the differential and helped purely domestic firms that right now are on and on an affair and unlevel playing field versusus multinationals that can shift their activities abroad in
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the global agreement. >> thank you madam secretary. i think it makes common sense and it's important for u.s. businesses. there's also a provision that says folks making more than $10 million should pay more inn u.s. taxes. i think that makes sense to most people around the country in order to help the whole country succeed. you mentioned some of the itemsh that we will invest those funds in including lowering childcare costs into saying no family should pay s more than 8% on childcare costs that's one of the items, right? >> yes. >> you also mentioned with respect to the child tax credits this is one of the largest tax cuts, is it not, and we are talking about $3,600 up to $3,600 per year, per child, profamily, which will expiremi n december 31 if we do not extend
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it as a part of the build back better legislation. >> that is true. >> we are talking about closing the corporate tax loopholes and those making more than $10 million to pay more so that we can lower the costs and financial squeeze on american families and it's all paid for, isn't that right? >> that is correct. >> senator tellis is recognized. chair powell you know it was
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risen by 5% within the prices pushing inflation upward. i want to make sure i understand your perspective on how it is calculated if the federal government provides subsidies to every american runner so the out-of-pocket is the same as it was 12 months ago even though the sticker price has gone up would that mean they would see no installation of rent? >> i'm not sure how to collect the data but it would be what is the landlord receivingre would e my guess. >> it's receiving more in spite of the fact that payment would have been subsidized. >> i will come back to you. i don't know the answer on that. >> what would be your position?
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>> i would agree with the comments with of the number and we subsidized because it is at 14% more expensive, so i would like you to get back to me on that. i have another question for you. we had the original covid virus. we've had to tell diana some variants that haven't been designated as a variant of concern. it's now being viewed as a variant of concern, and after that we will have but i'm a bit worried that the administration has a policy of just zeroing out covid. the goal is to remove the virus that is likely to be around for as long as we are alive. it's going to be like a flu season. but i feel like we are still in this mode where monetary policy or fed policy is heavily
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instructed by the risk of another onslaught of a virus. we took the first and now we are dealing with variance so at what point do we just gete back to a more normal execution of the policy that isn't influenced by may be the next threat as if suggesting we are going to go last we were i don't think that most people think we would treat a variant the way we had to treat this new so at what point can we get away a from seeing the markt and the fed appear to react based on and implement a policy that looks like what we had to do last year with something affecting our economy? >> we are not thinking, and i am not thinking that the affects on the economy will be remotely comparableot to what happened wh the shutdowns or that there will be additional shutdowns.
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we are focused on the price stability and we've tried to adapt the policy as we've moved along we will continue to do that and part of the world, i agree we are going to see this being around for probably a long time. at the economic effects will diminish. we have to be humble but we are not at all thinking that we haven't made progress on the economy or that as you suggest. >> i think it would be helpful for the administration to be more specific to the american people to understand that it's going to be among us. it's a new virus that is going toto be here. we cannot have talk or expectations that we would react the way last year but now we have to deal with the fact that it's amonghe us. secretary, first i would like unanimous consent to fact check
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on the economists and nobel winners that president biden has cited as the build back better plan being non-inflationary. i think if you read further into the letter and hear other comments, they say that longer-term, it may reduce inflation, but short-term it may increase inflation so rather than drill down on the question, my time is expired and i'd like unanimous consent to submit a fact check and to say i think there are laudable goals in what's put back into the build backut better plan, but i don't think they are sustainable. i think the way they've been passed out of the house is problematic and i tend to agree with senator kennedy that we have other promises we've already made it to the american people with respect to medicare, medicaid, social security that are promises we've already made as we continue to add more and more stressors on the debt and
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deficit those are going to be promises that are broken and once we get that on sound footing maybe we should consider other ways to help others. >> senator warren from massachusetts is recognized. >> thank you mr. chairman. so, as you know in the early to thousands, the fed isy stood by and failed to use its authority to regulate and supervise the biggest banks in the country and the result was a financial crash that cost millions of families their jobs, their homes, millions their savings. that's why i believe vigilant regulation is a part of the job. chair powell, you recently stated that it would be appropriate, quote, for a new person to come in and look at the current state of regulation and supervision and suggest appropriate changes. is that still your position?
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>> yes. >> the press also reported as the agreement to defer to the vice chair for supervision, so i want to ask you a specific example of how that difference would work in practice if you are confirmed and if the new vice chair for supervision suggests the regulatory action that you disagree with, will you bring that matter before the federal reserve board for consideration? >> let me say what the law does is gives the vice chair the authority to set the regulatory and supervisory agenda, and i would expect to have a perfectly normal working relationship with the chair for the supervision. i wouldn't see myself as stopping thoseys kind of proposs from reaching the board since it seems to indicate that that is the job of the vice chair for
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supervision. >> just trying to be clear on your understanding of it so you would bring that before the full riboard for consideration even f you personally disagreed. >> that would be my general intent, yes. i can't cover every possible situation but yes that's my understanding of how this is the only other office that has specific legislative grant as the vice chair for supervision and that is what the job is. >> i appreciate that, so you're saying you would do it and feel like you were legally bound to do it? if the vice chair for supervision recommends regulatory action with which you adisagree such as undoing a rue that the vice chair brought forth and you voted in favor of, what does it mean to defer under the circumstances?
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>> we are a commission structure, the sole voice. every vice v chair for supervisn and those that held the job beforeit him, they have tovi convince the other members of the board. that's how it works and how i would expect it to work going forward. >> i appreciate that, but your language was you would respect that authority which is why i believe many in the press interpreted at that is deeper and i'm trying to understand that. of those were your words. >> i would say a couple things, respect the authority to the proposal and i also think a person that arrives with particular views i would say that person is entitled to a degree of deference but i wouldn't overstate that. the person still would have to convince the members of the
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board to vote for whatever that person is proposing. >> if thee person in this role proposed new capital requirements to incorporate banks exposure to climate risk, would you vote for that? >> what i voted for that, i would have to see what you are specifically talking about. >> very helpful. ii appreciate the answers. during the last four years while the fed was chipping away at regulations piece by piece, new and emerging threats to the financial system continue to grow. i think about the list right now, climate change, right now climate change is on pace for the global economic output by as much as $23 trillion annually by 2050. the market cap of the market is $3 trillion, six times bigger than just a year ago and this is
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explosive growth coupled with almost no regulation and guardrails to protect either investors or the financial system. the scenario here writes itself. they grow bigger by the day. nearly twice as much money as the entire economy of japan while the fed refuses to work to declare them a significant financial institution. growth and collateralized, the list goes on. this is why i believe the fed must take a more active role on regulation. failure to do so puts the entire economy at risk. thank you, mr. chair man. >> thank you, chair man brown. i appreciate you holding the hearingld today. thank you for your testimony. i want to congratulate you on your recent renomination and i look forward to the hearing
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that's coming up and i appreciate we are going to be seeing the report on the digital dollar soon. i think it's an opportunity to take a lead in innovation so thank you for t that. i would like to pose my first question to you. every move president biden has taken so far is seemingly improved russia and vladimir putin's strategic position. from capitulating on the treaties and congressional extension to not fully enforcing mandatory sanctions, we see russia and putin now with leverage and strength with partners in ukraine that they haven't had since the fall of the soviet union. natural gas prices have been soaring to the benefit and now in real time, just like watching a fatal car crash we are seeing an unprecedented number of troops on the border of ukraine. secretary, i want to make
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certain that you have all the authority you need in congress to detour that russia invaded ukrainera after what happened we certainly can't again. >> we do have authority to impose sanctions the president signed i believe in april into the executive order expanding treasuries authority to impose sanctions, and we are aware of the true build up and have adequate authority. >> madam secretary, i'm pleased to hear you have the authority for the pressure.
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i'm curious to hear with the biden administration's strategy is to stop this train wreck that enappears to be happening at the border of ukraine. >> we are very cognizant of what is happening and we are involved in discussions about the appropriate setet of steps. >> madam secretary, with all due respect i hope that we can talk much more in the discussions about strategies to send a strong message to putin. ssthis is the largest build up that we have seen since the fall of the soviet union. they are taking a very aggressive posture and i would encourage you to send a strong message that we are capable of and you have the authority to put significant financial pressure on that regime. >> agree that is appropriate. >> i will turn to another topic we discussed before back in september. we talked about the taxpayer
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information that was done for political purposes. youl testified then that it's being investigated thoroughly and there can't be any tolerance for that, so given the testimony, i want to ask you have they been identified? they are within treasury, the inspector general, the fbi and doj conducting investigations. nothing has been reported out yet from those investigations that i am aware of, but i believe thoseev investigations e moving forward. >> i take that as no update, but after the lowest learner scandal that occurred in 2021 under this administration's watch, i appreciate the fact that there
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is an investigation underway but i would say until we have the results of that and a true accountability, i cannot imagine how the administration is encouraging the ten times increase in the capacity of the irs when there's no accountability. this is the dc swamp at its best. >> we don't know what theno soue of the leak of the information was, and i would say it's premature to indicate that it came from the irs. >> i think that underscores my case we can't even determine the source. we know that it was irs information. this is the smog and i cannot encourage and certainly my constituents can't condone this aspect of the planer that would give even more authority and a tenfold increase in the budget to snoop on more americans. >> we have an enormous tax cap over the next decade it is estimated the actual tax collections will be 7 trillion
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below what is due and the irs has been starved of resources over the last decade so that they are not able to conduct meaningful audits of high income individuals were complex partnerships or corporations, and that's where most of the tax cap law use. these are important resources that are needed to make sure the wealthiest individuals and corporations particularly comply with the tax laws and pay their fair share of what to do. >> i would encourage to make sure they are focused in the direction they should be rather early in the conservative groups and ordinary americans in the leaking that information to the public. >> senator cortez masco is recognized. >> secretary yellen, chairman powell, welcome and
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congratulations on your nomination. i also want to express my appreciation to the treasury department and federal reserve staff, because we cannot forget why we are here. we have passed over the last couple of years several covid relief packages that were bipartisan support except for maybe one of them, and the money was immediately put out to help our families, our businesses and so your staff have taken extraordinary efforts not only avoid an economic collapse during this deadly covid-19 pandemic, but getting billions of dollars in relief and loans to help us manage the economy, help the small businesses, help families as a tremendous feat and we shouldn't forget that, so thank you to the staff that have worked so hard as well. let me talk about something that is impacting my estate, the supply chain disruption. and i know you all are working
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on this. sec., president biden announced a plan to address the supply chain disruption. it's clear the vaccination rates and repeated outbreaks and overreliance on chinese imports contributes to some delays and shortages, but where has president biden's initiatives to address the disruptions been successful and where are some of the sticking points that might persist past the second half of next year? >> president biden, the administration created a supply chain disruption task force in june and it's been working broadly to identify places where the white house could make contributions to be effective, and i think we are beginning to see progress at the ports. as you know, president biden
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worked with the ports of los angeles and long beach, where there been long delays in unloading the ships waiting for many days to be able to offload the containers. they've agreed to remain open 24/7, which they are now doing. also, the administration has worked with the need to the retailers that were leaving containers for long periods of time on the docks without picking them up to make sure that they begin to expedite the movement of the containers away from the ports. in other areas, in savanna the president has worked to establish locations away from the ports where containers could
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be brought, moved and deposited to create more room at the docks to keep the cargo moving. so there is just a wealth of interventions and working with private sector, these are private sector participants that are responsible for the supply chain, but bringing together parties, we are looking at ways that maybe we could work with states and cities to expedite the licensing, commercial drivers license to raise the supply of truck drivers which are in short supply, and of course a lot of this is related to the pandemic and it comes back to increasing vaccinations, boosters, gets the pandemic under control
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so that the patterns shift back to more normal towards services and away from goods, but there is a wealth of interventions that the white house is involved in. >> there's also a role for congress to continue to support not only the administration but there's legislation that we can pass to actually help us address this as well, which is why the border supply chain resiliency act that has been introduced by several of my colleagues. it creates an office of resiliency of the commerce department, charged with monitoring, researching and addressing vulnerable supply chains.ra the office will provide loan guarantees and grants to small and medium manufacturers to allow them to address the bottlenecks by expanding production. we should be prepared for this knowing this has happened for the future long-term and
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short-term. >> i will submit the rest of my questions to you for future airesponse. thank you again. >> senator scott from south carolina. >> thank you mr. chairman and ranking member for holding the hearing this morning and thank you to the guests for being with us. thinking about the conversation i had over thanksgiving about the consequences of elections and over and over again elections have consequences we've heard. perhaps no finer point van elections have consequences is simply losing a single seatos in georgia, january 5th. f as a result of one lost his st in georgia may cost taxpayers just this year $5 trillion in additional spending. one single seat, $5 trillion of additional spending. 1.9 trillion on a covid relief
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package that had 1% for vaccines and less than 9% for covid related health, 1.2 trillion for infrastructure package with only 10% of the $1.2 trillion going into the roads and bridges in the next five years and now we are talking about overheating of the economy with another $2 trillion. elections have consequences. what i've heard of this morning is hard to process back at home in south carolina. if the administration wants you to believe what they say and not what you see, and are experiencing, what you see with your own eyes, they say by putting another $2 trillion inmy the economy, it will make things more affordable for you. but what you see and are experiencing is inflation in part caused by trillions of
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dollars of government spending and the anticipation of even more money. in other words, when inflation is over 6%, and the wage growth is under 3%, your buying power is going down, not up and they want you to believe that spending more money is going to solve this problem. the south carolinians on a fixed income, like social security averaging around $1,500 per month, their spending because of this transitory inflation. i don't know the definition anymore. a third of the social security income putting gas in their cars, heating their houses and fixing up the places they live
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the rising prices are hitting people the hardest that are on social security, families struggling paycheck to paycheck and single moms? it's not appropriate for me to comment on whether biden administration thinks. >> what do you think? >> if you think about families living paycheck to paycheck, they are feeling the high gas prices soon enough heating, oil prices, food prices, they certainly are feeling that. this is our job, to make sure that this higher inflation does not become entrenched. >> we've seen a loss of about
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1.7 labor force participation it means that the labor force participation rate also goes downat but before i run out of time let me follow up on the senator's point about expanding the power giving the irs more power to catch by starting with the irs a bank reporting proposal seems far-fetched at best because the original proposal if you make $12 a week putting $600 into your checking or savings account would cause that account to be reported to the irs so then they revamp that
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to $10,000 and said differently, if you make minimum wage, working almost full-time, your accounts would alsoac then be transferred at least available for heightened inspections by the irs. if you are looking to catch complex business partnerships in cheating their taxes, you don't need the irs reporting proposal. can you tell the american people today whether you'd still support any form of the irs bank reporting requirements, your department proposed earlier this year which will provide the irs currently undisclosed taxpayer information with a purpose of targeting essentially every single working american minimum wage or higher. do you still support that were not? >> i do support it. i think it's important that the irs has visibility into opaque
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income streams, and that is an importantan way of improving tax compliance if you are looking to catch, why would we start with something as low as $600 and revamp to $10,000 if you try to find millionaires and billionaires that are not running lemonade stands, i don't think there are, and they certainly aret not making minim wage so when you create a new approach to having the irs searchro through the account records and financial institutionsns -- or compelling the financial institutions to forward the information to the irs -- >> i'm sorry is this not detailed information about what you're doing? >> aggregated information going to the irs is the scariest
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proposal, and there's no way that it has to be anywhere near the thresholds that you started with in order to find a way to take accountability for those complex organizations. >> your time is secretary yellen, please answer the question. >> you had of the dialogue. >> we work carefully to narrow the scope of the reporting and in particular to exempt the wage earners and beneficiaries. ..
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>> no attempt to target income in earners whose incomes are below $40000 that is the low reporting requirements that was needed to make it more difficult by opening multiple accounts. >> thank you mr. chairman thank you for your renomination the fed as noted is beginning and to continue and according to the current schedule and what it is the specific economic purposes does this continue to serve?
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>> at our next meeting in a couple of weeks we will have a discussion about accelerating that taper by a few months in the intervening time we will see more data on inflation and unemployment and also the development of the micron variant. the purpose of the very beginning is all about market function and then we said we would continue it until substantial further progress was made. and then to support the economy in the way of longer-term interest rates do and it serve that purpose now the economy is strong and inflationary pressures are high. so we are looking at
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discussing the possibility of a faster conclusion to wrap up the purchases a little earlier. >> with those labor and durable goods as you noted rates are low in capital markets are highly liquid. so what economic purpose, i'm not disputing there is one so what economic person so as we stated that we will be reassessing the pace quick. >> that purpose it is serving as supporting economic activity in the trade for that has clearly diminished as we have seen significant inflationary pressures that is why we announced we word taper
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and why we will discuss a faster taper at the next meeting. >> when a future crisis arises the quantitative easing. beyond temporal temporal those that target interest rates. does it not for example providees additional liquidity to worsen the quality and are the balance sheets of major institutions of high net worth and investors quick. >> and the asset purchases work through much the same channels as the interest rate so when you at the lower interest rates you can promise
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to hold rates lower for longer and that will affect the curve and then you can buy funds directly. and the asset purchases are part of the toolkit. it essentially what iss happening is companies are experiencing are lower longer-term rates for their operations and mortgage rates. into supporting the economic activity to the same channels but the idea is it is not well supported and we never hear about that when we meet with community groups and labor complainey never about quantitative reasoning on —- quantitative easing. >> what you currently call the
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systemic threat in the united states. >> the banking system is strong there are some issues in the capital market that is of grave systemic importance we think about q cyberrisk as the one that is so difficult to quantify and that's the one i tend to lose sleep over. >> the senator from montana is recognized for five minutes. >> being on —- congratulations on your renomination i was supporting the renomination and congratulations you have my support.
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i will start expressing my concern and my democratic colleagues are continuing to plow ahead with a reckless tax and spending proposal and early this year senator scott made the comment of elections having consequences then we have policy outcomes. coming into 2021. with one.9 trillion partisan spending package. these are cash cannons shooting across the economy. we have created demands by injecting borrowed money into the economy and now democrats are looking at jamming through
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one.7 trillion-dollar reckless spending bill many believe the true cost is between four and $5 trillion they play games with truncatinghe the numbers the real number is $45 trillion but the point is that injecting into the economy is borrowed money. whether through mandates or government shutdowns we now have the perfect storm created by the biden administration for inflation not to mention issues of energy montanana will see a 47 percent increase in heating costs this winter. for higher energy prices. the proposal will have att least $300 billion deficit in the first two years and about $740 billion over the first five years. with all due respect you said it is paid for think the cbo has not said that even if you
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add up with the massive tax break given to the coastal elites the democrats put in there because they are donors screamed so loud. it is not fully paid for in the cbo has stated that. takes $80 billion to hire 87000 new agents should be chilling it is a massive expansion of government and that only exacerbates the inflation. that's why so many montanans and americans are experiencing the harms every day. the cpi readings are two major indicators jump to 30 year highs of four.1 percent respectively.
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we are seeing much higher inflation rates and the fed projected and many of us here were very concerned about inflation and had a different view of whereti the forecast was going at that time that is more than the fed has projected. in what hindsight would you say underestimated in the previous forecast? and what economic factors have changed to give confidence in your projection inflation will come down in the near-term? >> and those who blames his tools that is a poor craftsman what all forecasters missed it is the collapse of enormous
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supply-side with some conductor chips anddu lumber. we saw high demand coming and higher inflation coming that but this was a hard constraint that is not in the model we live and learn it's hard to model something that is not linear or incredibly infrequent. >> i spent 20 years in business the forecast is always wrong. so what have we learned from that having learned what has happened in the last six months to give you confidence the current forecast of diminishing inflation is accurate quick. >> we have learned a lot how to model. we haven't thought about that that you will never hear us say we have great confidence in our forecast. what is here are saying is there is tremendous
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uncertainty. we have been saying that for some time. also we do see these inflationary pressures to be sustained well into next year. we do expect them to subside the second half of next year that is widely held in the forecast in the community. >> using deficits in the rapid increase of the one.2 trillion dollar annual deficit will have an impact on inflation? >> i don't want to comment on fiscal policy. that is that to you. >>is you feel that rapid rise in debt? >> if i can stay in my role, unfunded spending can tend to be stimulative in the short term but i would just say we need to return to a more sustainable fiscal path
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but the timing and the means of doing that are not up to the fed. >> before i close i just want to touch. >> you can make a commentom number questions we are well over time. >> ever short comment to make montanans are concerned we have seen reports over the nominee for the comptroller i would encourage my colleagues to come out publicly for the nominations we can find a way forward on this nomination thank you. >> senator tester isse recognized. >> hopefully you can hear me secretary ellen and it is interestingg mr. chairman to those who have presented when you have a tax break with billionaires and that this
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will turn around the economy and the fact is by democrats and republicans it is a little disingenuous but the fact of the matter is we need to work to fix it to give tax breaks s to billionaires want to talk about housing for secretary ellen. we have housing challenges all over this country in particular housing challenges fun indian country and in some of tomorrow and frontier areas of our state of montana threat this country. we have done stuff from housing that the impact of
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covid-19 and with the particularly the indian country that's a big problem can you give me some indications on how we should be addressing this issue? for something that needs to be done? >> i think the issue of affordable housing is one that is from many years and certainly predates the pandemic and those especially low income workers that already are tremendously challenged and those that are
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helping those households and those that we have but that is where the president has proposed policies for what is a crisis in housing affordability with those investments of affordable housingn production that this country has ever seen. so i am hopeful that will be helpful with the funds that arele available for state and local governments and that arp can be used to address
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longer-term problems with respect to housingec affordability. >> so in the headlines today that housing inventory has caused an increase i in prices and it's dragging prices up it's pretty basic economics quite frankly. but with build back better, do you see a significant investment in supply for affordable housing quick. >> yes. it is mainly directed at affordable housing and in totally think the housing related provisions amount to $150 billion. i think that is substantial support to raise the supply. >> have to ask you this anyway but if you have a chance to
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take a look and see how much that $150 billion could leverage for housing? have you had a tensile account much $150 billion word leverage for affordable housing? >> i don't have those numbers at my fingertips but i can get back to you there are estimates of that. >> very good i just want to thank you for being here and secretary powell congratulations we will go from there. thinking mr. chairman. >> senator kramer from north dakota is recognized. >> congratulations chairman powelliz look forward to
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supporting your confirmation the first thing you want to do is correct the record it got real fuzzy when senator kennedy asked secretary ellen a couple times and to prove it that they agree with her senator daines touched on it. >> to result in a increase in the deficit totaling $367 billion over the ten years. now i have the chart year-by-year it is 155 billion nextxt year alone and continues for five years then in the last four it shows a turnaround but the five years of revenue is built on the
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premise these programs will not be continued for anys casual observer once the program start they will never be cut again. according to the congressional budget office score with a build back betterbe plan. so to an earlier question with the build back better plan with child tax credit child care credit and you talked senator tester call that workforce housing you call that affordable housing that's an important distinction these words matter a lot.
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if all of those giveaways the work requirements tied to all of those. >> i will start by correcting the mac i read the score from the cbo. >> butes you did not read it completely. but it did not include with
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the build back better plan from the house. >> and the requirements like that child tax credit but the overwhelming preponderance of individuals who receive these tax credit with the child tax credit do work and in some ca cases. >> that we are talking abouted the workforce participation rate do any of the's incentives require people to work? or is this just added onto what they are already getting? >> regardless of the employment situation? >> they aren't.
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earlier you answer the question from the chairman about why build back better does not increase inflation are actually it was will it bring down cost. you went on to explain all the ways it brings down cost. except the inflation rate is over 7 percent. because appropriately we stimulated the economy with the congress and the president and the federal reserve policies but by the time we got your early this year the wind of inflation was already blowing the economy was expanding and democrats added 2 trillions more dollars now doing whatever it will be with a $5 trillion.
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>> and those that have more money to spend on it. >> it's really hard to answer that in the abstract there is investment that creates more capacity in the economy. >> which is why i supported that package it invest in the infrastructure that moves the economy and pays people to work rather than not pay them to work.
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>> senator sinema as recognized from her office. >> secretary ellen it's good to speak with you both increasingly concerned about supply chain inflation global supply chains are fragmented and dysfunctional due to the pandemic and thehe holiday seasonon they are frustrated a with delayed shipments and empty shelves and in the supply of good goes higher and higher to create inflationary pressures like to hear from both of you on that question how much of that do you attribute to supply chain disruption. >> we are seeing inflation all around the united states it is not alone to see an increase in inflation. in most countries are seeingt
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disruptions as a result from the pandemic we have had a huge shift away from surfaces like going out to restaurants or traveling and a shift toward goods that need to be produced many of which are imported this is true in the united states and other countries as well. and the impact we are seeing here and with the labor supply because many people that have jobs with face-to-face contact don't yet feel comfortable going back to work in childcare is disruptive.
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and with this dramatic shift away from surfaces combined with labor supply. now it is suddenly hard and then to get those needed components from manufacturing. i and then to build inventories which add to the problem. so bothes of these factors plug into inflation in the united states. >> but if you just take out the inflationary effects around durable goods and other
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goods but in addition because you see energy prices going up that is not a supply-chain issue mostly. that that headline inflation that is a big factor driving up in inflation. >> eval the government is edextremely limited to have the supply-chainha issue. and then to stop to address the ports but also congress asked by passing thepa bipartisan infrastructure jobs act those in the field so that is a way to inflation do you
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agree with that assessment. >> t over time the infrastructure bill will increase the efficiency of our economy the rails and improve the roads and bridges. and with that potential output of the economy and then inre that sense over time will lower inflationary pressures. >> asked if the fed needed to achieve all of those goals with 2 percent inflation now recognizing with the tapering bond purchases is that still
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true today regarding interest rates? >> that is still true. look at the one goal to reach 2 percent inflation and another is to achieveme inflation above 2 percent for some time. i would say this is a decision for the committee to make. but incoming meetings wewe will wind up saying the inflation conditions have been met. >> thank you. >> congratulations on your nomination and forward to supporting your nomination and working with you to ensure that georgia families andco businesses and workers continue to recover.
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to make sure we have a labor market. and we have the economy that works for all americans. with the georgia department of labor with the state unemployment rate is one.3 percent. this is the lowest rate in the state recorded history with that emergency economic relief program in the c.a.r.e.s. act. with the american rescue plan has been working. george's economy is not out of the woods yet. small businesses continue to tell me they're having difficulty hiring. but the labor force is not what it is prior to the pandemic. r
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with the outside of the pandemic it has remained flat and then the economy reopens. and those that have been hard hit by this especially women with parents of small children much of congress do to bring workers back into the labor force? vaccinations and increasing the number of people who have boosters to get it under control to reduce the number of cases. that is a single most important thing the people feel it is safe to work there are a substantial number of
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people and in some cases even people who werebu fully vaccinated and those that are concerned about exposing themselves to covid risk. you see that for schools and childcare centers and food services. over medium or a long-term with those provisions of build back better particularly those affecting childcare with that support for child care, those things promote labor force participation. >> chairman power? >> it has been a surprise and
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then the important thing is to get past the pandemic and then we will know how permanent this is. people have been surveyed substantial numbers are concerned about going back to work at a time when the pandemic is stillg moving around. that is the key more vaccination and boosters. >> soem getting the pandemic under control through vaccination and those with eldercare or childcare you think that will spread the labor market. >> i don't want to get into
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particular legislation but yes there is good legislation there is good research showing the us has fallen behind with a female labor force participation and you asked why you dofe comparisons to other countries and one of the difference that is statistically significant is childcare. o >> i believe in the dignity of work and it frustrates me to hear folks moralize of the importance of work although i'm not supporting workers and their ability in the labor market that will help and strengthen workers thank you all so much. spent just a few points to wrap up first i would like to respond to my friend and colleague to senior senator to the tax reform and remind him and all of us in the wake of
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the 2017 tax reform we have the strongest economy in 50 years. we have an all-time record low of unemployment and wages growing fastest for the lowest income workers and inflation that was modest and then we were nearing the gap between high income and low-income people in tax revenue was growing and also touching on the important point that correctly made the cbo has not said that build that better will will be fully paid for he correctly noted that it would result in an increase of the deficit totaling $367 billion over the tenure. not counting any additional revenue from additional funding of tax inform enforcement taking that into account you are still leftth with $160 billion estimated increase in the deficit over
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the ten years but it is much worse than that because by design the spending in the bill is heavily frontloaded with the expectation that supposedly expiring programs will actually be continued if you look at the cbo numbers for the first five years, the deficit increases by 800 for billion dollars in additional deficits which means $804 billion increasing in the debt we take on which is why our democratic colleagues need such a big number to raise the debt ceiling and why they are so unwilling so far to use the tool available to them to pass the debt ceiling it also requires that they specify just how much debt they want to run up. it's important to set the record straight on those matters r.
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>> as the ranking member mentioned the debt ceiling the last time congress dealt with the debt ceiling was 27 senate republicans voted to raise the debt ceiling and so did i and with the republican president and republican house and senator and senate more than 40 of my democratic colleagues joined me to do the right thing for our country there was such little concern in my colleagues pass the 2 trillion-dollar tax cut we will set on the finance committee and had those debates they just were not concerned and i word reiterate as secretary ellen in the cbo has confirmed this bill is paid for secretary ellen responded to greatly detailed questions now republicans
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would rather hold the full faith and credit hostage for those bills that they have racked up and that is not acceptable. one final point on inflation bloomberg released a story with a headline that says it all profit since 1950 with the wage inflation story and the fdic and also just released the quarterly report think profits are up. the corporations cannot afford to pay workerser higher wages they actually reflect the value of the work that they do to make the come them profitable is ridiculous so let's be clear by a pullback and to taper that they were fewer jobs available that's what happened after the last crisis that fed pulled back on amfamilies never recovered we
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cannot make that mistake again. for senators who which you submit questions for thee record do one week from today you have 45 days to respond thank you again the committee is adjourned. [inaudiblele conversations]
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