Congress Averts Government Shutdown
On Thursday, Congress voted to approve another short-term funding bill to fund the federal government and avoid a shutdown. Congress had already passed one continuing resolution in September that funded government operations through December 3. The bill will extend current funding levels for the federal government until February 18, 2022. The Senate voted yesterday to approve the funding bill 69 to 28, only hours after the House of Representatives voted 221 to 212 in favor. The passage of a short-term funding bill was required to fund government operations after House and Senate Appropriations Committees failed to reach agreement on the dozen annual spending bills that fund federal agencies for the fiscal year. The stopgap legislation gives the committees time to negotiate a larger package in early 2022. President Biden is expected to sign the bill today.
Federal Reserve Chair and Treasury Secretary Provide Updates to Congress on COVID-19
Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen testified before congressional committees this week on how quickly the U.S. economy would rebound from the COVID-19 recession and how to relieve the pressure on strained supply chains. Testifying before the Senate Banking, Housing and Urban Affairs Committee on Tuesday, Secretary Yellen discussed her confidence in a strong recovery and credited the relief measures Congress has enacted during the COVID-19 crisis: the CARES Act, the Consolidated Appropriations Act, and the American Rescue Plan Act. She stated before the committee that the economic recovery is on track, with the U.S. averaging half a million new jobs per month since January. Secretary Yellen explained how GDP now exceeds its pre-pandemic levels and the unemployment rate is at its lowest level since the start of the pandemic. She also reiterated that the economy is on pace to reach full employment two years faster than the Congressional Budget Office had previously estimated. She credited the American Rescue Plan’s expansion of the Child Tax Credit, which has been sent out every month since July, for a 24 percent reduction in food insecurity among families with children. She also discussed the importance of the Emergency Rental Assistance Program which is providing rental relief to over 2 million households and cited this assistance as having helped keep eviction rates below pre-pandemic levels. Secretary Yellen also explained how important expanding the national debt limit was to current recovery efforts, stating: “America must pay its bills on time and in full. If we do not, we will eviscerate our current recovery. In a matter of days, a 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.”
During a Wednesday hearing before the House Financial Services Committee, Chairman Powell acknowledged that high inflation has risen faster and lingered much longer than he or Secretary Yellen expected. Chairman Powell acknowledge that prices for a wide range of consumer goods have risen sharply this year as manufacturers, shipping companies, suppliers and retailers struggle to keep up with demand due to numerous pandemic-related constraints. The emergence of the COVID-19 delta variant also shifted more spending into the goods sector and away from service sector industries, such as dining and entertainment, which are still struggling to return to pre-pandemic activity. During the hearing, Chairman Powell stated that “We understood demand would be strong, we didn’t understand the significant problems of the supply side.” Both Chairman Powell and Secretary Yellen stated that the consumer focus on goods as opposed to services has contributed massively to the supply chain problems. Secretary Yellen discussed the importance of President Biden’s Build Back Better plan as a way to ease long-term prices as the Administration looks for ways to solve the short-term challenge of relieving supply lines. Chairman Powell also discussed how substantial fiscal and monetary stimulus played a role in creating higher demand that fueled inflation but called it a challenging side-effect of an otherwise fast recovery. Chairman Powell noted that while the U.S. was experiencing the strongest rebound of any nation hit hard by the pandemic, it wasn’t the only one suffering from higher inflation. “COVID continues to impose supply-side constraints and many of the same features that we’re seeing here, you’re seeing elsewhere in the world, but different countries are feeling it to different degrees.” Chairman Powell also mentioned the Federal reserve would consider accelerating its taper of monthly bond purchases during its upcoming monetary policy meeting, but he has not commented on how soon the bank may begin interest rate hikes.
To view the Senate Banking, Housing and Urban Affairs Committee hearing on CARES Act Oversight of Treasury and the Federal Reserve, click here.
To view the House Financial Services Committee hearing on Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response, click here.
President Biden Nominates OMB Leadership
President Biden recently announced his intent to nominate Nani Coloretti as Deputy Director of Office of Management and Budget (OMB) and Shalanda Young as Director. Ms. Coloretti is currently a Senior Vice President at the Urban Institute, an independent policy research organization and think tank. Ms. Coloretti’s federal government service includes deputy secretary of the U.S. Department of Housing and Urban Development, Assistant Secretary for Management and Acting CFO of U.S. Department of the Treasury, and Acting COO of the Consumer Financial Protection Bureau. Ms. Coloretti holds a Bachelor of Arts Degree in economics and communications from the University of Pennsylvania and master’s degree from the University of California, Berkeley.
President Biden also nominated Shalanda Young as Director for OMB. She currently serves as the acting Director, having been confirmed by the Senate in a bipartisan vote as the agency’s Deputy Director in March. Previously, Ms. Young served as Clerk and Staff Director for the House Appropriations Committee, overseeing annual appropriations bills, disaster aid, and major aspects of COVID-19 related spending. A native of southern Louisiana, Ms. Young holds a master’s degree from Tulane University and a Bachelor of Arts Degree from Loyola University New Orleans.
To view President Biden’s announcement, click here.
To view the White House press release, click here.