Fed Chair Warns Congress Not To Ease Up On COVID-19
The chairman of the Federal Reserve had a pretty simple message for Congress Tuesday, arguing that best thing lawmakers can do to help the economy is everything they can to stop COVID-19, and to help the people harmed by it.
While economic news has been better of late, Jerome Powell put it in stark context.
"The decline in real GDP this quarter is likely to be the most severe on record," he warned.
Powell's diagnosis hardly seemed controversial, but it's counter to the current wait-and-see approach favored by the Republican-led Senate and the White House.
Powell's appeal for action included the advice to lawmakers to embrace deficit spending now, and worry about the piles of debt later.
"The time to work on that -- hard -- is when the economy's strong, unemployment is low, there's growth. That's when you want to work on that," Powell told Montana Democratic Sen. Jon Tester, who raised the issue of mounting debt.
"Those those concerns are always going to be there, but I wouldn't prioritize them at a time like this when the spending is, you know, what it's doing is it's giving us a better economy going forward, which will really help service the debt," Powell said.
Still, most Republicans did not embrace the idea of doing more now, focusing instead on how the already passed multi-trillion rescue legislation is working, and on the recent better economic news.
"I'm not for a minute suggesting that we're out of the woods, but the anecdotal evidence has been very, very encouraging," said Pennsylvania Republican Sen. Pat Toomey, arguing that the debt should be very much in mind.
"I would just remind my colleagues, there's no such thing as a free lunch," Toomey said. "We have authorized several trillion dollars of government spending in a variety of ways, and much of it has not yet even been spent. So I think we should be very, very careful in evaluating what's necessary before we go forward."
Nevertheless, Powell said repeatedly that both Congress and the Federal Reserve likely would need to do more, especially for people whose jobs simply will not return anytime soon, such as in the service sectors that depend on close human contact.
"They'll be hard-pressed to find work, and they're going to need support," Powell said. He also agreed -- though he didn't make any policy recommendations -- that mounting layoffs by state and local governments pose a threat to recovery. Governors and local leaders have appealed to Congress for a $500 billion bailout, which President Trump and Senate Majority Leader Mitch McConnell have resisted.
And Powell said what would help the most is a COVID-19 strategy that effectively deals with the disease and allows people to feel safe returning to work, stores and restaurants.
"I think the public wants to have confidence to be able to return to these kinds of activities," Powell told Sen. Richard Shelby, the Republican Chair of the Appropriations Committee, who will have a major role in crafting future COVID-19 relief legislation. "In fact, I think the return to investment that creates that confidence will be extremely high from an economic standpoint."