Cortez Masto Claims: If Elected The Trump Admin. Plans To Weaken Federal Reserve Independence

2 months ago

Earlier this month, Sen. Catherine Cortez Masto (D-NV) questioned Federal Reserve Board Chairman Jerome Powell on agency independence and economic health during a Senate Banking Committee hearing.

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Transcript

00:00of Nevada is recognized.

00:02Excuse me.

00:03Chairman Powell, thank you for joining us.

00:05And I always appreciate visiting with you

00:07in my office as well and your comments.

00:10Let me start by a comment you made in the opening.

00:13Over the past two years,

00:14you said the economy has made considerable progress toward the

00:17Federal Reserve's 2 percent inflation goal.

00:20Labor market conditions have cooled while remaining strong.

00:23Reflecting these developments, the risk to achieving our

00:26employment and inflation goals are coming into better balance.

00:30And what we know is that since Biden came into office,

00:32the United States has added over 15 million jobs.

00:35Under President Biden, we had 41 consecutive months

00:38of job growth.

00:39And you just said it again here today,

00:41that wages are up as well.

00:43Average U.S. wages and salaries grew by nearly, what,

00:4616,700 between January 2021 and April 2024.

00:53So would you agree with a statement

00:56by a ranking member earlier today

00:58that the U.S. has the greatest economy on the planet?

01:02I certainly would.

01:03Let me ask you this.

01:06Jumping around, and there's been talks today

01:08about the Fed's independence

01:10and how important the Fed's independence is.

01:13The Wall Street Journal recently reported former Trump

01:17administration officials drafted policy options

01:20to weaken the independence of the Federal Reserve

01:23if President Trump were to be elected in November.

01:26Allegedly, former administration officials discussed policy

01:29options to erode the Fed's independence to make it easier

01:35for a president to impact interest rate decisions

01:38or fire the Fed chair at will.

01:41Chairman Powell, how important is it

01:45that the Fed has independence to provide economic stability

01:49and anchor inflation expectations?

01:52So I think it's actually essential.

01:54It's literally essential.

01:55And the good news is I think that's pretty broadly understood

01:58and particularly on Capitol Hill on both sides of the aisle.

02:03I believe that people do understand that we need

02:06to do our work in a way that's outside the political process

02:10to the maximum extent possible.

02:11Of course, we need to be accountable

02:13and tremendously transparent.

02:14If you look at the box in the monetary policy report

02:17on central bank independence, it's really a box

02:19about transparency.

02:20That's the other side.

02:22So I think it's really important.

02:23I think it's an institutional arrangement

02:24that has served the public well.

02:26And I do believe that there's pretty wide support for it.

02:30And you just said it has been intentional

02:32and institutional arrangement over the years

02:34for this very reason, correct?

02:36Yes. This is a choice that we make.

02:37And I think it's countries around the world,

02:41advanced economies have all made this choice effectively.

02:43And the results are clear

02:45that you now have independent central banks

02:47and you have better anchored inflation expectations

02:50and you have better performance on inflation

02:52and better performance in the economy generally,

02:55which isn't to say there won't be shocks and crises

02:57and that kind of thing.

02:58And then let me touch on a subject that one

03:01of my colleagues just talked about because I was going

03:03to ask about this, which is our immigration.

03:06In Nevada, immigrants are extremely important

03:09for our economy.

03:11They're essential workers, doctors,

03:12nurses and teachers in my community.

03:15Can you, without getting into other ancillary issues

03:21that don't impact what you do, can you talk about

03:25and elaborate on how immigration affects the employment rate

03:29and why you look at it and for what reason you look

03:32at the immigration issue?

03:34So we, again, we don't, as you, just to make the point

03:37that you made, we don't take a position, we don't comment

03:40on immigration policy.

03:42We have no responsibility for it.

03:44It's not our job.

03:45But, so we just look at the numbers and we sort of try

03:49to assess the economic consequences of immigration.

03:52And over the last two years, we, two years ago,

03:55we had an economy where we really had a labor shortage.

03:59And what's happened is we've had a wave of immigration.

04:02And those, many of those people have gone to work and gone

04:06to work legally through the asylum process.

04:11Not all of them.

04:12There's also a group that is not,

04:13that has not been legally processed.

04:15But many of this latest group have been, have sought asylum

04:19and then gotten, gone through the process

04:21of getting a work permit.

04:22So what that means is that employers wanted workers

04:26and there's, there are now, there were more job openings

04:30than there were people actively seeking work or working.

04:33And so now you have a new supply of workers

04:36and they've filled those jobs.

04:37So we have a bigger economy.

04:39But it's not a tighter economy

04:40because labor supply has increased the economic capacity.

04:44That's just the arithmetic.

04:45That's not saying it's a good thing or a bad thing.

04:48There are other policy choices that could be made

04:50and they're not for us to make.

04:51When you say greater, greater economy.

04:53A larger economy.

04:54In other words, it has improved the growth of our economy.

04:57The economy grew 3 point something percent,

05:003.4 percent I believe last year.

05:02And some part of that was that,

05:04as Congressional Budget Office analysis showed,

05:08and to many's surprise,

05:10there had been a really significant uncounted group

05:13of workers coming into the country who had gone to work.

05:17And that's part of the story of how the economy managed to grow

05:21that much while inflation was coming down pretty sharply.

05:24Inflation came down two full percentage points during 2023

05:28while the economy was growing at 3.4 percent.

05:30So, and while these people were coming in.

05:33So that is part of the explanation for why we had

05:36such an interesting and pretty good year in 2023.

Cortez Masto Claims: If Elected The Trump Admin. Plans To Weaken Federal Reserve Independence

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