Happy Wednesday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL—House panel pulls Powell into partisan battles over pandemic: Lawmakers on Wednesday attempted to pull Federal Reserve Board Chair Jerome Powell into a partisan battle over a deepening stalemate over further coronavirus relief and the U.S.’s grueling fight against the pandemic.
In a hearing on the Fed’s response to the coronavirus recession, the most powerful U.S. economic policymaker found himself refereeing disputes between Democrats and Republicans with just six weeks until Election Day.
Much of Powell’s appearance before the House Oversight and Reform Committee’s special coronavirus subcommittee revolved around the partisan tensions that have left millions of struggling Americans and U.S. businesses without further aid. I’ll take you to the contentious hearing here.
The background: About 11 million Americans remain unemployed, and the first wave of unemployment benefits for coronavirus job losses are set to expire over the coming weeks. Escalating closures of small businesses will likely make it harder for them to find work again.
But Wednesday’s hearing was dominated by partisan bickering, finger-pointing and sniping over subjects that are well beyond the Fed’s domain.
Lawmakers sparred over and asked Powell to weigh in on:
- Trump’s initial response to the coronavirus pandemic
- China’s culpability
- Trump’s relationship with China
- Whether the Centers for Disease Control and Prevention was suppressing information about the virus
- How quickly states should reopen schools
- How quickly states should rollback pandemic-related restrictions
But Powell didn’t budge, taking a more aggressive tone with several lawmakers who pushed the chairman beyond the realm of his domain.
- “I just want to make it clear that I do not have a judgment on the pace of school closures whatsoever,” Powell responded after Rep. Mark Green (R-Tenn.) cited the rising number of youth suicides and accused “the left” of “rambling about science and numbers” but “clearly ignoring them to keep schools closed.”
- Rep. Jamie Raskin (D-Md.) asked Powell to weigh in on Trump’s claim that “herd mentality” — a possible reference to “herd immunity” — would help the U.S. defeat the coronavirus without further restrictions. “I never comment on the president’s comments or policies,” Powell replied.
Concerns over the Fed’s response: Despite the overall tenor of the hearing, Powell did face several questions about what the Fed could do to help smaller businesses beyond the scope of its current emergency lending programs.
- Some Democratic members of the panel asked Powell to consider lowering the minimum loan threshold for the Fed’s Main Street Lending Program (MSLP), a facility designed to help mid-sized businesses weather the pandemic.
- The minimum for a MSLP loan is set at $250,000, which Democrats consider too high to cover small businesses in desperate need of credit.
- But Powell said the MSLP has seen virtually no demand for loans less than $1 million and that the Fed is not well equipped to underwrite a flood of smaller loans that could lead to substantial taxpayer losses.
Lawmakers also pushed the Fed chief to require large companies that receive help from the bank to hold onto as many employees as possible.
Democrats on the subpanel issued a report Wednesday critiquing the Fed for an emergency COVID-19 response program they say enriched shareholders even as workers were laid off. The Hill’s Niv Elis has more on that here.
LEADING THE DAY
New York considers hiking taxes for the rich to fill COVID-19 hole: Policymakers in New York are debating whether to raise state taxes on wealthy residents to address fiscal challenges caused by the coronavirus pandemic.
- State lawmakers and outside groups argue that raising taxes on the rich would help to minimize cuts to spending on valuable services.
- They’re hoping New York will follow in the footsteps of neighboring New Jersey, where politicians last week announced a deal to raise taxes on millionaires.
But New York Gov. Andrew Cuomo (D) has resisted those calls. Instead, he has pushed for states to receive more federal funds, and he is concerned that tax increases could put New York at a disadvantage.
“Before you talk about tax increases in New York City or New York state, let’s first focus on the better options,” Cuomo said during a press conference earlier this month.
The Hill’s Naomi Jagoda—and a fellow New Yorker—tells us why.
The hollowed-out Big Apple budget: New York was hit particularly hard with the coronavirus in the spring, followed by a revenue shortfall. The state budget division is projecting that receipts will be $14.5 billion less for the current fiscal year than it had projected in February. That shortfall is estimated to balloon to $62 billion through fiscal 2024.
The snag: Cuomo and state lawmakers have been advocating for increased federal funds for states, but aid to states has been a source of contention between congressional Democrats and Republicans. It remains unclear whether Congress will even pass another coronavirus relief package. That uncertainty has prompted some lawmakers and advocates to look at what New York could do on its own.
Treasury: Trump’s payroll tax deferral won’t hurt Social Security: The Treasury Department on Wednesday said that President Trump’s payroll tax deferral during the coronavirus pandemic won’t hurt Social Security, pushing back on criticisms from Democrats and advocacy groups.
- “We do not expect deferral to impact the Social Security Trust Funds because the deferral is temporary and all deferred taxes must be repaid,” a Treasury spokesperson said in a statement.
- The spokesperson added that “the deferral will have no impact whatsoever on current or future payments received by Social Security recipients, and the Trump Administration remains fully committed to the integrity of the Social Security Trust Funds.”
The statement comes one day before a Democratic-led House subcommittee holds a hearing on legislation to overturn Trump’s payroll tax deferral order. Naomi has more here.
GOOD TO KNOW
- Lobbying groups are actively trying to figure out what a first hundred days of a Biden administration might look like.
- The House passed legislation on Tuesday night to avert a government shutdown through Dec. 11, sending the bill to the Senate with just eight days left before current federal funding expires.
- Wells Fargo chief executive Charles Scharf on Wednesday issued an apology after drawing a wave of backlash online for attributing a lack of diversity at the company to what he referred to as “a very limited pool of Black talent.”
- Stocks closed with another round of losses Wednesday as a selloff in technology shares returned following a day of gains.
ODDS AND ENDS
- The Chamber of Digital Commerce, a blockchain trade association, named Mick Mulvaney, President Trump’s former acting chief of staff, to its board of advisers on Wednesday.
- Tesla reportedly suffered a network outage Wednesday morning as hundreds of car owners filed complaints they were unable to connect their vehicles to the company’s mobile app.