On The Money: Yellen touts ‘whole-of-economy’ plan to fight climate change | Senate GOP adopts symbolic earmark ban, digs in on debt limit

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THE BIG DEAL—Yellen touts ‘whole-of-economy’ plan to fight climate change: Treasury Secretary Janet Yellen on Wednesday laid out the department’s plans to mobilize the U.S. economy against climate change, defying growing criticism from Republicans over the pace and scope of President Biden’s environmental agenda.

In a speech to the International Institute of Finance, Yellen insisted that the U.S. must take an ambitious approach to fighting climate change through the economy despite the challenges of measuring and curbing the economic and financial risks it poses.

• Republicans and advocates for the oil and gas industry have ripped Yellen and several other financial regulators for laying out plans to account for the financial and economic risks of climate change. 
• Critics argue that holding banks and companies to strict climate-related standards is unfair given the uncertainty surrounding climate risk and a threat to fossil fuel producers.

“I know some have argued that this is a reason for us to move slowly. The thinking goes that because we know so little about climate risk, let’s be tentative in our actions — or even do nothing at all,” Yellen said in prepared remarks. “This is completely wrong in my view. This is a major problem and it needs to be tackled now.” I break it down here.

The plan: Yellen’s Wednesday speech comes two days after Treasury announced the creation of a Climate Hub, a division meant to drive investments toward projects that will reduce carbon emissions, expand access to affordable renewable energy, and prepare the economy for climate-related risks.

• Yellen highlighted the range of climate-focused programs in Biden’s $2.3 trillion infrastructure proposals, dubbed the American Jobs Plan, including extended tax credits for renewable energy production, and other grants and credits.
• Even so, Yellen said the federal government does not have the economic capability to cover the $2.5 trillion needed to “green our economy” in the long haul and needs to spur investment from the private sector to make up the gap. 

Read more: Senate Democrats introduce bill to reform energy tax credits

LEADING THE DAY

Senate GOP keeps symbolic earmark ban: Senate Republicans on Wednesday opted to keep a ban on earmarks, a symbolic victory for conservatives that capped a weeks-long fight about spending in the post-Trump era.

What GOP senators did: They reaffirmed the existing caucus rules that contained the earmark ban and added language supporting the idea of spending cuts for raising the debt ceiling.

What that actually does: Well, nothing binding. The rules don’t prevent the GOP senators from voting for a bill that would technically violate them, so think of them more as general goals or statements of value. Even so, it sets up a potentially messy fight with Democrats and the Biden administration over spending cuts with the debt limit set to kick back in this summer. The Hill’s Jordain Carney has more here.

A debt limit refresher: 

• There is a legal limit to how much debt the U.S. can take on, often called the debt ceiling, which has been suspended and increased several times over the past few years. 
• It often causes major showdowns over fiscal discipline, even though allowing the U.S. to hit the debt ceiling would effectively shut down the global financial system.

Here’s what Federal Reserve Chairman Jerome Powell, who basically got his Fed appointment because of the debt limit, said in 2019 about the “unthinkable harm” would happen if the U.S. actually did that: “No one should assume that the Fed or any other agency can be relied upon to shield our economy from the short-, medium- and long-term negative consequences of such an act.”

Sanders, Jayapal introduce bill to make college tuition-free for many Americans: Sen. Bernie Sanders (I-Vt.) and Rep. Pramila Jayapal (D-Wash.) introduced legislation on Wednesday to make college tuition free for many Americans, a policy that would be paid for by a tax on Wall Street. 

• The bill would make community college tuition-free for everyone and four-year public colleges tuition-free and debt-free for students from families making up to $125,000 per year. 
• The bill would also allow students from families who make up to $125,000 per year to attend private, nonprofit minority-serving institutions tuition-free such as historically Black colleges and universities.
• And it would double the maximum Pell Grant to $12,990, which can be used for living and nontuition expenses, and would expand eligibility to “Dreamers,” immigrants brought into the country illegally as children.

Funded by financial transaction tax: The bill would be paid for by a tax on some financial trades. Sanders said he would separately reintroduce a bill, known as the Tax on Wall Street Speculation Act, on Wednesday, to put a 0.5 percent tax on stock trades, a 0.1 percent tax on bonds and a 0.005 tax on derivatives. 

ON TAP TOMORROW:

• The Senate Banking Committee holds a hearing on green energy and the economy at 10 a.m.
• The Senate Finance Committee holds a hearing on U.S.-China economic relations at 10 a.m.

GOOD TO KNOW

• Former Treasury Secretary Larry Summers said Wednesday that inflation indicators were “flashing red alarm,” renewing a critique of President Biden’s $1.9 trillion COVID-19 relief bill, which was signed into law last month.
• The Senate Judiciary antitrust subcommittee turned into a Silicon Valley battleground Wednesday, with representatives from several app-based companies accusing Apple and Google executives at the hearing of stifling competition in their app stores.
• The fight between major U.S. companies and Republican-led states is expanding beyond voting laws to include legislation targeting transgender people.

ODDS AND ENDS

• Amazon is set to launch pay-by-palm print technology at a Whole Foods grocery store near its headquarters in Seattle on Wednesday
• Senate Majority Leader Chuck Schumer (D-N.Y.) led dozens of bipartisan House and Senate members on Wednesday in rolling out legislation that would invest more than $100 billion in emerging technologies in an effort to put the U.S. on a level playing field with China.