Congress to press Powell, Yellen on post-pandemic agenda

Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet YellenJanet Louise YellenThe Hill’s Morning Report – Biden’s next act: Massive infrastructure plan with tax hikes Congress to press Powell, Yellen on post-pandemic agenda On The Money: New batch of stimulus payments to hit accounts Wednesday | Biden eyes T infrastructure package | Senate confirms Walsh as Labor secretary MORE will make their first joint congressional appearance Tuesday as the U.S. approaches the start of a post-pandemic economic rebound.

Lawmakers are expected to press the government’s two biggest economic policymakers on their agendas and outlooks for the economy during testimony before House and Senate panels this week with the worst of the coronavirus crisis in the rearview mirror.

With the ink barely dry on President BidenJoe BidenGood luck, Dan Bongino! The Hill’s Morning Report – Biden’s next act: Massive infrastructure plan with tax hikes Conservative group says polling shows Dems’ voting rights bill ‘out of sync with American voters’ MORE’s $1.9 trillion economic relief bill, Powell and Yellen are sure to face questions about how the new spending will affect the pace of the recovery — and concerns from Republicans that it could send the economy into overdrive. They’re also likely to come under scrutiny from Democrats over how they will ensure the recovery adequately addresses the disproportionate toll taken on women and communities of color during the downturn.

Powell and Yellen — both before and after she took over the Treasury — have been largely in lockstep on the best ways to respond to the pandemic-driven recession, insisting the U.S. should spare no expense to avoid long-term damage with decades-long implications. Experts expect them to maintain that united front when they go before Congress.

“They’re on the same page on those things and they don’t have to strain themselves very hard to appear to be,” said Ian Katz, director at research consultancy Capital Alpha Partners. “It does make it a little bit tougher to attack them because you can’t really stick one on the other.”

Their strong ties date back to when Yellen joined the Fed board in 2012 on the nomination of former President Obama. Powell, a moderate Republican, began his stint with the Fed while Yellen was vice chair and was nominated by former President TrumpDonald TrumpGood luck, Dan Bongino! The Hill’s Morning Report – Biden’s next act: Massive infrastructure plan with tax hikes Conservative group says polling shows Dems’ voting rights bill ‘out of sync with American voters’ MORE, who decided not to renominate Yellen for a second term in 2018.

Powell’s term as Fed chairman is up in February 2022.

Despite their nominal partisan differences, Yellen and Powell are ideologically aligned on nearly every major issue facing the economy and how to foster a full recovery from the coronavirus recession.

Before the pandemic, Powell had taken steps to cement a new employment-centric approach to inflation promoted by Yellen into the Fed’s formal framework. As COVID-19 derailed the economy, both Powell and Yellen insisted that a massive fiscal response would be essential to a speedy and equitable recovery.

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“The size and the speed with which Congress has delivered [fiscal aid] is going to wind up very much accelerating the return to full employment,” Powell said during a press conference last week after the Fed released new projections showing a faster rebound from the pandemic.

“It’s going to make a huge difference in people’s lives, and it has already,” he said.

Yellen has also exuded optimism since Biden signed his $1.9 trillion economic aid package on March 11, saying the U.S. could reach full employment as soon as 2022 thanks to the additional fiscal support.

While Powell never directly endorsed Biden’s relief plan, he was among many economists across the ideological spectrum who insisted that more fiscal aid was necessary to repair the deep economic toll of the COVID-19 pandemic.

The U.S. has yet to recover 9.5 million of the more than 20 million jobs lost since last spring, and millions of households are on the hook for rent, mortgage payments and other expenses that piled up during a year without employment.

Powell and Yellen are expected to keep up their praise of the unprecedented fiscal and monetary support offered to prop up the economy, particularly as Republicans attempt to poke holes in the popularity of Biden’s economic relief plan.

GOP lawmakers, who voted unanimously against the package, have blasted Biden and Democrats for approving nearly $2 trillion in additional spending within months of the U.S. potentially reaching herd immunity. Republican lawmakers and even a handful of left-of-center economists have argued that the bill could force the economy to overheat and spur rampant inflation.

“The economy looks like it is going to light up this year and still the Fed says it will not raise rates until 2023. Moreover, it says it will see through any temporary burst of inflation,” wrote David Beckworth, senior research fellow at the Mercatus Center at George Mason University. “Will it endure? Some members will push the Fed on this issue. Especially with more large bills in the pipeline.”

Both officials can also expect criticism from each side over their roles in fighting climate change, racial economic inequality, and other issues not historically considered within the Fed and Treasury’s mandates.

Powell and Yellen have each emphasized the need to foster a strong and long-enough recovery to reduce high unemployment among racial and ethnic minority groups. Black and Hispanic Americans have taken the hardest hits from the pandemic and typically take the longest to bounce back from economic hardship due to structural barriers created by discrimination.

“We welcome this progress, but will not lose sight of the millions of Americans who are still hurting, including lower-wage workers in the services sector, African Americans, Hispanics, and other minority groups that have been especially hard hit,” Powell will say Tuesday in his opening statement to the House Financial Services Committee, released by the panel on Monday.

Democrats have pushed the Fed to do more to specifically target the economic health of minority groups, but Powell has said the central bank’s tools can only be applied to the economy as a whole.

Republicans have been more concerned with the Fed and Treasury’s increasing focus on climate-related issues and have warned each against taking actions that could harm the oil and gas industries.

Yellen has promised that the Treasury Department will play a leading role in the Biden administration’s fight against climate change, which she has called an “existential threat” to the world. While the Fed has taken a more measured approach focused on monitoring climate-related risks, Republicans have blasted both the central bank and Treasury for even their initial steps into the issue.

“I expect many Republicans to question the chair on the Fed taking on climate risk, minority unemployment, and other non-traditional focuses of the Fed,” Beckworth said.