[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                      LESSONS LEARNED: THE FEDERAL
                        RESERVE'S RESPONSE TO THE
                          CORONAVIRUS PANDEMIC

=======================================================================

                                HEARING

                               BEFORE THE

             SELECT SUBCOMMITTEE ON THE CORONAVIRUS CRISIS

                                 OF THE

                   COMMITTEE ON OVERSIGHT AND REFORM

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 22, 2021

                               __________

                           Serial No. 117-30

                               __________

      Printed for the use of the Committee on Oversight and Reform
      
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]      


                       Available at: govinfo.gov,
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                             docs.house.gov
                             
                                 __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
45-368 PDF                 WASHINGTON : 2021                     
          
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                   COMMITTEE ON OVERSIGHT AND REFORM

                CAROLYN B. MALONEY, New York, Chairwoman

Eleanor Holmes Norton, District of   James Comer, Kentucky, Ranking 
    Columbia                             Minority Member
Stephen F. Lynch, Massachusetts      Jim Jordan, Ohio
Jim Cooper, Tennessee                Paul A. Gosar, Arizona
Gerald E. Connolly, Virginia         Virginia Foxx, North Carolina
Raja Krishnamoorthi, Illinois        Jody B. Hice, Georgia
Jamie Raskin, Maryland               Glenn Grothman, Wisconsin
Ro Khanna, California                Michael Cloud, Texas
Kweisi Mfume, Maryland               Bob Gibbs, Ohio
Alexandria Ocasio-Cortez, New York   Clay Higgins, Louisiana
Rashida Tlaib, Michigan              Ralph Norman, South Carolina
Katie Porter, California             Pete Sessions, Texas
Cori Bush, Missouri                  Fred Keller, Pennsylvania
Danny K. Davis, Illinois             Andy Biggs, Arizona
Debbie Wasserman Schultz, Florida    Andrew Clyde, Georgia
Peter Welch, Vermont                 Nancy Mace, South Carolina
Henry C. ``Hank'' Johnson, Jr.,      Scott Franklin, Florida
    Georgia                          Jake LaTurner, Kansas
John P. Sarbanes, Maryland           Pat Fallon, Texas
Jackie Speier, California            Yvette Herrell, New Mexico
Robin L. Kelly, Illinois             Byron Donalds, Florida
Brenda L. Lawrence, Michigan
Mark DeSaulnier, California
Jimmy Gomez, California
Ayanna Pressley, Massachusetts
Mike Quigley, Illinois

       Jennifer Gaspar, Select Subcommittee Deputy Staff Director
                  Beth Mueller, Investigative Counsel
                    Amy Stratton, Deputy Chief Clerk
                      Contact Number: 202-225-5051

                  Mark Marin, Minority Staff Director

             Select Subcommittee On The Coronavirus Crisis

               James E. Clyburn, South Carolina, Chairman
Maxine Waters, California            Steve Scalise, Louisiana, Ranking 
Carolyn B. Maloney, New York             Minority Member
Nydia M. Velazquez, New York         Jim Jordan, Ohio
Bill Foster, Illinois                Mark E. Green, Tennessee
Jamie Raskin, Maryland               Nicole Malliotakis, New York
Raja Krishnamoorthi, Illinois        Mariannette Miller-Meeks, Iowa
                         
                         
                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page
Hearing held on June 22, 2021....................................     1

                               Witnesses

Jerome Powell, Chair, Board of Governors of the Federal Reserve 
  System
Oral Statement...................................................

Written opening statements and the written statements of the 
  witnesses are available on the U.S. House of Representatives 
  Document Repository at: docs.house.gov.

                           Index of Documents

                              ----------                              

Questions for the Record: to Mr. Jerome Powell; submitted by 
  Chairman Clyburn.

Documents are available at: docs.house.gov.

 
                      LESSONS LEARNED: THE FEDERAL
                       RESERVE'S RESPONSE TO THE
                          CORONAVIRUS PANDEMIC

                              ----------                              


                         Tuesday, June 22, 2021

                   House of Representatives
                  Committee on Oversight and Reform
              Select Subcommittee on the Coronavirus Crisis
                                                   Washington, D.C.

    The subcommittee met, pursuant to notice, at 2:07 p.m., in 
room 2154, Rayburn House Office Building, Hon. James E. Clyburn 
(chairman of the subcommittee) presiding.
    Present: Representatives Clyburn, Waters, Maloney, Foster, 
Raskin, Krishnamoorthi, Scalise, Jordan, Green, Malliotakis, 
and Miller-Meeks.
    Mr. Clyburn. Good afternoon. The committee will come to 
order.
    Without objection, the chair is authorized to declare a 
recess of the committee at any time.
    I now recognize myself for an opening statement.
    I am pleased to welcome Federal Reserve Chair Jerome 
Powell.
    Thank you for being here today, Chair Powell.
    Today's hearing will examine the Fed's response to the 
economic crisis caused by the coronavirus pandemic, the current 
state of the recovery, and what steps we must take to ensure a 
strong, sustainable, and equitable economic future.
    The pandemic resulted in the loss of over 22 million jobs. 
In March 2020, Congress passed the CARES Act, which allocated 
up to $500 billion for emergency lending by the Fed, including 
for loans to small and medium-size businesses, as well as 
states and municipalities. The lending programs established by 
the Fed for these recipients helped prevent some economic 
damages but were limited in their effectiveness.
    The Fed's Municipal Liquidity Facility sought to provide 
much-needed emergency lending to state and local governments, 
but the program's restrictions limited its impact at a time 
when many states and localities were in dire need. During the 
crisis, state and local governments shed 1.5 million jobs, and 
there is little evidence that the Municipal Liquidity Facility 
saved jobs or led to their return.
    The Fed's Main Street Lending Program similarly imposed 
restrictions that made its loans unattractive to struggling 
businesses and partner banks. Today's hearing will help us 
learn from the shortcomings of these programs and the Fed's 
efforts to improve its future crisis response capabilities.
    The Fed has admirably highlighted the toll of economic 
crisis on the American people, and its unequal impact on Black, 
brown, and low-income workers. The Fed's report last month on 
the economic well-being of United States households in 2020 
shows that Black and brown Americans suffered disproportionate 
economic pain last year. I look forward to hearing from Chair 
Powell today on how we can continue to make the recovery more 
equitable.
    Congress and the Biden-Harris administration have 
accelerated the recovery. As Chair Powell predicted in late 
March, the dramatic ramp-up in the vaccination campaign, which 
occurred as a result of the Biden administration's leadership, 
with support from Congress in the American Rescue Plan, has 
enabled--and I quote him here--``us to reopen the economy 
sooner than might have been expected.''
    The American Rescue Plan also delivered desperately needed 
financial assistance which has been and will continue to be a 
lifeline for American families. The American Rescue Plan 
provided direct relief checks, extended unemployment, and 
increased healthcare access.
    And we have seen the results of that extraordinary action. 
Over the last four months, the economy has added over 1.6 
million jobs, and new unemployment insurance claims have 
dropped significantly. As Chair Powell predicted in March, 
Congress's aggressive action to provide fiscal relief through 
the American Rescue Plan is ``accelerating the return to full 
employment.''
    But there is more work to do. There are still 7.6 million 
fewer jobs than before the pandemic, with Black and brown 
Americans still unemployed at disproportionately high rates.
    As Chair Powell said earlier this year, to raise Americans' 
standard of living over the long term, Congress must make 
investments to increase the productivity of the economy. I 
agree, and Congress is working to do just that. The American 
Jobs Plan and the American Families Plan will make the 
investments we need to ensure a strong, sustainable, and 
equitable economic recovery.
    The American Jobs Plan will sustainably modernize our 
transportation infrastructure, bring affordable household 
access to millions of Americans, build schools and housing, 
upgrade water and power systems, and create well-paying jobs 
for essential home-care workers.
    The American Families Plan will invest in preschool and 
higher education, allow parents to return to the work force by 
providing childcare assistance, and support families by 
extending the American Rescue Plan's expanded child tax credit.
    Congress is working hard crafting legislation to enact the 
American Jobs Plan and the American Families Plan so that we 
will build back better in our recovery from the pandemic. I 
look forward to hearing from Chair Powell about what else we 
can do to ensure that our country's economic policy is 
effective, efficient, and equitable.
    Thank you for being here, Chair Powell.
    I now yield to the ranking member for his opening 
statement.
    Mr. Scalise. I thank you, Mr. Chairman. And I also welcome 
Federal Reserve Chairman Powell.
    Thank you for being with us, and I look forward to having 
an interesting conversation about the state of our economy.
    But I first want to begin by making sure to reiterate a 
point that we've been making for over a year, and that is that 
House Democrats still refuse to hold a hearing on the origin of 
COVID-19.
    If this virus did, in fact, leak from the Wuhan lab--by the 
way, which a growing mountain of evidence now indicates is the 
real possibility--everyone in this country and around the world 
who has been touched by this evil virus deserves to know what 
happened and how it happened. Given the Chinese Communist 
Party's documented cover-up and lies, every member of this 
subcommittee should agree.
    If this is a manmade virus, then this is exponentially 
worse than Chernobyl. Yet not a single hearing by the House 
Democrat majority. Two-hundred-and-nine House Republicans wrote 
Speaker Pelosi asking that the committees of jurisdiction 
simply hold hearings. I have asked repeatedly that this select 
subcommittee hold a hearing on this important topic.
    We were told that the Science Committee is looking into it. 
Mr. Chairman, every single Republican member of the Science 
Committee signed this letter to Speaker Pelosi. The Science 
Committee hasn't even scheduled a hearing on this subject. Not 
a single committee----
    Mr. Raskin. Would the gentleman----
    Mr. Scalise [continuing]. has, indicating clearly that 
Speaker Pelosi has sent word that the House will not 
investigate the origins of COVID-19.
    We are amid a long, global competition with China. Much of 
the world must decide whose values to espouse and with whom to 
align. Speaker Pelosi and the House of Representatives should 
not be covering up for China's lies and potential crimes. We 
should be coming together on a bipartisan basis to search for 
those answers and shine the light of transparency on the origin 
of this virus to the world and to do it on a bipartisan basis.
    I urge you to reconsider and schedule a hearing on the 
origins of COVID-19, without further delay, Mr. Chairman.
    Now let's get back to the focus of today's hearing, the 
economic crisis.
    Chairman Powell, welcome back to this subcommittee. We 
appreciate your openness and accessibility during these 
challenging times.
    Inflation has been defined as ``too much money chasing too 
few goods.'' It also happens to be a nearly exact description 
of the Biden economic plan.
    Last year, Congress worked together on a bipartisan basis 
to provide much-needed relief from the government-imposed 
lockdowns. America did not know a whole lot about this novel 
coronavirus, and we did not, at the time, have a vaccine.
    Some in Congress used this crisis to spend trillions of 
dollars on things that had little or nothing to do with COVID. 
We still have hundreds of billions of dollars from the many 
relief packages that are still left unspent.
    We also learned that the revenue shortfalls some predicted 
state and local governments would face were dramatically 
inaccurate. Congress provided hundreds of billions in aid to 
states that are running billions of dollars in surpluses. This 
is borrowed money, keep in mind.
    Republicans have a clear set of policies for the economy. 
Since we passed the initial CARES Act last year on a bipartisan 
basis, Republicans at the national and state level have called 
for schools to be reopened, to get in-person learning going 
again. We called for an end to enhanced unemployment and other 
policies that discourage people from going back to work.
    We called for full, from the beginning, support for 
Operation Warp Speed, because that is what got us not one, not 
two, but now three safe and effective vaccines. We've also 
called for safely reopening our economy and for repurposing the 
unused COVID funds for real infrastructure, not with job-
killing taxes that would actually slow our economy down even 
more.
    We're focused on growing our economy and increasing 
supply--supply of workers, expanded investment--and for 
bringing back jobs to America, strengthening supply chains and 
returning the American people to a country that is open and 
free.
    Twenty-five Republican Governors have moved to end the 
enhanced unemployment insurance program that is clearly causing 
so many of these labor shortages we see around the Nation.
    The Biden inflation agenda of too much money chasing too 
few goods is causing major harm to hardworking families: a $1.9 
trillion COVID bill that had almost nothing to do with COVID, 
but airdropped more borrowed money into the economy while 
restricting supply; canceling the Keystone Pipeline; siding 
with teachers' union bosses to keep schools closed, when the 
science said to open up the schools, causing long-term damage 
to millions of our youngest children; extending the enhanced 
unemployment insurance, and paying people more to stay home 
than to work.
    And, alarmingly, President Biden actually wants to give 
away our intellectual property for the vaccine to China. On top 
of that, he's proposed a $3.5 trillion tax hike that will crush 
American workers, small businesses, and family farms. He wants 
a higher tax rate than Communist China. Add to that, he wants 
another $4 trillion of spending.
    Too much money chasing too few goods. Welcome to the Biden 
inflation agenda.
    The Washington Post's lead story yesterday said, quote, 
``The U.S. economy is emerging from the coronavirus pandemic 
markedly transformed, as businesses and consumers struggle to 
adapt to a new landscape with higher prices, fewer workers, and 
a range of inconveniences.''
    They go on to say, ``What Americans are encountering, 
though, is almost unrecognizable from just 16 months ago. 
Prices are up. Housing is scarce. It takes months longer than 
normal to get furniture, appliances, and numerous parts 
delivered. And there is a great dislocation between millions of 
unemployed workers and millions of vacant jobs.''
    The Washington Post is hardly a conservative news outlet.
    Larry Summers, top economic advisor to both President 
Clinton and President Obama, has been warning since February 
that President Biden's agenda is inflationary. The Consumer 
Price Index is up the most since 2008. The 6.2-percent increase 
in the Producer Price Index is the highest on record. Milk is 
up five percent; bacon is up 13 percent; used cars are up 30 
percent; transportation, up 16 percent. The list goes on, 
unfortunately.
    Housing prices are soaring, and economists are warning of a 
rental crisis. The cost of building new homes has made it 
prohibitive for home builders, restricting supply while 
flooding the economy with cash.
    Inflation is outpacing wage gains, the past few months. In 
the first five months of the Biden Presidency, 500,000 fewer 
jobs were created than in the last five months of the Trump 
administration, and the Biden administration started with 
approved vaccines already in place on day one.
    Chairman Powell, these Biden inflationary policies have put 
you in a tough spot. I have confidence, Chairman Powell, that 
the Fed has tools to deal with inflation, but those tools are 
harsh. Raising interest rates and constricting the money 
supply, they work, but, as we saw with Paul Volcker, it causes 
tremendous pain.
    The job of taming inflation belongs to Congress and this 
administration. Take the $4 trillion in new spending proposals 
off the table. Send a message to the markets that we will do a 
bipartisan infrastructure bill that is paid for with unused 
COVID relief money. There's plenty of it. Let's agree to end 
the enhanced UI, drop the massive tax hikes.
    President Biden proposed shipping jobs overseas with many 
of his agenda items. Why don't we reverse that? Why don't we 
come together on a bipartisan basis to focus on getting a long 
and sustained recovery from this pandemic? That would be a good 
start.
    Mr. Chairman, with that, I yield back.
    Mr. Clyburn. Thank you very much, Mr. Scalise.
    Chair Powell, please rise and raise your right hand.
    Do you swear or affirm that the testimony you're about to 
give is the truth, the whole truth, and nothing but the truth, 
so help you God?
    You may be seated.
    Let the record show that the witness answered in the 
affirmative.
    Without objection, your written statement will be made part 
of the record. Chair Powell, you're now recognized for your 
opening statement.

 STATEMENT OF THE HONORABLE JEROME H. POWELL, CHAIR, BOARD OF 
            GOVERNORS OF THE FEDERAL RESERVE SYSTEM

    Mr. Powell. Thank you, Chairman Clyburn, thank you, Ranking 
Member Scalise and other members of the select subcommittee, 
for the opportunity to update you on our ongoing measures to 
address the hardship brought by the pandemic.
    Since we last met, the economy has shown sustained 
improvement. Widespread vaccinations have joined unprecedented 
monetary and fiscal policy actions in providing strong support 
for the recovery. Indicators of economic activity and 
employment have continued to strengthen. And real GDP this year 
appears to be on track to post its fastest rate of increase in 
decades.
    Much of this rapid growth reflects the continued bounce-
back in activity from depressed levels. The sectors most 
adversely affected by the pandemic remain weak, but have shown 
improvement. Household spending is rising at a rapid pace, 
boosted by the ongoing reopening of the economy, fiscal 
support, and accommodative financial conditions. The housing 
sector is strong, and business investing--investment is 
increasing at a solid pace. In some industries, near-term 
supply constraints are restraining activity.
    As with overall economic activity, conditions in the labor 
market have continued to improve, although the pace has been 
uneven. The unemployment rate remained elevated in May, at 5.8 
percent, and this figure understates the shortfall in 
unemployment, particularly as participation in the labor market 
has not moved up from the low rates that have prevailed for 
most of the last year. Job gains should pick up in coming 
months as vaccinations rise, easing some of the pandemic-
related factors currently weighing them down.
    The economic downturn has not fallen equally on all 
Americans, and those least able to shoulder the burden have 
been the hardest hit. In particular, despite progress, 
joblessness continues to fall disproportionately on lower-wage 
workers in the service sector, and on African Americans and 
Hispanics.
    The Fed pursues monetary policy aimed at fostering a 
strong, stable economy that can improve economic outcomes for 
all Americans. Those who historically have been left behind 
stand the best chance of prospering in a strong economy with 
plentiful job opportunities. And our economy will be stronger 
and perform better when everyone can contribute to and share in 
the benefits of prosperity.
    Inflation has increased notably in recent months. This 
reflects, in part, the very low readings from early in the 
pandemic falling out of the calculation, the pass-through of 
price increases in oil prices to consumer energy prices, the 
rebound in spending as the economy continues to reopen, and the 
exacerbating factor of supply bottlenecks, which have limited 
how quickly production in some sectors can respond in the near 
term. As these transitory supply effects abate, inflation is 
expected to drop back toward our longer-run goal.
    The pandemic continues to pose risks to the economic 
outlook. Progress on vaccinations has limited the spread of 
COVID-19, and will likely continue to reduce the effects of the 
public health crisis on the economy. However, the pace of 
vaccinations has slowed, and new strains of the virus remain a 
risk. Continued progress on vaccinations will support a return 
to more normal economic conditions.
    The Fed's policy actions are guided by our dual mandate to 
promote maximum employment and stable prices for the American 
people, along with our responsibilities to promote the 
stability of the financial system.
    In response to the crisis, we took broad and forceful 
measures to more directly support the flow of credit in the 
economy and to promote the stability of the financial system at 
the onset of the pandemic. Our actions, taken together, helped 
to unlock more than $2 trillion of funding to support 
businesses large and small, nonprofits, and state and local 
governments between April and December 2020. This, in turn, 
helped keep organizations from shuttering and put employers in 
a better position to keep workers on and to hire them back as 
the recovery continues.
    Our facilities were designed as backstops to private credit 
markets, not as replacements. Once lenders and investors 
understood that borrowers would have access to emergency loans, 
conditions improved.
    For example, yields in spreads on municipal bonds started 
to fall dramatically following the announcement that some 
municipal notes would be eligible at our money fund facility, 
and that we were opening the Municipal Liquidity Facility. This 
is detailed in the charts accompanying my testimony.
    Over the succeeding months, issuance of municipal debt 
surged. Over the period from April to December 2020, state and 
local governments and other muni issuers borrowed almost $380 
billion in the private markets at extremely attractive rates, 
and 2020 as a whole saw the highest volume of municipal 
issuance on record.
    We've deployed these lending tools to an unprecedented 
extent. And our emergency lending tools require the approval of 
the Treasury and are available only in unusual and exigent 
circumstances, such as those brought on by the crisis. Many of 
these programs were supported by funding from the CARES Act. 
Those facilities provided essential support through a very 
difficult year, and they are now closed.
    We continue to analyze the facilities' efficacy and to 
review the lessons learned from their establishment and 
operation. And additional analysis is included in my written 
testimony.
    To wrap up, we understand that our actions affect 
communities, families, and businesses across the country. 
Everything we do is in service to our public mission. We at the 
Fed will do everything we can to support the economy for as 
long as it takes to complete the recovery.
    Thank you.
    Mr. Clyburn. Thank you very much, Chair Powell.
    Each member will now have five minutes for questions. The 
chair now recognizes himself for five minutes.
    Chair Powell, as you have suggested in the past, our 
delivery of direct assistance to the American people--and I'm 
quoting you here--``is going to wind up very much accelerating 
the return to full employment.''
    You have also observed--and I'm quoting you again--``the 
economic downturn has not fallen equally on all Americans.'' We 
have observed that in our own communities. And I know the Fed 
has extensive data that are backing it up and is looking 
closely at steps that can be taken to address economic 
disparities.
    Now, my question is, why do you believe that economic 
equity is important for the strength of our economy as a whole, 
and necessary to successfully fulfill the Fed's core mandate of 
price stability and maximum employment?
    Mr. Powell. Thank you, Mr. Chairman.
    So disparities in economic outcomes along various lines 
have been a persistent and growing feature of our economy for 
several decades. We can contribute to addressing those through 
our tools. It does, of course, take a much broader set of 
policies from the legislature to really make significant 
progress on this.
    So, what we can do, really, is to focus principally on the 
employment mandate and to assure that we achieve maximum 
employment, which we now define as a broad and inclusive goal, 
meaning we will not just look at the headline numbers for 
unemployment, we will look at all kinds of measures of 
unemployment, including unemployment and employment for various 
groups, ethnic groups, gender groups, and things like that. 
We'll look at--it is a broad and inclusive goal.
    We will also, under our new framework, respond to 
shortfalls only in full employment. We will not raise interest 
rates preemptively because we think employment is too high 
because we fear the possible onset of inflation. Instead, we 
will wait for actual evidence of actual inflation or other 
imbalances.
    So those are the--that is the most important thing that we 
can do.
    I mean, I think the point is that there's a growing 
realization, really, across the political spectrum that we need 
to achieve more inclusive prosperity. Real incomes at the lower 
end of the spectrum have stagnated relative to those at the 
top. Mobility across income spectrums has declined in the 
United States and now lags that of most other advanced 
economies.
    These things hold us back as an economy and as a country. 
And I do think these are important issues that relate to the 
overall performance of the economy and, therefore, are in scope 
for us to analyze and call out.
    Mr. Clyburn. Well, thank you for that.
    You know, one of the primary goals of the select 
subcommittee is to ensure that our response to the pandemic is 
effective, efficient, and equitable. Now, I appreciate that the 
Fed, under your leadership, recognizes the importance of all 
three of these attributes for future economic strength.
    I'm not a social scientist, by any means, but I am well 
aware that in past recoveries--and we don't have to go all the 
way back to the 1930's to see this phenomenon; we saw it taking 
place in 2009. And that recovery was slow because, I feel, we 
did too little when we should've been going bigger and bolder, 
which we've done here.
    And I appreciate the fact that you are recognizing that and 
helping to build America back under this Rescue Plan, this 
Families Plan, all these things that are necessary to make sure 
that all elements in our society build--or, come back, not just 
to where we were but hopefully beyond. And I thank you for the 
way you have handled this, and I look forward to continuing to 
work with you on that.
    And, with that, I'll yield to the ranking member.
    Mr. Scalise. Thank you, Mr. Chairman.
    Mr. Powell, Chairman Powell, if we can go back to the pre-
pandemic and look at, first, where the economy was, how it was 
performing, were we experiencing a record economic expansion 
prior to the pandemic?
    Mr. Powell. The longest in our history.
    Mr. Scalise. And so, we saw the lowest overall 
unemployment. Is that correct?
    Mr. Powell. That is. Well, since--in 50 years, really. Yes.
    Mr. Scalise. Since the 1960's, let's say.
    Mr. Powell. That's right.
    Mr. Scalise. How about how it was affecting everybody? I 
know we've got some that try to say it didn't impact all 
groups. We've seen other numbers--I've surely seen other 
numbers that show that everybody benefited but especially those 
lowest-level entry levels. We saw record startups, African-
American unemployment, Hispanic unemployment at all-time 
records. Is that what you saw as well?
    Mr. Powell. Yes. And, really, that started to happen in the 
last two or three years of the very long expansion, which shows 
you the benefit of a very strong labor market. We saw all-time 
record-low unemployment since 1972 or so when we started 
tracking it for African Americans and very low for Hispanics as 
well.
    Mr. Scalise. Right. And, obviously, the Tax Cuts and Jobs 
Act passed, that is when we started seeing that happen. In 
fact, right before the bill was signed into law, we saw major 
companies--AT&T started and then every day there would be more 
announcements of companies announcing bonuses and increased 
wages for their employees because of a more competitive tax 
rate globally.
    Did you see that same thing?
    Mr. Powell. You know, we don't comment on particular--the 
effects of particular bills, as you can imagine, of any kind.
    Mr. Scalise. I'll give you that. And, obviously, there's 
enough documentation of those reports as people would announce 
that they were doing it strictly because America had become 
competitive again. We had the highest corporate rate in the 
world. We made ourselves not only competitive, we had a 21-
percent rate when the world average was 23 percent, and then we 
saw all of those great benefits.
    We also saw record-high markets, didn't we?
    Mr. Powell. We did, yes, I guess.
    Mr. Scalise. So, when we saw the government-ordered 
lockdowns, whether it's businesses, schools, didn't that 
ultimately hurt this record-setting economy?
    Mr. Powell. You know, I don't know that I can say that. I 
mean, I think the--of course, the economy was very hard hit by 
the pandemic, and it's assigned to others to decide how we 
should've reacted. It's really not something that the Fed has 
expertise in or the ability to judge.
    Mr. Scalise. Yes. Would you say that the lockdowns were 
caused by a reaction to COVID-19 becoming a global pandemic?
    Mr. Powell. Yes.
    Mr. Scalise. And did COVID-19 come from China?
    Mr. Powell. I really--I don't know.
    Mr. Scalise. Well, hopefully this committee will have that 
hearing on the origin of COVID; we won't have to wonder about 
it. Obviously, there's a lot of data out there that indicates 
not only did it start in China, but that it also started in the 
Wuhan lab. Whether it was intentional or accidental, that is a 
question no one should have doubt about when we could be having 
those hearings. So, we'll continue to call for that.
    But you could see that straight line between the pandemic 
hitting, from this virus that came from China, and then the 
shutdown that had a devastating impact not only on lives--over 
600,000 in America, millions worldwide--but also on this 
economic crisis that we're dealing with.
    Now I want to turn to the inflation crisis that we're 
seeing. As you can see right behind me, we've seen a dramatic 
increase in the cost of many household items, everyday items 
that families buy--milk up five percent, bacon up 13 percent, 
gas up 56 percent, used cars up 30 percent--as we're seeing a 
shortage of products, harder for people to get products, supply 
chain backups, harder to get workers. We're seeing, as the 
result of that, about a five-percent inflation rate recently.
    So, I would ask you, Chairman Powell, is five-percent 
inflation acceptable to you?
    Mr. Powell. No. Certainly not.
    Mr. Scalise. So, clearly, we want to address this crisis.
    Now, when you look with the unemployment crisis, there's 
9.3 million job openings right now, which is a record high, yet 
the economy only added back 500,000 jobs in May.
    We've seen the enhanced unemployment being a big factor. In 
paying people--40 percent of the people that are getting these 
checks are getting more money not to work than work. That was a 
policy decision made here in Washington, a very flawed one. 
You're seeing many states try to address it.
    But, ultimately, as we have this labor shortage, as it's 
creating supply chain backups, as it's starting to get worse, 
especially on the inflation side, Chairman Powell, will the 
economy ever reach a full pre-pandemic level if this labor 
shortage continues?
    Mr. Powell. Well, if it continues. I strongly suspect that 
labor supply and job creation will be moving up well over the 
rest of this year.
    Mr. Scalise. And I think that will follow, as you see, many 
Governors, half the Governors in the country now have decided 
to end, on their own, that enhanced unemployment, and that is 
getting people back to work in those states. Unfortunately, 
some states want to continue paying people not to work, and 
that's causing inflation in other areas.
    Hopefully we can confront this, address it. I wish you well 
as you look at the tools you have available to you, but 
hopefully we, as policymakers, get this right as well.
    With that, Mr. Chairman, I yield back.
    Mr. Clyburn. I thank the gentleman for yielding back. I'm 
sure he's going to join me later in making sure we increase the 
minimum wage so we can do something about the----
    Mr. Scalise. There is no minimum wage right now, Mr. 
Chairman. They're giving bonuses to people to go back to work.
    Mr. Clyburn. Yes, but I don't think the minimum-wage people 
got bonuses. Or did they?
    Mr. Scalise. I've seen wages in almost every state go up 
well above minimum wage.
    Mr. Clyburn. Almost every state. Missed South Carolina. I'm 
sure they caught Louisiana.
    Mr. Scalise. I know my restaurants in the New Orleans area 
cannot find workers, and they're looking and paying more than 
they were pre-pandemic. And New Orleans has got the best food 
in the world. I'm sure South Carolina's not far behind, but----
    Mr. Clyburn. Oh, no, no, no.
    Mr. Scalise. They would like to get those workers back too.
    Mr. Clyburn. Yes, Gullah Geechee's a little better.
    With that, I'd yield five minutes to Ms. Maloney.
    Mrs. Maloney. Thank you, Mr. Chairman.
    Thank you. It's good to see you again, Chairman Powell.
    I want to start by asking about the Fed's monetary policy, 
and inflation in particular. I am very concerned that the Fed 
is going to raise rates too early, which would seriously harm 
the economic recovery.
    As you stated last week, much of the recent rise in 
inflation had actually been expected. I strongly believe that 
the recent spike in inflation will only be temporary, and that 
shouldn't cause the Fed to raise interest rates too soon.
    In the early months of the pandemic, prices fell incredibly 
low, so now, a year later, the year-over-year rise in prices 
looks very high. But that was only because prices fell to 
artificially low levels last year at this time. This is 
something that everyone saw coming for many months, so it 
shouldn't come as a surprise at all.
    How much of the recent rise in inflation do you attribute 
to artificially low prices from early in the pandemic, and how 
much do you attribute to other effects like supply bottlenecks 
pushing up prices and a genuine rebound in economic activity?
    Mr. Powell. Well, a pretty substantial part or perhaps all 
of the overshoot in inflation comes from categories that are 
directly affected by the reopening of the economy, such as used 
cars and--used cars and trucks in particular. There's sort of a 
perfect storm of very strong demand and weak supply due to the 
reopening of the economy and various factors. We see airplane 
tickets, we saw hotel prices, we see other things.
    So those are things that we would look to to stop going up 
and ultimately to start to decline as these situations resolve 
themselves. They don't speak to a broadly tight economy and to 
the kind of thing that has led to high inflation over time.
    I will say that these effects have been larger than we 
expected, and they may turn out to be more persistent than 
we've expected. But the incoming data are very much consistent 
with the view that these are factors that will wane over time 
and that inflation will then move down toward our goals.
    And we'll be monitoring that carefully. Of course, we're 
prepared to use our tools as appropriate, if that turns out not 
to be the case to, you know, to guide inflation to two percent.
    Mrs. Maloney. Thank you.
    Let me followup on that, because we know that inflation 
statistics are fundamentally flawed right now due to the 
pandemic. We typically measure inflation using a basket of 
goods and services that represents what people usually 
purchase, but the pandemic completely scrambled what everyone 
was spending money on. People weren't traveling or going out to 
restaurants, so spending on those items stopped entirely, while 
spending on groceries surged dramatically.
    As a result, a lot of economists question whether we should 
be relying so heavily on inflation statistics that we know 
don't represent what people are actually spending money on.
    So, my question is, do you have any concerns with relying 
on traditional inflation statistics, which we know are 
unreliable right now in setting monetary policy?
    Mr. Powell. I think the overall point is that the data that 
we're looking at in the labor market and for inflation and for 
growth, it's in such an unusual setting of reopening the 
economy, we have to be very humble about our ability to really 
try to draw a signal out of it. And it may take some patience 
to see what really is happening.
    Specifically on inflation, you're really talking about 
consumer price inflation, the CPI. We actually use, at the Fed, 
PCE--Personal Consumption Expenditure--inflation. And the 
basket is actually updated on a monthly basis for PCE. And 
that's one of its more attractive features, from our 
standpoint.
    Still, at a time like this, when people are changing their, 
you know, consumption patterns in ways that are outside of 
experience, I would say there's also a challenge there, even 
though we are--our measure is, in fact, updating monthly in 
terms of its basket.
    Mrs. Maloney. Switching gears a little, I want to ask about 
the Main Street Lending Program.
    It seems clear that both the Main Street Program and the 
Municipal Program generally improved credit access. Fed 
officials have acknowledged that the Main Street Program would 
likely have been more productive with different bank incentives 
and more generous terms.
    And, as you know, the eligibility threshold for the 
Municipal Program excluded many cities and counties that were 
deeply affected by the pandemic.
    What do you believe are the most important adjustments the 
Fed could make to the Main Street Lending Program to make it 
more effective in future crises?
    Mr. Powell. Well, I would say the Main Street Lending 
Program overall was effective. It made a couple thousand 
dollars--a couple thousand loans, and it helped a lot of 
businesses.
    So, if I could take away a lesson there, it is that it's 
very difficult to reach small businesses across America. And I 
would look to the PPP program and things like that. A lot of 
these very small businesses didn't need unforgivable loans. 
These were statutorily unforgivable; they could not be 
forgiven.
    Mrs. Maloney. Uh-huh.
    Mr. Powell. And so, I would look in that direction going 
forward.
    In terms of Municipal Liquidity Facility, I think that the 
overall assessment of that is that it was a resounding success. 
And the test of it is not how many loans we made; the test of 
it is how much lending took place.
    The municipal markets were collapsing. There was no lending 
going on. The people who put their money in those funds that 
wind up making all the loans were taking their money out. We 
announced the facility, and all of that turned around. And by 
through much of last year, municipalities, states, had great 
access to market, including ones with relatively low ratings. 
Record amounts of borrowing took place at low, low rates.
    So, it really worked. I mean, it really stands for the 
proposition that a backstop is better than a direct loan, in a 
lot of cases. So, we would look at it that way, and I think 
that's the way it's generally seen.
    Mrs. Maloney. My time has expired. Thank you. I yield back.
    Mr. Clyburn. I thank the gentlelady for yielding back.
    The chair now recognizes Dr. Miller-Meeks.
    Mrs. Miller-Meeks. Thank you, Mr. Chair.
    And, Mr. Powell, thank you so much for coming up for us 
today and for your testimony.
    There has been--I think, first and foremost, that the 
improving economic position we see today, do you think that it 
would be in existence without Operation Warp Speed and three 
safe and effective vaccinations?
    Mr. Powell. I think that the vaccines and the widespread 
adoption of them are absolutely essential to the recovery.
    Mrs. Miller-Meeks. Thank you.
    And, currently, about 40 percent of workers on enhanced 
unemployment are paid more than they did while they were 
working. Coincidentally, there is a labor shortage.
    In my home state of Iowa, as of May 2021, 87,000 workers 
dropped out of the labor force since February 2020, a five-
percent decrease in the size of Iowa's work force. 
Notwithstanding, employers in my state cannot find workers. And 
these are jobs that are greater than $15 an hour. Even some 
employers cannot find people to work at salaries of between 
$80,000 and $130,000.
    As Governor Brainard pointed out earlier this year, true 
unemployment is far higher than the headline rate, and the 
labor force participation rate is nearly six percentage points 
below where it was at the beginning of the 2lst century.
    Shouldn't we be doing everything we can to incentivize work 
for our own citizens? And shouldn't we be looking at bringing 
in additional unskilled workers into this country at a time 
when we have a labor shortage of skilled workers?
    Mr. Powell. So, I'll try to answer.
    So, I think a number of things, we think, are weighing on 
labor supply right now, and those are things that should be 
expected to abate and wane and go away over the course of 
coming months. So, we should be seeing our way to strong job 
creation, we think, as the year goes on.
    And there I'm thinking of: A significant number of people 
still report themselves as not wanting to work because of being 
afraid of being infected or being afraid of carrying the 
infection to somebody they may live with who's vulnerable. 
Also, schools not being open, that's weighing on participation 
by caretakers.
    And, also, unemployment insurance may be interacting with 
some of those other factors and causing people to go on with 
their job search longer.
    There's another thing, though. The very quick job gains of 
the early recovery essentially involved going back to your old 
job. That's not so much what's happening now. Now it's actually 
finding new jobs. And that's a matching function that is more 
labor-intensive and time-consuming, and there may be a bit of a 
speed limit on that.
    We expect, though, as I said, a lot of progress to go 
forward.
    On immigration, it's something we--really isn't in our 
bailiwick, and so I try to stay at a high level on a question 
like that.
    Mrs. Miller-Meeks. President Biden promised not to raise 
taxes on anyone making under $400,000 a year. But inflation, as 
already been noted, has increased dramatically. And I realize 
you use the PCE rather than the CPI, but it's over five 
percent. And it's the most insidious and regressive tax, 
affecting low-income, minority families, hardworking taxpayers, 
and seniors on a fixed income.
    You stated recently that want current inflation surge is 
likely to be transitory. Does ``likely'' mean greater than a 
95-percent chance? A 50-percent chance? Or do you have any 
level of confidence in that prediction?
    Mr. Powell. I have a level of confidence in that 
prediction. What I have been saying, though, is that we--it's 
very hard to say what the timing of that will be. When will 
these bottlenecks disappear? When will there be enough 
microchips? We saw what happened in the lumber business. Prices 
have come way down, but they're still pretty high. When will 
the used-car markets get back into equilibrium?
    And so, it's hard to say exactly when it will be and 
exactly how large the effects will be. But, honestly, if you 
look at the--if you look behind the headline and look at the 
categories where these prices are really going up, you'll see 
that it tends to be areas that are directly affected by the 
reopening. That's something that we'll go through over a period 
that will then be over, and it should not leave much of a mark 
on the ongoing inflation process.
    So, there's no reason why it should leave a mark on 
inflation, say, a year or so ahead, because we should be 
through it then.
    Mrs. Miller-Meeks. Thank you.
    And, finally, ``The Financial Report of the U.S. 
Government,'' published annually by the Treasury Department, 
says unambiguously, the current fiscal path is unsustainable. 
On our current path, debt is projected to exceed six times the 
GDP by the end of the century and annual government spending 
will exceed 50 percent of GDP.
    Do you agree with the conclusions of this report? And, if 
so, isn't this an additional and one of our greatest avoidable 
crises that our country currently faces?
    Mr. Powell. I think that it--``unsustainable'' just means 
that the debt is growing faster than the economy. That's been 
the case for a long time, and I don't think that's 
controversial.
    I think the point I would make is that the time to work on 
that problem will come, and that time is when employment is 
high, unemployment is low, economic activity is strong, taxes 
are rolling in. That's the right time to go to work on a 
longer-term program that gradually moves us back to, you know, 
primary balance.
    And, ultimately, you just have to get the GDP growing 
faster than the debt, and it has to do that for an extended 
period of time. That's how countries get back to a sustainable 
path.
    Mrs. Miller-Meeks. And to be mindful of their spending when 
the economy is growing.
    Thank you so much.
    I yield back my time.
    Mr. Clyburn. I thank the gentlelady for yielding back.
    The chair now recognizes Mr. Raskin for five minutes.
    Mr. Raskin. Thank you so much, Mr. Chairman.
    I'm sorry that you were harangued again this morning about 
the origins of the coronavirus. I'm very eager also for the 
House Committee on Science to take up this scientific question, 
and also deal with the facts that I have emphasized since the 
beginning: that Donald Trump repeatedly defended the 
performance of the Chinese Communist Party and General Xi in 
COVID-19. In February, in March, in April, in May, for many 
months, I think on 19 different occasions, he defended them as 
doing a great job and a wonderful job and praising their 
partnership. So, I'm very eager to get to the bottom of it.
    Regardless of whether the virus came out negligently, 
recklessly, or deliberately, none of it excuses the lethal 
recklessness of Donald Trump in his complete mismanagement of 
the coronavirus in our country. And, of course, we lost 
hundreds of thousands of people before he left office and we 
got organized to crush the disease, finally.
    Mr. Chairman, welcome to our committee.
    I was taken with something that you said in February, when 
you said, ``What it takes to drive productive capacity to raise 
living standards over time is investment--investment in 
people's skills and aptitudes, investment in plants and 
equipment, investment in software.''
    Do you agree that investing in our Nation's infrastructure 
will increase our productive capacity and contribute to long-
term economic growth in the country?
    Mr. Powell. Mr. Raskin, I want to start by saying, I don't 
want to be seen to be addressing any particular legislative 
proposal. But I think it's basic economics that productivity is 
what--and demographics are what drive longer-term growth in a 
country. And one of the big ways to affect productivity is 
through investment. And that includes infrastructure, includes 
plants and equipment and people, education, skills, things like 
that.
    So, I think that is the point that I made--was making back 
in February.
    Mr. Raskin. Gotcha.
    Well, let me take a specific example then, and maybe you 
can help me with it.
    Thirty million Americans live in areas with inadequate 
broadband, which severely limits their abilities to do their 
work, to develop their businesses, to participate equally in 
school. I have had high school kids tell me they have to go to 
McDonald's or Starbucks in order to get internet that they can 
use for their assignments.
    The American Jobs Plan would make unprecedented investments 
to expand broadband to these rural communities, like Frederick 
and Carroll County in my district.
    And I know that you don't comment on specific legislative 
proposals, but would you say that, in general, expanding high-
speed broadband access to millions of Americans who don't have 
it, especially in rural areas, would create new economic 
opportunities and potential for long-term economic growth?
    Mr. Powell. Again, without commenting on particular 
legislation, I think I would look at broadband like that in the 
same way that prior generations looked at electricity.
    If kids don't have access to the internet and to, 
basically, all the knowledge that's available through that, 
they're not going to be able to maximize their potential or 
realize their potential in this economy.
    Mr. Raskin. Well, that's a fascinating answer to me, 
because when I tried to look at it historically, it seemed like 
the definition of ``infrastructure'' has expanded over time. 
And, you know, when Eisenhower said, ``Let's build the 
highways,'' people said, ``What's that got to do with 
infrastructure? Infrastructure is bridges.'' And, you know, 
when President Lincoln did the land grants, you know, to do 
universities and colleges across the country, people said, 
``What's that got to do with infrastructure?''
    And so, it does seem like the definition of 
``infrastructure'' changes. What is your working definition of 
``infrastructure'' as an economic concept?
    Mr. Powell. I don't--I hadn't taken the trouble to really 
write one down, and I wouldn't like to do it in real-time here, 
if I can avoid that.
    Mr. Raskin. OK. Well--or, let me just pose it, then, in 
kind of a more abstract way. Would you say that infrastructure 
is anything that allows for the expansion of productive 
capacity and contribution to long-term economic growth?
    Mr. Powell. I don't see anything objectionable about that.
    Mr. Raskin. Yes.
    All right. Well, I just very much appreciate your emphasis 
on investment, because that's what we've been doing with the 
American Rescue Plan, that's what we want to do with the 
American Families Plan, that's what we want to do with the 
American Jobs Plan. We want to reinvest in America, to keep 
those jobs here in America, and to invest in our communities so 
we have a solid foundation for the continuing growth of the 
great American middle class and for the opportunity for lots of 
poor working people to get into the middle class.
    And, with that, I will yield back to you, Mr. Chairman.
    Mr. Clyburn. I thank the gentleman for yielding back.
    The chair now recognizes Mr. Jordan for five minutes.
    Mr. Jordan. Thank you, Mr. Chair.
    Chairman Powell, the Fed has two mandates, right?
    Mr. Powell. Maximum employment and stable prices.
    Mr. Jordan. Maximum employment and stable prices. Seems 
like both have got--both got some problems today.
    I want to spend a little time on the first. Why are the 
jobs numbers so bad right now?
    Mr. Powell. Well, I think we're digging out of a very deep 
hole. We've made a lot of progress, but I would agree with you, 
we have a long way to go.
    Mr. Jordan. Over 9 million job openings; over the past two 
months, only 800,000 jobs added back. That's pretty bad. Well, 
is there a specific reason you point to as why those numbers 
aren't where we would, frankly, hope they would be?
    Mr. Powell. You know, it's a good question, and my thinking 
is that there are some temporary factors that are weighing on 
job creation. And I mentioned those earlier.
    Another thing is, actually, actual hiring is at very high 
levels but it's being offset by high levels of quits and 
retirements. So, the net--what's happening is that the net job 
creation has been lower, but actual hiring is high.
    And that's--in a sense, quits is a good thing because 
people are looking for----
    Mr. Jordan. Got it.
    Mr. Powell [continuing]. jobs that they want more. 
Retirements are just something that happens.
    Mr. Jordan. What about unemployment benefits? Does that 
factor in as well?
    Mr. Powell. It may be a factor, and it'll be a temporary 
one, because something like 15 million people will see either 
those benefits disappear or significantly decrease.
    Mr. Jordan. My understanding is the state unemployment plus 
the Federal enhancement is $37,000 a year. Might that 
discourage people from going back to work?
    Mr. Powell. We're going to find out. We're going to find 
out, because it's going to be gone really quickly.
    Mr. Jordan. Well, I think we are finding out. Yet, in the 
stimulus package, child tax credit, family of four, it's about 
$110,000.
    I mean, every single employer, literally every single 
employer I talk to in our district--and, frankly, folks I--
employers I talk to around the country--tell me they can't find 
people to work. And you think it's more of quitting and 
retirements, or is it more unemployment, or a combination, or 
what is it?
    Mr. Powell. I think it's, in terms of things that are 
weighing on people getting in the labor force, I think it's 
those three things I mentioned.
    It's still--some people are still afraid of COVID. Maybe 
they're living with someone who is vulnerable.
    It's also schools are closed still, and having schools be 
open again will free up a lot of caretakers.
    I think unemployment benefits, too. I think you would 
expect a significant, a really strong set of jobs numbers 
coming up beginning in the next month or two----
    Mr. Jordan. Well, didn't you expect higher numbers in April 
and May?
    Mr. Powell. Yes, I did.
    Mr. Jordan. I mean, it sort of surprised me. I guess when 
you pay people not to work, you shouldn't be surprised when you 
don't have workers.
    I've never seen a situation like this where we now have, as 
the ranking member mentioned, we now have several Governors, 
25, I believe, who have turned back, who said: We don't want 
the Federal enhancement to unemployment.
    I've never seen that. I've been in politics 26 years. I've 
never seen Governors turn down Federal money. So, I think that 
just underscores how serious the problem is.
    But you said you think it changes soon?
    Mr. Powell. Well, we know that these benefits run out on--
the Federal ones run out----
    Mr. Jordan. What if the Democrats renew them, which they're 
talking about doing?
    Mr. Powell. Excuse me?
    Mr. Jordan. What if the Democrats renew them? That would be 
a problem, wouldn't it?
    Mr. Powell. Again, I don't comment on----
    Mr. Jordan. No. But you said you expect it to run out and 
that will help. I'm asking you--that's not what Democrats are 
saying. They're talking about renewing them. And so, if it 
helps if they run out, if they renew them, won't that hurt?
    Mr. Powell. Well, these are judgments for people who stand 
for election.
    Mr. Jordan. No, I'm just following your logic. You said, if 
it runs out, that will help the employment situation. I mean, 
I've got employers----
    Mr. Powell. I think we'll see strong job creation in the 
fall, I really do. And I think there are all these, as you 
point out, 9.3 million job openings, many millions of people 
unemployed.
    There seems to be some kind of a speed limit. It may just 
be that it's hard to match up with a new job and people feel 
like they can wait a little bit longer and really shop 
carefully.
    Mr. Jordan. It seems to me, Chairman--and, again, I know 
you don't talk--you're not going to comment on policies--but I 
don't know that Democrats are doing anything right. They kept 
the economy locked down. They're spending money like crazy, 
proposing more, I think a $6 trillion budget the White House is 
proposing, all causing inflation.
    Inflation went up the last four months, continues to 
increase. As you said, you've got two mandates at the Fed: 
stable employment, low inflation. We've got unstable 
employment, we've got high inflation.
    And now they're paying people not to work, and that may 
continue.
    And then, finally, on top of all that, they're thinking 
about raising taxes.
    I mean, this is amazing to me. First you pay people not to 
work, and then the folks who are working, you're going to raise 
their taxes, and somehow they think that's going to help our 
economy, when, as I said now a couple times, every single 
employer I talk to tells me they can't find people to work.
    What do you think about all those policy ideas from the 
Democrats?
    Mr. Powell. Again, it's not my job.
    Mr. Jordan. No, but your job is stable employment and low 
inflation. Right now, we have 9 million job openings and 
inflation that's went up five months in a row. So, something 
has to give.
    I don't necessarily--I'm not necessarily blaming you. I'm 
blaming the Democrat policies. And it seems to me the idea that 
they're going to extend the Federal enhancement make absolutely 
no sense. The idea they're going to raise taxes on hardworking 
Americans makes absolutely no sense. And the idea they're going 
to spend $6 trillion also makes absolutely no sense.
    So, as I said, it seems to me they're doing everything 
wrong, making your job that much harder.
    With that, Mr. Chairman, I yield back.
    Mr. Clyburn. It's a good thing, too.
    Mr. Jordan. I don't give comments when you make your 
statements. Tell me what I said wrong in that statement.
    Mr. Clyburn. It's a good thing that you're yielding back so 
I can give five minutes to Mr. Foster.
    Mr. Jordan. It's a good thing I made those points about how 
bad the Democrat policies are. That's the good thing.
    And I'd like to answer--and it would be nice if the Fed 
Chairman would answer the fact that, if you guys extend 
unemployment, which he said if it goes away will be good for 
the economy, and if you extend it, he wouldn't answer that 
question.
    Mr. Clyburn. With that, I yield five minutes to Mr. Foster.
    Mr. Foster. Thank you.
    And I sympathize with the chairman sort of being left 
speechless by the logic that we just saw demonstrated.
    I'd also like to respond to some of my Republican 
colleagues about the origin of the coronavirus. The Science 
Committee Investigations and Oversight Subcommittee that I 
chair is, in fact, having a hearing on--hearings on the origin 
of the coronavirus. The first is scheduled July 14 at 11 a.m.
    These hearings are going to be science based. And I think 
it says a lot about how seriously my Republican colleagues take 
science that they cannot even find a complete set of members to 
serve on that committee, on that Science subcommittee. They 
have only two members, the ranking member and Representative 
Sessions.
    Well, with that out of the way, I just want to thank you, 
Chairman Powell. In your testimony, you correctly note the 
importance of the successful vaccination campaign. Under the 
Biden administration's leadership, we've now administered over 
300 million vaccine doses, and COVID infections have fallen 
dramatically.
    The CDC has advised that vaccinated people can safely 
engage in a wide variety of activities, and states have been 
able to do that and ease coronavirus health restrictions. And 
when they do that, our economy recovers.
    I think it's clear to everyone that the return on our 
investment on vaccines, starting with money and directions 
provided by Congress before Operation Warp Speed was even 
announced, and following decades of federally funded research 
into the underlying science, has had the highest return on 
investment of really any that our country has ever made.
    Would you agree with that?
    Mr. Powell. I don't have a number to put on that. But, yes, 
I would think the return on investment would be high.
    Mr. Foster. But the return on investment is not limited to 
vaccinating the United States. We also benefit economically by 
helping vaccinate our trading partners.
    Would you also agree that the return on that investment is 
likely to be very high?
    Mr. Powell. I would, yes.
    Mr. Foster. Yes. And would you be willing to have some of 
your brilliant economists that work for you actually try to put 
a rough number on that, because it's an important thing for us 
to appreciate as we decide how much of resources to devote to 
helping other nations around the world?
    Mr. Powell. I will be glad to do that.
    Mr. Foster. Thank you.
    And now with COVID, our economy has experienced a number of 
inflation shocks--the tight labor markets, commodity shortages, 
release of pent-up consumer demand, chip shortages, as you 
mentioned, due to underinvestment in foundries and 
overinvestment in Bitcoin and meme stocks, proposals to move on 
shore the supply chains that have historically been offshore, 
which will in general increase prices.
    And all of this, however, happens against a continuing 
backdrop of long-term technological job loss that was arguably 
accelerated by COVID.
    So how do you think this is all going to net out when the 
transients are over, the longer term, say medium term effect of 
inflation?
    Mr. Powell. I mean, it's incredibly hard to say really.
    If you're positing an actual reversal of globalization, 
that could have implications as you suggest.
    But I wonder if that's really going to happen because of 
policies that we adopt. Technology goes instantly around the 
world. It's not going to be easy to stop that. The economy's 
become very globalized.
    And also production technology is so much more efficient 
than it was. You can do things with the new technologies. You 
can manufacture things here that may or may not result in a lot 
of jobs in manufacturing, but you can certainly make things. 
There may be reshoring here that's actually quite efficient in 
terms of costs.
    Mr. Foster. So, the jobs will come back to the U.S., but 
they'll be taken by robots.
    Mr. Powell. There is some of that----
    Mr. Foster. There is some of that.
    Mr. Powell [continuing]. in manufacturing, as you know.
    Mr. Foster. Yes. So, you really maintain some uncertainty 
on how this is going to net out for the inflation.
    Mr. Powell. A lot of uncertainty, yes.
    Mr. Foster. Yes. OK.
    Let's see. And my last thing. You've been talking a little 
bit about high-speed broadband, which is, I think, an important 
investment with huge return.
    An important part of that is that when Americans get, for 
the first time, access to the internet, that they're also 
provided a secure digital ID that prevents them from becoming 
victims to identity fraud and allows them to safely participate 
in our economy.
    One of your other projects you're working on, central bank 
digital currencies, is going to need to have a secure digital 
ID to allow people to transact in digital dollars in a safe way 
that can't be abused.
    Are you working internationally to try to get these secure 
digital IDs as part of your negotiations on central bank 
digital currencies and others?
    Mr. Powell. I think it's part of the discussion. I would 
say we're not as far along as your description would suggest on 
that. But that's--it's certainly something you would need to be 
able to have----
    Mr. Foster. Well, will it be addressed in your white paper 
coming out this summer?
    Mr. Powell. A lot of things will be addressed. I'm not sure 
if that would be. That's something--you certainly need that 
down the road. We probably will be. We're just laying it out 
right now.
    Mr. Foster. Yes. No, it's important for our economic 
recovery as well as planning to respond to China, frankly, on 
central bank digital currencies. So, put it--move it up on your 
to-do list.
    Thanks much, and I yield back.
    Mr. Powell. Thank you.
    Mr. Clyburn. I thank the gentleman for yielding back.
    My understanding is that Dr. Green has joined us. If so, 
he's now recognized for five minutes.
    Mr. Green. Can you hear me, Mr. Chairman?
    Mr. Clyburn. We can hear you, yes.
    Mr. Green. OK, thank you. Sorry about that. Thank you, 
Chairman Clyburn and Ranking Member Scalise. And I want to 
thank Chairman Powell for being here today.
    Last summer, when the former Fed Chairs Bernanke and now-
Treasury Secretary Yellen testified before this subcommittee, I 
expressed some concern that the excessive spending by Congress 
and money printing by the Fed might cause inflation. Mr. 
Bernanke denied this, saying that people said there'd be 
inflation in 2008, but they were wrong.
    Mr. Chairman, the numbers are in, and it looks like there 
is some inflation, at least the past couple of months, four and 
now five percent.
    When Congress spends trillions of dollars and the Fed 
prints money, something's got to give.
    Prosperity isn't created by government, I don't believe. 
It's created by workers, by businesses, by entrepreneurs 
creating and inventing, innovating.
    I founded a healthcare company, grew that company up to 
over 200 million in annual revenue in just eight years, and I 
have a little bit of experience on understanding how to create 
jobs, grow business, et cetera.
    And I genuinely believe those businesses out there are 
looking at this inflation as a tax. Now, it's a hidden tax. 
They see it as a tax on their ability to do B-to-B transactions 
or B-to-customer.
    Every dollar the government spends has to come out of 
somebody's pocket. Whether it's through another tax or a 
reduction in their purchasing power, it comes out.
    And if we don't get our fiscal house in order, I worry that 
that inflation won't be transitory, as I know you've said both 
in the press and probably here today. And I apologize for being 
a little bit late.
    My first question, Chairman Powell. Are you concerned from 
an economic and really a national security perspective about 
Russia and China dumping the dollar and their, what appears to 
be a move to some kind of financial alliance between the two of 
them?
    Mr. Powell. That's not something that's really within our 
bailiwick or on our radar screen.
    The dollar is the world's reserve currency. There really is 
no currency that's close to being able to compete. That's 
because of our democratic institutions and our record of 
maintaining low inflation, and because we have open capital 
markets and are great traders with the rest of the world. I 
don't see anything changing that anytime soon.
    Mr. Green. Do you see the threat of raising the capital 
gains tax to 40 percent as a challenge to those capital 
markets?
    Mr. Powell. Again, I really don't comment on tax and 
spending proposals. We don't have any authority over that. The 
level of capital gains tax is something that is the business of 
elected officials, not the business of the Fed.
    Mr. Green. I appreciate that.
    Over the past 10 years, the Fed's--the Federal Government's 
net interest costs have grown about 25 percent relative to GDP 
despite the historically low interest rates.
    If spending remains on its current trajectory and interest 
rates reach their historic average of 5.7 percent, do you think 
the Federal Government will be able to pay its bills?
    Mr. Powell. I have no question that the U.S. Government 
will be able to pay its bills for the foreseeable future. There 
is no case in which that would not be the case. We have the 
strongest and largest and most flexible economy in the world.
    It's also true, though, that we're on an unsustainable path 
and that we're going to have to address that. And, as I 
mentioned, the time to address that is when the economy is 
strong, unemployment is low, and economic activity is high.
    Mr. Green. Is it possible that the high interest rate that 
we're seeing today is the start of something that could be as 
bad as the 1970's? And, if not, could you explain why?
    Mr. Powell. You say higher interest rates or higher 
inflation?
    Mr. Green. Inflation. I'm sorry.
    Mr. Powell. OK.
    Very, very unlikely. What we're seeing now, we believe, is 
inflation in particular categories of goods and services that 
are being directly affected by this unique historical event 
that none of us has lived through before, called ``reopening 
the economy after closing it.''
    So, you see extremely strong demand for labor, for goods, 
for services, and you see the supply side caught a little bit 
flatfooted in trying to catch up.
    And you see bottlenecks with--and you see this all over the 
world, by the way. This is not just the United States. You see 
it everywhere. And it's very similar kinds of situations.
    And you also, you have a central bank that's committed to 
price stability and has defined what price stability is and is 
strongly prepared to use its tools to keep us around two 
percent inflation.
    So, all of those things suggest to me that an episode like 
what we saw in the 1970's--and I graduated from college in 
1975, I had a front row seat--that nothing like that--I don't 
expect anything like that to happen.
    Mr. Green. OK.
    Mr. Chairman, I can't see the clock, unfortunately. I don't 
know if I have any more time.
    Mr. Clyburn. You are out of time.
    Mr. Green. OK. Thank you, Mr. Chairman. I yield.
    Mr. Clyburn. Thank you for yielding back.
    The chair now recognizes Mr. Krishnamoorthi for five 
minutes.
    Mr. Krishnamoorthi. Thank you, Mr. Chairman.
    And thank you, Chairman Powell, for appearing before us.
    Back in 2019 you said the following. You said: ``We try to 
create a strong labor market. For many, many people and many, 
many communities, that's enough. But for people who are at the 
margins, the low-to moderate-income community, that's not 
enough. They need a chance.''
    And earlier that year you said you were cutting rates, in 
part, to help those who are, quote, ``left behind.''
    How do you see the impact of the pandemic on these groups 
of people for whom you expressed empathy and concern back in 
2019? And how do you see the recovery affecting them?
    Mr. Powell. Well, in the first instance, the pandemic hit 
the service industries very hard, industries that involve 
dealing with the public--hotels, travel, entertainment.
    And the people in those customer-facing, public-facing 
jobs, they tend to be relatively low-paid jobs, and they're--
minorities and women are significantly overrepresented among 
the people in those jobs. And that's who got laid off. Most of 
the layoffs, a big chunk of the layoffs disproportionately were 
in those industries.
    So, it's clear this pandemic really hit those people hard. 
And why it was even more painful was that, in the last couple 
of years of the very long expansion that ended in March 2020, 
the longest in our history, you really began to see benefits 
going more to those groups than to the high end. I mean, wage 
gains at the lower end of the income spectrum were bigger than 
they were at the higher end. That began to be the case in year 
8, 9, 10, and the 11th year.
    And that was a very positive thing--high labor force 
participation, the benefits of prosperity being spread widely--
and it could have gone on for a long time but for the pandemic.
    So, we have the pandemic. And those industries are hiring 
people back. A whole lot of the job creation we're seeing is in 
those industries. You're still several million short in those 
industries of where employment was. But there are really high, 
very large numbers of job openings in a number of industries, 
including the service industry.
    So, I really am hopeful, with the strength of labor 
demand--it really is remarkably strong--that over time--and not 
a lot of time--this will sort itself out, and we'll find 
ourselves in a very, very strong labor market with low 
unemployment, wages going up across the spectrum.
    Mr. Krishnamoorthi. Can I jump in for one moment? Which 
is--thank you for that answer.
    You were talking about the matching function that's 
happening right now between people who are perhaps dislocated 
and people who--I mean, the job openings that exist.
    What is your perspective on efforts by educational systems 
working with governments, state, local, Federal, in upskilling 
people to match them with the jobs that currently exist in the 
post-pandemic economy, through skills-based education or career 
technical education and the like?
    Mr. Powell. You know, I've been exposed to a number of 
programs of that nature, and they seem to work really well. 
Some of them do, anyway. The idea being companies--you actually 
see it in South Carolina quite a bit. You see companies teaming 
up with schools and technical schools in these apprenticeship 
programs, and they really work.
    I would say that's a great idea, and it would be great to 
see more of it all over the country. But those things take 
time. They take policy support. They'll take time to really 
build and produce value, whereas this is something we have the 
immediate need to get people back to work.
    Mr. Krishnamoorthi. Yes, sir.
    Last question. What is the impact of other countries in the 
world not getting their populations vaccinated at the rate that 
we are and the COVID fires continuing to rage over there?
    What is the impact on our economy? If you have any metrics 
that can measure that or that you'd be willing to share, I'd be 
very interested in that.
    Mr. Powell. I don't have any metrics. But I will say, to 
Mr. Foster's earlier point, to the extent large countries 
around--large populations around the world are not getting 
vaccinated, we're giving time and place for new strains, more 
virulent strains of the virus to develop and spread. Viruses do 
not respect natural--national borders.
    And so, I think it is very much in our interest to support 
broad vaccination around the world. It's also the right thing 
to do. But it clearly is the best thing for us as well, because 
no one is really safe until we're all safe.
    Mr. Krishnamoorthi. Very good. Thank you so much for your 
service, sir.
    Mr. Clyburn. I thank the gentleman for yielding back.
    The chair now recognizes the ranking member for a closing 
statement.
    Mr. Scalise. Thank you, Mr. Chairman. I appreciate the 
hearing.
    Chairman Powell, appreciate the work that you do. 
Obviously, some of the questions that we have, both Republican 
and Democrat members had, are more in the policy realm, which 
is not your purview.
    You have tools as the Chairman of the Federal Reserve. You 
have mandates, as I know Mr. Jordan and you were talking about. 
But many of those tools are harsh tools, tools that we don't 
want to have to get to if we don't have to.
    And I think that's really where we as policymakers need to 
step up and do a better job so that it doesn't fall in your 
lap. And I think those points were made clear.
    If you look at just the two mandates of the Federal 
Reserve, maximum employment and stable prices, right now we 
don't have either. And it's because of policy decisions, policy 
decisions primarily by the Biden administration.
    Paying people not to work is causing real damage to our 
economy. You can't have 9 million openings for jobs right now, 
at the same time that we're paying people on average $35,000 a 
year not to work and then wonder why we have 9 million job 
openings. It's pretty clear.
    Every small business in America will tell you why. I hear 
the same thing across the board. They can't get all their 
workers to come back. And because of that, they can't open 
their business fully.
    Restaurants who are struggling, just scrapping and clawing 
to hold everything together, want to reopen fully, and in many 
states are able to reopen fully, but they can't because they 
can't get all of their workers back.
    And it's not like they've gone on to other places. They 
know exactly what's happening. They're being paid more not to 
work than to work. That policy has to end.
    You even said it: When the benefits run out, it will help. 
The problem is, Democrats here in Congress don't want those 
benefits to end. And we're borrowing that money from our 
children and our grandchildren to keep people out of the work 
force. It makes absolutely no sense. It undermines your very 
mandates.
    And, again, it would push us to a place where you would 
have to use tools, and we don't want to see high interest 
rates, we don't want to see limits on monetary policy. But 
that's where it would go if we leave it up to other entities, 
like the Federal Reserve. We need to confront this here in 
Congress.
    We can look at how states have done well and how states 
have done poorly. We don't have to reinvent this wheel. You can 
just look at a few of the states who have done it right.
    Georgia probably has the lowest unemployment, 4.5 percent. 
They were the first state to open. They took a lot of 
criticism, just like Florida when they opened their economy 
early. Some said, ``Oh, everybody is going to die.''
    The only problem is, when you look at the states that 
stayed mostly closed, they were the states actually that had 
the higher COVID death rates. And right now, to this day, just 
looking at recent numbers on seven-day average of COVID, 
Georgia 14 per 100,000 cases a day, New York's 36 per 100,000, 
almost triple Georgia.
    Georgia is fully open. New York is still mostly closed. 
Broadway is not even going to open until September. There is 
absolutely no reason for that. They should be open today. They 
could be open today.
    Schools should have been open months ago. All the 
scientists--we've had people sit in the very chair you're 
sitting in, including Dr. Fauci, say under oath, schools should 
have been open months ago, and, actually, you're doing long-
term damage to the kids by not reopening schools.
    This isn't something that the Federal Reserve Chair has 
anything to do with. That's policy, policy of local governments 
that are hurting their economies and their people, and 
especially the children that are paying a big price. This is 
what's got to end.
    We need to focus on getting the economy fully reopen, on 
getting kids back in the classroom.
    And, oh, while we're doing that, we surely ought to be 
addressing the origins of COVID-19. Not a month from now. 
Should have been months and months ago when we started calling 
for it, because nobody should have to sit here and go, ``Why 
did it happen? Why did this calamity, deaths, destruction of 
economies, people's whole livelihoods going away?''
    Suicide rates, we didn't even talk about that today. 
Suicide rates, drug overdoses, all off the charts because of 
what we went through in the last year. And yet, not a single 
hearing in over a year on the origins of COVID-19.
    So hopefully we can get back to focusing on the very 
policies that will help us get through this the right way so 
that it doesn't end up in your lap and things end up having to 
be abruptly changed to the point where it actually harms real 
families even worse than they've already been harmed.
    Because as we've seen so many things that are happening, 
like all of this inflation across the board, that shouldn't be 
happening right now.
    We shouldn't be seeing all this inflation that is brought 
on by President Biden's policies and his overreaction to 
something where the science--in fact, one of the things we've 
seen is a whole lot of political science being practiced 
instead of medical science.
    So hopefully we can get back to common sense and the 
science that shows us where we should be going, when, instead, 
we're seeing a whole lot of actions that are devastating to 
people when they shouldn't be going through some of this pain.
    So, let's focus on getting things open the right way, 
following that science, and doing it--again, not reinventing 
the wheel. Go look at the states that have done it right.
    Many states have gotten it right. Many states have gotten 
it wrong and still to this day are doing it wrong. Let's not 
have the Federal Government continue to do it the wrong way by 
making things worse.
    With that, I would yield back, Mr. Chairman.
    Mr. Clyburn. I thank the ranking member for yielding back.
    I want to close by thanking Chair Powell for his testimony 
today. We appreciate the opportunity to discuss the lessons 
learned from actions that the Fed took during the pandemic to 
support our economy, the Fed's current outlook as our economy 
recovers, and the action needed to ensure a strong, 
sustainable, and equitable economic future.
    Today's hearing has made clear that the Fed must improve 
its crisis response tools to ensure that communities, small 
businesses, and workers, not just large corporations, receive 
support during emergencies.
    The Fed's pandemic relief efforts, while innovative and 
well intentioned, were often too little too late and did not 
have the impact they could have had to bolster the economy. The 
Fed must learn from this experience to improve on these 
responses in future crises.
    The good news is that, thanks to smart and bold economic 
policy by Congress and the Fed alike, our economy is recovering 
swiftly. The American Rescue Plan is delivering desperately 
needed relief that is supporting a broad-based economy--
recovery.
    Since March, the economy has been adding an average of 
540,000 jobs a month, and new unemployment insurance claims 
have dropped dramatically.
    Direct payments have eased Americans' financial concerns 
and have enabled them to support their local economies. Soon, 
the Department of the Treasury and IRS will begin to deliver 
advanced payments to families from the expanded child tax 
credit relief that experts project will cut child poverty 
nearly in half.
    As vital as the American Rescue Plan is, it must only be a 
first step toward a better economic future. The pandemic 
exposed significant faults in our economy, and we cannot be 
satisfied with a return to the pre-pandemic status quo.
    I notice that our Chairman Waters has finally made it.
    Ms. Waters. Just got off a plane today.
    Mr. Clyburn. I understand, and I'm glad you got here 
safely. And I don't think we ought to close this hearing 
without hearing from you.
    Ms. Waters. Oh, well, thank you very much, Mr. Chairman. 
And I'm pleased I was able to get in at the end of the hearing.
    But let me just say that of course I've worked with 
Chairman Powell for quite some time now, and I was so very 
pleased with the way that he worked even with the Treasurer 
during the pandemic, and of course now with Yellen, who is our 
Treasurer--Secretary of the Treasury now.
    The two of them work very, very well together. And I was 
very pleased that, at the beginning of this pandemic, they both 
said you have to go big, you have to think big. And that's 
quite unusual for a Fed Chair, who is usually more cautious and 
more careful about expenditures.
    Also, I'm very pleased at the way that he opened up and 
initiated so many facilities. Some of them I still don't 
understand. But I do know that there was every attempt to be 
able to meet the needs of the business community.
    With the Main Street Facility, I was very pleased that, 
after opening that up and getting the information out from 
that, they modified some, and they brought in the opportunities 
for smaller businesses to have access to the Main Street 
Facility.
    And so, I compliment and thank Chairman Powell for not only 
his leadership during this pandemic, but his creativity and the 
way he was available to us to always help us think through what 
more can we do, and how can we do it.
    So, I'm pleased that I was able to at least come in on the 
end of this hearing today to say to you, Mr. Powell, I credit 
you, along with others who worked so very hard to get us, you 
know, past this pandemic and to get us back on the road so that 
our economy can do what we know it can do.
    And I've never really been worried about inflation, but I 
want to keep an eye on that, and I want you to keep us informed 
about what is happening in our economy.
    I think we're coming back, and we're going to come back 
strong. We've got to answer some questions about employment. 
We've got to find out what is happening with the need to 
increase the minimum wage, because I think that is what is 
keeping some of our people from wanting to come back to work. 
They're looking for better wages. They're looking for better 
opportunities.
    So, with that, let me just say thank you, Mr. Chairman, and 
thank you, Chairman Powell.
    Mr. Clyburn. I thank the gentlelady. And I'm sure Chairman 
Powell is very pleased that I did not close this meeting 
without your comments.
    Mr. Powell. Thank you.
    Mr. Clyburn. Let me continue to close by reminding--many of 
you may recall when we passed the CARES package, as we were 
debating it, I said at a meeting that I thought this would give 
us an opportunity to build an economy with the vision, with our 
vision. I was chastised for having said that.
    But I want to say once again, fulfilling the vision of this 
country, as we heard from Chair Powell today, is integral to 
our, what I call the pledge, as we close our Pledge of 
Allegiance, with liberty and justice for all.
    That's the vision that all of us have for this great 
country, and that is why we are working hard to pass the 
American Jobs Plan and the American Families Plan, which will 
make the investments in our infrastructure and our families 
that are necessary to build back better.
    As we listened to the testimony today and the Q&A, we were 
talking about why people have not gone back to work. I've 
talked to a lot of people in my state that will go back to work 
tomorrow if we could cure their childcare problems.
    That's what we've got to do. We've got to make sure that 
this Families Plan is put in place so people's children will 
not be endangered when they go back to work.
    So, Chair Powell, I thank you so much for testifying today.
    The Fed continues to play a critical role in helping our 
Nation recover from the coronavirus crisis and in ensuring 
equitable recovery. I trust that you will never lose sight of 
the fact that millions of Americans are dependent on the Fed 
continuing to support the economy's recovery.
    With that, and without objection, all members will have 
five legislative days within which to submit additional written 
testimony for the witness to the chair, which will be forwarded 
to the witness for his response.
    This hearing is adjourned.
    [Whereupon, at 3:38 p.m., the committee was adjourned.]

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