On The Money — The Fed gets a new No. 2

The Senate just confirmed President Biden’s pick to be vice chair of the Federal Reserve, but the rest of his slate is up in the air. We’ll also look at new hope for a Democratic tax bill and a steep decline in stocks.  

But first, here’s what to expect from an Elon Musk-run Twitter. 

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.

Senate confirms Brainard as Fed vice chair

The Senate on Tuesday confirmed Federal Reserve Governor Lael Brainard as vice chair of the central bank.  

• Senators voted 52 to 43 in favor of Brainard’s confirmation to be the No. 2 official on the Fed board of governors, where she’s served since 2014 at the appointment of former President Obama.
• She will be just the third woman to serve as Fed vice chair since the modern central bank system was established in 1914, following Alice Rivlin and former Fed chair and current Treasury Secretary Janet Yellen.   

The background:  

• Brainard has been aligned with Fed Chair Jerome Powell on the bank’s efforts to fight inflation while preventing a strong U.S. economy from slowing into recession. 
• She supported keeping the Fed’s baseline interest rate range near zero through all of 2021 but pivoted along with Powell in favor of rate hikes as inflation steamed well ahead of the bank’s expectations late last year.
• Progressive Democrats had urged Biden to replace Powell with Brainard, citing her frequent objections to efforts supported by Powell and other Republicans to streamline bank regulations.    

The snag: The Senate is also expected to confirm the renomination of Powell and the nomination of Davidson College economics professor Phillip Jefferson to serve on the Fed board as soon as the end of the week.

But it could be weeks, however, before Biden’s full slate of Fed nominees is confirmed. With Vice President Harris and Wyden and Murphy all sidelined with COVID-19, only nominees with bipartisan support can advance until they return.  

Sylvan explains here. 

BBB COME BACK

Manchin: Scaled-down bill should focus on inflation, debt reduction 

Sen. Joe Manchin (D-W.Va.), who late last year all but killed the Biden administration’s Build Back Better legislation, said on Tuesday that any new Democratic budget reconciliation bill should be focused on combating inflation and reducing the deficit.  

Manchin outlined his vision of what a scaled-down bill should include to a small group of reporters after a meeting he said was focused on inflation with Senate Majority Leader Charles Schumer (D-N.Y.).  

“Reconciliation to me is about getting inflation under control, paying down this debt, getting a handle on what’s going on,” Manchin said.  

• Manchin expressed support for increasing the corporate rate to 25 percent, putting capital gains at 28 percent, getting rid of “loopholes” and “making sure everyone pays their fair share.” 
• He again rejected including programs such as paid leave, saying that any social policy changes need to go through the Senate committee process. 
• That could be a tough red line for many of his Senate Democratic colleagues who view reconciliation as their best chance to make good on long-held policy goals.    

The Hill’s Jordain Carney has more here. 

POWERING DOWN

Stocks sink as inflation, recession fears rattle Wall Street  

Stocks fell Tuesday as a steep decline in technology stocks deepened Wall Street’s losses after a brutal start to 2022.  
 

The Dow Jones Industrial Average closed with a loss of 809 points Tuesday, falling 2.4 percent. The Nasdaq composite closed with a loss of 4 percent and the S&P 500 index fell 2.8 percent by the closing bell  

Following a year of stellar gains, all three indexes have fallen since the start of the year as investors brace for the continued war in Ukraine, high inflation and the Federal Reserve’s attempts to cool off price growth to cut into corporate profits. Tech stocks that made up much of the market’s massive gains last year are among the leading forces behind the steady decline across Wall Street.  

Sylvan breaks it down here. 

CHINA CONCERNS

China COVID lockdowns threaten higher prices in US  

Lockdowns in China are ravaging global supply chains as shipping containers pile up at ports and factories close their doors.   
 

Beijing’s aggressive action to curb the spread of COVID-19 is likely to further fuel inflation in the U.S., where companies are struggling to get products from their Chinese suppliers.   

• Nearly one-fourth of the world’s stalled container ships are waiting outside of Chinese ports, according to data provided by maritime intelligence firm Windward AI.
• Chinese supply chain snags will impact U.S. supply of electronics, apparel, furniture, plastic items and raw materials, potentially driving up prices for a wide array of products. Higher transportation costs stemming from the slowdown are also likely to pass on to consumers.  

Experts expect U.S. consumers to experience a shortage of Apple products this year after several of the tech giant’s Chinese partners, including iPhone supplier Foxconn, were forced to shut down their factories in recent weeks due to COVID-19 outbreaks. 

Karl and Sylvan have more here. 

Good to Know

The CEOs of several meatpacking companies are expected to come under tough questioning from lawmakers Wednesday at a House hearing where soaring food prices are likely to take center stage.  

Since last year, overall meat and fish prices have risen nearly 14 percent on an annual basis, spurred on by pandemic-induced supply chain disruptions, overall high demand, and an overabundance, some economists say, of fiscal stimulus.   

Here’s what else we have our eye on: 

• Senate Republicans ripped the Biden administration’s top financial watchdog Tuesday as the agency takes aggressive steps to expand its oversight and regulation. 
• Fidelity Investments will offer 401(k) investors access to bitcoin, the company announced Tuesday.
• Moscow announced that it will be cutting off gas supplies to Poland and Bulgaria as of Wednesday. 

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow. 

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