Happy Tuesday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL–Fed chief sees ‘conflicting signals’ from economy: Federal Reserve Chairman Jerome Powell said Tuesday that the central bank is trying to make sense of “conflicting signals” worldwide that could hint at threats to the U.S. economy.
Powell said in testimony before the Senate Banking Committee that the Fed is trying to reconcile the persistent strength of the U.S. economy with growing signs of a global slowdown.
{mosads}”While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals,” Powell said.
“We will carefully monitor these issues as they evolve.”
Powell’s testimony was his first before Congress since July of last year and comes after a turbulent stretch for the Fed chief. Powell found himself under attack from President Trump over a series of rate hikes through 2018.
Powell throughout insisted that politics would not influence the central bank’s policies as he faced the tough task of dealing with confusing economic signals and a stock market downturn late last year. I’ve got more on the hearing here.
The highlights:
- Powell said that with low inflation and steady, low unemployment, the Fed could afford to let the labor market run hot. The chairman said that the economy appears able to absorb more workers without spurring rampant price increases. “We learned there’s more slack in the labor market because people are staying,” Powell said. “There’s more room to grow and that has implications for monetary policy.”
- Sen. Brian Schatz (D-Hawaii) asked Powell if the White House had ever communicated with him about interest rates, which the chairman has denied before. But Powell declined to answer the question, saying he’d prefer to keep private his conversations with other officials.
- Some Republicans pushed Powell to expand the Fed’s implementation of a bill to loosen up oversight of banks, which Trump signed last year. “If the end result of [the bill] is as modest as this appears to be, we’ve not achieved our goal. That can’t be the congressional intent,” said Sen. Jerry Moran (R-Kan.).
ON TAP TOMORROW
- Federal Reserve Chairman Jerome Powell appears before the House Financial Services Committee to testify on the central bank’s semiannual report to Congress, 10 a.m.
- U.S. Trade Representative Robert Lighthizer appears before the House Ways and Means Committee to testify on U.S.-China trade relations, 10 a.m.
- The Brookings Institution hosts an event entitled “Productivity slowdown and wage stagnation: Causes and policy implications,” 2 to 3:30 p.m.
- The Senate Budget Committee holds a hearing on the Budget Control Act and cap-adjusted spending, 2:30 p.m.
- The Senate Small Business and Entrepreneurship Committee holds a hearing on China and the future of American industry, 2:30 p.m.
LEADING THE DAY
House votes to overturn Trump emergency declaration: The House passed legislation Tuesday to block President Trump’s emergency declaration at the southern border, marking an unprecedented congressional challenge to a president’s authority to invoke emergency powers.
The resolution passed easily through the Democratic-controlled chamber, 245-182, with Democrats voting unanimously to send it to the Senate. The GOP-led upper chamber is expected to hold a vote on the measure in the coming weeks.
Sponsored by Rep. Joaquin Castro (D-Texas), the one-page resolution would terminate Trump’s emergency declaration, thereby preventing the administration from extending the U.S.-Mexico border wall using funds previously allocated for other programs.
The vote marks the first time Congress has taken formal action to block a presidential emergency declaration since the power was created in the National Emergencies Act of 1976.
GOP defections: Republican leaders, who had clambered to limit defections in their ranks heading into Tuesday’s vote, were largely successful: 13 Republicans joined with Democrats to admonish Trump’s move — well short of the number Democrats would need to overturn the president’s promised veto.
McConnell unsure if Trump’s emergency declaration is legal: Senate Majority Leader Mitch McConnell (R-Ky.) says he has yet to determine whether President Trump’s emergency declaration to build border barriers is legal.
Asked for his legal opinion after meeting with a Department of Justice lawyer at a Tuesday luncheon of the GOP conference, McConnell said, “I haven’t reached a total conclusion.”
McConnell said while he graduated from law school, he’s not an expert on constitutional questions of separations of power.
“I wouldn’t go, to me, for a simple will,” he said, while noting, “I did go to law school.”
“We had real serious lawyers in there discussing that very issue,” he said, summarizing the lunchtime discussion with Vice President Pence and the senior lawyer from Justice.
“We had a very fulsome discussion of this issue in the conference at noon today with the vice president,” McConnell added. The Hill’s Alexander Bolton has more here.
- Three Republican senators — Susan Collins (Maine), Lisa Murkowski (Alaska) and Thom Tillis (N.C.) — say they will support a Democratic resolution of disapproval on the emergency declaration.
- McConnell said it will come up for a vote on the Senate floor before the recess scheduled for mid-March. The resolution could pass with support from all Democrats and one more Republican, but Trump has pledged to veto it.
Governors bullish on infrastructure after Trump talks: The nation’s governors are increasingly hopeful that a sweeping infrastructure package is possible this year after White House talks that even some of President Trump’s harshest critics called surprisingly productive.
Governors who met this weekend in Washington almost universally said they were disappointed in the lack of action by a divided Congress. But they are optimistic that Congress will act to send them billions of dollars to repair roads and bridges in a matter of months.
“It’s realistic because I think every governor is aligned on this, Republican and Democrat, and we can put pressure on that congressional delegation, Republican and Democrat, to get it done,” New Hampshire Gov. Chris Sununu (R) told The Hill in an interview. The Hill’s Reid Wilson tells us why.
GOOD TO KNOW
- A federal appeals court on Tuesday rejected the Department of Justice’s (DOJ) challenge of a lower court decision to approve the $85 billion AT&T-Time Warner merger, clearing the way for the deal to go through.
- Members of the Senate Finance Committee grilled pharmaceutical executives during a public hearing Tuesday about their role in rising drug costs, an issue that has elicited outrage from the American public and members of Congress.
- Fiat Chrysler on Tuesday detailed a $4.5 billion investment plan for its operations in Detroit, focusing on five existing plants in the city and one new one.
- The Securities and Exchange Commission (SEC) on Monday asked a judge to hold Tesla and SpaceX CEO Elon Musk in contempt, saying he violated an agreement with the agency by posting an “inaccurate” tweet earlier this month.
- IBM apologized on Tuesday for asking job applicants to identify their ethnicity from a list of racially insensitive categories that included “yellow,” “mulatto” and “coloured.”
- Both Democrats and Republicans are ramping up oversight of credit-reporting companies and pledging to build a replacement for what they call a broken system.
ODDS AND ENDS
- Charitable giving was up 1.6 percent in 2018, but only because of an increase in money from large donations in the first year under President Trump’s tax law, according to a report released Monday by the Fundraising Effectiveness Project.