Happy Tuesday and welcome back to On The Money, your virtual elbow-bump of financial news in these socially distant times. 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—Mnuchin, Powell differ over how soon economy will recover: Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin offered differing opinions Tuesday on how quickly the U.S. economy would recover from the coronavirus recession.
In testimony before a House committee, Powell and Mnuchin offered disparate forecasts for a budding economic recovery despite broadly agreeing on the success of the federal response so far.
- Mnuchin told members of the House Financial Services Committee that he expected the economy to “improve significantly” in the second half of the year after adding 2.5 million jobs in May.
- “We are in a strong position to recover because the administration worked with Congress on a bipartisan basis,” Mnuchin said, later ceding that further help for certain industries may be necessary.
- While Mnuchin asserted that the worst of the pandemic-driven recession is in the rearview mirror, Powell warned of daunting obstacles still ahead after the country suffered “a level of pain that is hard to capture in words.”
- “The path forward will also depend on the policy actions taken at all levels of government to provide relief and support the recovery for as long as needed,” he added, arguing in favor of another round of stimulus.
Read more from the hearing here.
The background: The officials’ comments come as Democrats push for another sweeping coronavirus relief bill and Republicans caution against moving forward before existing measures work their way through the system.
Powell and Mnuchin’s competing levels of optimism mark one of the few splits between the two most powerful U.S. economic officials amid months of close collaboration.
- Both have worked in lockstep to deploy trillions of dollars in economic aid that’s widely credited with dampening the staggering blow of the pandemic.
- But Mnuchin’s bullish outlook, which is shared widely among President Trump’s top aides, has occasionally contrasted with Powell’s cautious approach as the chief of the independent central bank.
LEADING THE DAY
Millions fear eviction without more aid from Congress: Millions of tenants are at risk of receiving eviction notices in late July as protections from a major coronavirus stimulus program are set to expire.
The coronavirus relief bill, signed as the CARES Act in late March, included a moratorium on evictions for tenants in units with federally backed mortgages or other assistance who were unable to pay rent.
But with no agreement in Congress on an extension of the moratorium, families hit hard by the coronavirus pandemic may soon have to make new living arrangements. The Hill’s Niv Elis tells us more here.
The problems:
- The federal moratorium only applies to housing being paid off through federally backed mortgages or insurance, so it only applies to about a fifth of renters.
- But because many of the government programs are aimed at keeping costs down for low-earners, those renters also tend to be among the most vulnerable.
- A patchwork of other state and local level policies for keeping people in their homes are also due to expire, creating a slew of potential problems nationwide.
The proposals:
- Experts note that one of the best ways to keep the housing problem in check is to maintain an expanded level of unemployment benefits, which are also due to run dry come August. The income is one of the main things keeping millions of newly unemployed Americans afloat.
- House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) sponsored her own bill that would extend the eviction moratorium into March and also expand its scope, while providing billions in emergency rental assistance and low-cost loans for landlords. It passed in the House Monday night 232-180, largely along party lines.
IRS chief pledges to work on tax code’s role in racial wealth disparities: IRS Commissioner Charles Rettig said Tuesday that his agency would work with Congress to examine any ways that the tax code contributes to racial wealth disparities.
“I’m [a] huge proponent of inclusiveness, diversity,” Rettig said during a Senate Finance Committee hearing, in response to a question from Sen. Sherrod Brown (D-Ohio).
“I think you’re possibly aware of the fact that I’m the first commissioner whose spouse came to this country as a refugee. And so I understand how people are treated in different arenas, and we’re all in,” he added. Rettig’s wife came to the United States as a refugee from Vietnam.
Brown said communities across the country are calling for an end to systemic racism following the deaths of Black Americans at the hands of police, and that tax policy hasn’t been closely examined through a racial justice lens. The Hill’s Naomi Jagoda has more here.
GOOD TO KNOW
- Legislation exploring whether Black Americans should receive restitution for slavery may soon get a huge boost, as a growing number of Democrats are hoping to move reparations this summer as another response to the death of George Floyd.
- Stocks rallied Tuesday to cap off the best quarter for all three major U.S. indexes in several decades despite months of economic damage and anxiety driven by the coronavirus pandemic.
- A federal mandate to wear masks would slow the spread of the coronavirus enough to save the economy from losing 5 percent of its value, according to a Goldman Sachs study.
- The Federal Communications Commission (FCC) on Tuesday formally designated Chinese telecommunications groups Huawei and ZTE as national security threats, blocking them from accessing FCC funds.
On tap tomorrow
- The House Foreign Affairs Committee holds a hearing entitled “The End of One Country Two Systems?: Implications of Beijing’s National Security Law in Hong Kong,” 9:30 a.m.
- The House Small Business Committee holds a hearing entitled “The Economic Injury Disaster Loan Program: Status Update from the Administration,” 10 a.m.