Fed and Budget In The Spotlight

L . Thomas Block

Next Tuesday the Senate Banking Committee is scheduled to meet and vote on the nomination of Jay Powell for a second term as Fed Chair, and also on the nominations of Sarah Bloom Raskin, Lisa Cook and Philip Jefferson for openings on the Board.  The three new nominees represent a concerted effort to add diversity to the Board:  Raskin and Cook are women, Cook the first Black woman to be nominated; and Cook and Jefferson are Black. 

Senate progressives, led by Senator Elizabeth Warren, have announced their intent to oppose the re-nomiation of Powell; hence, in a divided Senate Powell will need Republican votes to be confirmed.  As I have written the Senate Democratic leadership and White House must get nominations approved with at least token Republican support. 

The illness of Senate Lujan has left the Senate with only 49 Democratic Senators voting if all are present; and of course, there are 50 Republican Senators.  The vote in the Banking Committee should serve as a good gauge as to support for the Chair and the three more progressive nominees for the open Board positions.  With the big inflation number this week Republicans will be focused on the Fed in the fight against inflation and they will need to decide if the votes on the new Board members offer an opportunity to make a political point on inflation.

The other big issue this coming week will be the effort to make sure that there is not a government shutdown next Friday when the current Continuing Resolution (CR) runs out.  The House has already passed a new CR that runs until March 11; and everyone in DC expects the Senate to approve the measure next week.  Passing a CR does not have any protection against a Senate filibuster so a Senator such as Ted Cruz could try to grab the spotlight for a day or so trying to delay the CR. However, most believe the majority of the Republicans would join Senate Democrats to “invoke cloture” and stop any filibuster, pass the CR, and keep the government open.

Under the House-passed bill, the threat of a government shutdown is moved until March 11 and talks are continuing to pass a broad spending bill by that date. With the divisions in Congress getting budgets passed has become more difficult, and the government has become more reliant on Omnibus Spending Bills when the entire government funding is put into one gigantic bill.  The bipartisan leaders of the Appropriation Committees have expressed optimism that they can find agreement on an Omnibus Bill by the new deadline of March 11 – we will see.

Disclosures (show)