WASHINGTON, D.C. – U.S. Senator Martin Heinrich (D-N.M.), Ranking Member of the Joint Economic Committee, delivered the following statement at today’s hearing on the economic outlook with Federal Reserve Chair Janet Yellen:
Below are his remarks as prepared for delivery:
“Chair Yellen, I want to begin by thanking you for your extraordinary public service.
Your leadership at the Federal Reserve has played a key role in helping the economy recover from the financial crisis. The nation owes you a debt of gratitude for your careful stewardship of monetary policy.
Last year, when you appeared before this committee, I asked you about how we can get the economy delivering for more Americans. Unfortunately, the economic situation is probably even more polarized today. Economic growth, jobs, and startups are increasingly concentrated by zip code.
While we have made real progress since the recession, some parts of the country are being left behind.
Too many rural and tribal areas are struggling to get back to where they were a decade ago.
I represent a state with an unemployment rate well above where it was when the recession began back in December 2007. That sure doesn’t seem to me like we have fully recovered from the recession.
I know that the Federal Open Market Committee has not yet made a decision on an interest rate hike next month. But, if the analysts are right, the Fed is expected to raise interest rates, which would be the third rate hike this year.
With many communities across New Mexico and the country still struggling, I’m concerned that we may be putting the brakes on too soon.
Wage growth remains weak while health care, college, and child care are less affordable for working families.
This reality should inform both monetary and fiscal policy.
We need targeted fiscal actions to grow the economy and help these areas that have been left behind. But that’s not what Republicans are delivering.
The Republican tax bill moving through the Senate adds 13 million to the ranks of the uninsured to pay for tax breaks for the wealthy and special interests.
To hand out tax breaks to the wealthiest among us, Republicans are not only taking health insurance away from millions of Americans, but they are wasting an opportunity to invest in our people and communities.
There’s so much we could be doing instead.
Congress should be focusing on important goals such as growing the economy and driving up wages for working families.
We could provide all children with early learning opportunities, offer students free tuition at community colleges and public universities, ensure broadband access for every American, rebuild our infrastructure, and take bold actions to fight the opioid epidemic.
But we’re not going to be able to make those investments if Republicans insist on adding $1.5 trillion to the debt for tax giveaways to the wealthy.
Chair Yellen, as you conclude your term, it’s an appropriate time to highlight the vital role an independent Fed plays in the economy.
This Congress, as was the case last Congress, is considering several Republican proposals to limit the Fed’s ability to independently conduct monetary policy.
These bills seek to change the way the Fed carries out monetary policy, even going so far as requiring the central bank to swap its current mortgage backed securities for Treasury bills.
There are also proposals to limit the central bank’s flexibility in responding to financial emergencies.
This idea is especially hard to understand in light of the critical role the Fed played in responding to the financial crisis and preventing another Great Depression.
I’m concerned about these attempts to undermine the Federal Reserve’s independence, as I suspect you are as well.
I’d like to close with a point about the challenges of crafting monetary policy in today’s political environment.
Fiscal and monetary policies work best when they are aligned. But, it is difficult to know with any certainty where Republicans in Congress are ultimately heading with fiscal policy.
For years, they have pledged to reduce the deficit. But, their tax package explodes the deficit.
The disconnect between words and actions is also visible on infrastructure. President Trump has talked about the need to invest in infrastructure. But, as we wait for a real infrastructure proposal from the administration, Republicans are proposing to eliminate key infrastructure funding sources like Private Activity Bonds.
They said they would deliver middle-class tax cuts. But in 2027, nearly 24 million Americans earning less than $100,000 would face a tax increase under the House Republican tax plan.
And in the Senate bill, half of all households would see a tax increase when it is fully implemented.
The chasm between words and policy must make the already challenging job of conducting monetary policy that much more difficult.
Chair Yellen, again, thank you for your service to our country. I look forward to your testimony today.”
For more information, please contact Latoya Veal at Latoya_Veal@jec.senate.gov or 202-224-0379.