Stimulus Payment: Mnuchin and Powell To Testify in Congress
Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin will testify before Congress on Tuesday to ask for more stimulus payment.
Federal Reserve Chair Jerome Powell and other Fed officials rarely involved themselves in political discussions. This is to limit politicians' intervention in their policymaking. However, the Fed officials are now asking Congress to give more stimulus to regain the country's economy.
Meanwhile, the U.S. Treasury Secretary Steven Mnuchin has been very supportive of the second round of stimulus payment, including stimulus check. He also testified last month before a Congress sub-committee panel for more coronavirus aid.
This time, both Powell and Mnuchin will testify on Tuesday, before Congress, to discuss the need for another round of stimulus package. The focus of the House Financial Services Committee hearing will likely fall on fiscal policy, with time running short for Congress to agree on another round of spending measures before it shuts down before the Presidential election.
In the previous days, the Fed officials said that that financial aids under CARES Act 1 has helped the economy regain its strength. An example of this is the PPP loans that allowed many businesses to operate and helped put employees back to work.
Recently, Goldman Sachs Group Inc. said that if Congress fails to pass any additional fiscal measures, it would likely lead them to downgrade economic growth estimates. They also added that the November presidential election could change the outlook on Fed action.
Goldman economists wrote in a note Monday. "That would raise the rate of growth and inflation, and could "ultimately pull forward" the central bank's first interest rate hike by two years to 2023." However, more economists are now asking that Congress should give more relief aids.
There are two proposals, one that is supported by Congress and the other one that is supported by the U.S. Senators.
Congress is proposing an amount that ranges up to $2.2 trillion while the Senate proposes up to $660 billion. On either of the two proposed budgets, the U.S. Treasury Secretary will be a key negotiator in the fiscal standoff.
Moreover, President Donald Trump has recently said that he supports the larger amount because it goes back to the country after all. Even though not all Republicans are expected to support the larger proposal but Pres. Trump will try to convince them to embrace it.
The Congress hearing will also allow Republicans to question Fed Chairman Powell whether some unspent budgets can be reallocated. An example of this is the $300 billion unspent budget under the CARES Act 1, which Pres. Trump asked to use it as a second-round for stimulus checks to over 160 million.
The Fed's Main Street lending program, which may come in for special scrutiny in Congress. The $600 billion facilities designed to help small-to-mid-sized businesses have been criticized for buying just $1.5 billion in loans so far. One reason is banks' reluctance to lend to the riskier businesses that may need credit the most.
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