Source: United States Senator Kevin Cramer (R-ND)
WASHINGTON – At a Senate Banking Committee hearing yesterday, U.S. Senator Kevin Cramer (R-ND) questioned Federal Reserve Chairman Jerome Powell about his views on the impact deficit spending has on the economy. Their exchange comes as Senate Democrats unveiled a new $3.5 trillion package while inflation continues to rise in the United States.
“You haven’t always resisted the temptation to give [Congress] advice and, by the way, thank you for it. I think that was good advice. Maybe we look back and say we did too much, but we were in a crisis and you did what you needed to do and we did what we needed to do. I don’t think there’s a lot of regret about that. … What people are not talking about is if we end up at the end of this fiscal year passing a one-year [Continuing Resolution] or something similar, we’re going to spend another $6.8 trillion, $3 trillion of which will be deficit spending,” said Senator Cramer. “Does the economy need another $6.8 trillion spent this year to enhance the recovery? Is there not a detrimental effect to all of that, including the tax increases, when we are in fact in a call-it-whatever-you-want inflationary time and it’s uncertain. There is concern, if not alarm.”
The Chairman declined to answer, noting that while he had advised Congress on fiscal matters during the COVID-19 pandemic, that was an extraordinary circumstance.
“I did a lot of things last year that we’d never done before, and that one in particular had a lot encouragement from the Administration and the leadership on both sides of the hill and both parties. But I swore it off,” said Chairman Powell. “I think we should go back to our regular order, which is the [Federal Reserve] does not play a role in fiscal policy. Whatever you do we take it into account in our policies, but we don’t come out and comment on whether we think something is a good idea or bad idea.”