Hearing — Oversight of Treasury and Federal Reserve Pandemic Response (House Financial Services, 2021)

Summary

This is a hybrid hearing before the Committee on Financial Services of the House of Representatives, titled Oversight of the Treasury Department's and Federal Reserve's Pandemic Response, on December 1, 2021. The contents list witnesses Jerome H. Powell, Chair, Board of Governors of the Federal Reserve System, and Janet L. Yellen, Secretary, Department of the Treasury. One member's remarks state that more than 90 percent of the member's constituents reported that rising prices were impacting household budgets. Additional material for the record lists a letter to the Mayor of the City of Charlotte, NC, dated November 19, 2021.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Issuer: Congressional materials
Document type: Congressional Hearing
Case: Chrg Chrg 117Hhrg46301 Chrg 117Hhrg46301

Cite this document

“Hearing — Oversight of Treasury and Federal Reserve Pandemic Response (House Financial Services, 2021).” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/chrg-chrg-117hhrg46301-chrg-117hhrg46301/, SHA-256 67cfb8cddad41265cffdfad6bd684ab126630587d003ea7709718538c425bcd5.

Full text

OVERSIGHT OF THE TREASURY DEPARTMENT’S
AND FEDERAL RESERVE’S PANDEMIC RESPONSE

HYBRID HEARING
BEFORE THE

COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION

DECEMBER 1, 2021

Printed for the use of the Committee on Financial Services

Serial No. 117–62

(

U.S. GOVERNMENT PUBLISHING OFFICE
46–301 PDF WASHINGTON : 2022

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 K:\DOCS\HBA335.000 TERRI
HOUSE COMMITTEE ON FINANCIAL SERVICES
MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York PATRICK MCHENRY, North Carolina,
NYDIA M. VELÁZQUEZ, New York Ranking Member
BRAD SHERMAN, California FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York BILL POSEY, Florida
DAVID SCOTT, Georgia BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri ANN WAGNER, Missouri
ED PERLMUTTER, Colorado ANDY BARR, Kentucky
JIM A. HIMES, Connecticut ROGER WILLIAMS, Texas
BILL FOSTER, Illinois FRENCH HILL, Arkansas
JOYCE BEATTY, Ohio TOM EMMER, Minnesota
JUAN VARGAS, California LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam TED BUDD, North Carolina
CINDY AXNE, Iowa DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts ANTHONY GONZALEZ, Ohio
RITCHIE TORRES, New York JOHN ROSE, Tennessee
STEPHEN F. LYNCH, Massachusetts BRYAN STEIL, Wisconsin
ALMA ADAMS, North Carolina LANCE GOODEN, Texas
RASHIDA TLAIB, Michigan WILLIAM TIMMONS, South Carolina
MADELEINE DEAN, Pennsylvania VAN TAYLOR, Texas
ALEXANDRIA OCASIO-CORTEZ, New York PETE SESSIONS, Texas
JESÚS ‘‘CHUY’’ GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts

CHARLA OUERTATANI, Staff Director

(II)

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 K:\DOCS\HBA335.000 TERRI
CONTENTS

Page
Hearing held on:
December 1, 2021 ............................................................................................. 1
Appendix:
December 1, 2021 ............................................................................................. 37

WITNESSES

WEDNESDAY, DECEMBER 1, 2021
Powell, Hon. Jerome H., Chair, Board of Governors of the Federal Reserve
System ................................................................................................................... 6
Yellen, Hon. Janet L., Secretary, U.S. Department of the Treasury .................. 5

APPENDIX
Prepared statements:
Powell, Hon. Jerome H. .................................................................................... 38
Yellen, Hon. Janet L. ....................................................................................... 42

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
Budd, Hon. Ted:
Letter to Hon. Viola Lyles, Mayor, City of Charlotte, NC, dated November
19, 2021 .......................................................................................................... 45
Powell, Hon. Jerome H.:
Written responses to questions for the record from Representative Hill .... 48
Written responses to questions for the record from Representative Hol-
lingsworth ...................................................................................................... 52
Written responses to questions for the record from Representative Steil ... 54
Yellen, Hon. Janet L.:
Written responses to questions for the record from Representative Budd .. 66
Written responses to questions for the record from Representative Garcia 57
Written responses to questions for the record from Representative Gon-
zalez ............................................................................................................... 56
Written responses to questions for the record from Representative
Kustoff ........................................................................................................... 68
Written responses to questions for the record from Representative
Loudermilk .................................................................................................... 65
Written responses to questions for the record from Representative Wil-
liams ............................................................................................................... 63

(III)

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 K:\DOCS\HBA335.000 TERRI
VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 K:\DOCS\HBA335.000 TERRI
OVERSIGHT OF THE TREASURY
DEPARTMENT’S AND FEDERAL
RESERVE’S PANDEMIC RESPONSE

Wednesday, December 1, 2021

U.S. HOUSE OF REPRESENTATIVES,
COMMITTEE ON FINANCIAL SERVICES,
Washington, D.C.
The committee met, pursuant to notice, at 10:11 a.m., in room
2128, Rayburn House Office Building, Hon. Maxine Waters [chair-
woman of the committee] presiding.
Members present: Representatives Waters, Sherman, Scott,
Green, Cleaver, Perlmutter, Himes, Foster, Beatty, Vargas,
Gottheimer, Gonzalez of Texas, Lawson, San Nicolas, Axne, Casten,
Pressley, Lynch, Adams, Tlaib, Dean, Ocasio-Cortez, Garcia of Illi-
nois, Garcia of Texas, Williams of Georgia, Auchincloss; McHenry,
Lucas, Posey, Luetkemeyer, Huizenga, Wagner, Barr, Williams of
Texas, Hill, Emmer, Zeldin, Loudermilk, Mooney, Davidson, Budd,
Kustoff, Hollingsworth, Gonzalez of Ohio, Rose, Steil, Gooden,
Timmons, Taylor, and Sessions.
Chairwoman WATERS. The Financial Services Committee will
come to order.
Without objection, the Chair is authorized to declare a recess of
the committee at any time.
As a reminder, I ask all Members participating remotely to keep
themselves muted when they are not being recognized by the
Chair.
We will conclude today’s hearing at 12:15 p.m. Members who
were unable to ask questions at our September 30th hearing with
Secretary Yellen and Chair Powell will be given priority to ask
their questions today, and we will return to our normal order of
recognition once these Members have asked their questions.
Today’s hearing is entitled, ‘‘Oversight of the Treasury Depart-
ment’s and Federal Reserve’s Pandemic Response.’’
I now recognize myself for 4 minutes to give an opening state-
ment.
Welcome back, Secretary Yellen and Chair Powell. As this pan-
demic continues, the Biden Administration and congressional
Democrats remain hard at work to provide protections and essen-
tial relief to individuals, families, and small businesses across the
country. The emergence of the new Omicron variant shows us that
this crisis is not over and we must remain vigilant to protect our
country and our families from the devastation of COVID-19.
(1)

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
2

Since Democrats have been in power, we have delivered for the
American public. Democrats provided rental relief for struggling
renters, provided 70,000 vouchers to address homelessness, pro-
vided support to State and local governments, and helped our na-
tion’s restaurants. Democrats helped businesses reopen and
prioritized vaccine distribution, and because of this work, 74.5 per-
cent of individuals 5 years of age and older have received at least
one shot. In fact, this Thanksgiving was the first time since the
pandemic began that many of us spent time in person with our
friends and families.
Under the Biden Administration’s leadership, the economy has
created 5.6 million jobs, more than any other Administration’s first
9 months. And weekly jobless claims recently fell to 199,000, the
lowest total in more than 50 years.
But our work does not stop at pandemic relief. We also enacted
bipartisan infrastructure legislation, an achievement that has elud-
ed Republican and Democratic Presidents alike for decades. Under
the Biden Administration, we now have the funding in place and
the programs to finally rebuild and refit our nation’s bridges, roads,
and railways, and bring broadband to millions. And soon, the Build
Back Better Act will make long-overdue investments in the nation’s
affordable housing infrastructure, childcare, and education work-
force. I hope that our Senate colleagues will quickly send this bill
to the President’s desk.
While these investments will be critical, the Fed’s unfinished ob-
jectives of full employment and price stability serve as a reminder
that we must not leave anyone behind during this recovery. Chair
Powell has identified supply chain bottlenecks and ongoing
caregiving needs as two of the major barriers to continued eco-
nomic recovery. Congressional Democrats have responded by pass-
ing bills that invest in childcare and help clear those bottlenecks.
It is crucial that the Fed hold off on declaring a premature vic-
tory on this economic recovery until the communities that have
been hit the hardest—people of color, renters who fell behind on
their rent, and women who have done the bulk of the caregiving—
have a chance to experience the recovery. If we are truly to build
back better, we must ensure that people of color are represented
in the Fed’s leadership. We must make sure that people’s
caregiving needs are met so that they can pursue new opportuni-
ties in education, clean energy, and more. We must address the
root causes of rising prices by investing in housing and supply
chain resilience.
Secretary Yellen, Chair Powell, I look forward to discussing your
ongoing work to respond to the pandemic.
I will now recognize the ranking member of the committee, the
gentleman from North Carolina, Mr. McHenry, for 4 minutes.
Mr. MCHENRY. Thank you, Madam Chairwoman, and Chair Pow-
ell, congratulations on your renomination. I am glad to see that
President Biden recognizes what I have said all along, that you
have earned and deserve another term leading the Federal Re-
serve. Under your leadership, the Fed took decisive and unprece-
dented action to prevent the COVID-related economic challenges
from becoming an economic or financial crisis for Americans, but
there is more to work to be done.

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
3

We need to unwind these firefighting measures and turn our
focus to rebuilding the economy, which, thanks to pro-growth Re-
publican policies, was the greatest in our lifetimes just prior to the
pandemic. It is the Fed’s job to look at and evaluate the macro-
economic picture. It is not their job to respond to each and every
variant. But it is not just the pandemic that is posing a threat to
our full recovery. It is Democrats’ bad fiscal policy decisions that
are driving inflation. Right before Thanksgiving, House Democrats
passed another massive multi-trillion-dollar spending bill. Our
economy is feeling the full force of that politically-motived decision.
Look at the job market. In September, a job opening and labor
turnover survey reported more than 10 million unfilled jobs re-
maining near a record high. Four-point-four million people quit
their jobs, an all-time high. Labor shortages continue to hold back
growth and weaken the backbone of our economy: small businesses.
And instead of seeking bipartisan solutions to support working par-
ents as we continue to manage COVID, Democrats opted for un-
workable mandates.
NFIB’s small business survey for October showed the economic
outlook deteriorating to its lowest level since November 2012. Our
labor force participation rate has stagnated since June 2020. What
do these things have in common? All of these issues have in com-
mon bad fiscal policy, not a question of monetary policy. Nearly
half of small businesses report they had job openings unfilled, for
which they unable to even get qualified applicants; in fact, 58 per-
cent indicated they had few or no qualified applicants.
Look at consumer prices. From a year through October, the head-
line Consumer Price Index (CPI) rose to 6.2 percent, the largest an-
nual increase in 30 years. Consumer sentiment for November
dropped to its lowest level in a decade. In fact, American families
just experienced the most expensive Thanksgiving on record.
Now, Democrats want to blame increased prices on American
businesses or some other force. It is their policies. It is their poli-
cies. It is coming from inside the House. It is coming from inside
the Senate. It is coming from inside this Administration. They are
driving up costs for the American people. In fact, in October, the
San Francisco Fed released a report showing that Democrat poli-
cies are harming our recovery.
So, what do House Democrats do? Well, they spend more money.
That was the big vote just before Thanksgiving. More money. That
is pouring jet fuel onto an inflationary trajectory we have in the
economy. Speaking of fuel, though, just look at gas prices. This is
the bad policies from this Administration. When you shut off Amer-
ican energy sources, it drives up the cost of petrochemicals in our
economy. Outsourcing that to OPEC actually makes us more de-
pendent on other foreign sources.
So as important as it is for us to hear from both of you today—
in fact, this is the final remnant of the CARES Act, the fact that
you are mandated to come and appear before us on a quarterly
basis about programs that have now been rescinded, but this is the
final remnant of the CARES Act, which was, by the way, a bipar-
tisan bill passed through the House and the Senate and signed by
the President last year. But we look forward to hearing from you
today about this broad economic question that we are all very con-

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
4

cerned about. And as we discuss these policies and what we are
doing to address them, I hope that we can talk about solutions, not
just the problems.
And with that, I yield back.
Chairwoman WATERS. Thank you, Mr. McHenry. I now recognize
the gentleman from Texas, Mr. Green, for 1 minute.
Mr. GREEN. Thank you, Madam Chairwoman. Madam Chair-
woman, the Fed is the lender of last resort, and I compliment the
Fed for what it is has done under its Section 13(3) authority to cre-
ate nine emergency facilities, seven of which were supported by
funds from the Treasury. But I would also like to note that today,
currently, unemployment of African American workers is at 7.9
percent, and at 5.9 percent for Latino workers, higher than the na-
tional average of 4.6 percent, and 4 percent for Whites.
Hence, today we must ask, in view of how unemployment rates
still vary dramatically across races, what more can the Federal Re-
serve do as the lender of last resort to advance its mandate to fos-
ter economic conditions that achieve both maximum employment
and stable prices, not just for some, but for all. What can regu-
lators do not only to continue to bolster the economic recovery, but
also the pandemic. We have to deal with it and reduce the insecu-
rity as it relates to the wealth gap. I look forward to hearing the
witnesses respond to this and other questions.
Chairwoman WATERS. I now recognize the gentleman from Min-
nesota, Mr. Emmer, for 1 minute.
Mr. EMMER. Thank you, Madam Chairwoman. My constituents
just experienced the most expensive Thanksgiving dinner in his-
tory. A 16-pound turkey is up 23 percent. Costco pumpkin pie is
up 17 percent. A 2-pound bag of carrots is up nearly 50 percent.
Let’s also not forget the outrageous prices at the pump making it
too expensive for many Americans to drive home and celebrate
Thanksgiving with their families in the first place. This inflation
is not transitory, as our witnesses finally acknowledged yesterday,
and it is not a high-class problem, despite what the Biden Adminis-
tration will tell you. That is a lie propagated by those who have
never had to do mental math at the grocery store to make sure the
amount in their cart does not exceed the cash in their wallet.
For Democrat leaders, paying 42 percent more at the pump prob-
ably isn’t a problem, when you are riding a government-funded
high-speed rail in Silicon Valley. More than 90 percent of my con-
stituents reported that rising prices were impacting their house-
hold budgets. Inflation is destroying Americans’ ability to save for
retirement, buy a home, or build wealth. This isn’t a tax on the
rich; it is an enormous burden on working Americans. We must
stop this reckless spending before it financially cripples our nation.
I yield back the balance of my time.
Chairwoman WATERS. I want to welcome our distinguished wit-
nesses today, who need little introduction to members of the com-
mittee. First, I want to welcome the Honorable Janet Yellen, Sec-
retary of the United States Department of the Treasury, who has
served in that role since her confirmation in January of this year.
Our second distinguished witness today is the Honorable Jerome
Powell, Chair of the Board of Governors of the Federal Reserve
System, who has served in that role since February of 2018.

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
5

You will each have 5 minutes to summarize your testimony. You
should be able to see a timer that will indicate how much time you
have left.
And without objection, your written statements will be made a
part of the record.
Secretary Yellen, you are now recognized for 5 minutes to
present your testimony.
STATEMENT OF THE HONORABLE JANET L. YELLEN,
SECRETARY, U.S. DEPARTMENT OF THE TREASURY
Secretary YELLEN. Thank you, Chairwoman Waters, Ranking
Member McHenry, and members of the committee. It is a pleasure
to testify today.
November has been a very significant month for our economy,
and Congress is a large part of the reason why. Our economy has
needed updated roads, ports, and broadband networks for many
years now, and I am very grateful that on the night of November
5th, members of both parties came together to pass the largest in-
frastructure package in American history.
November 5th, it turned out, was a particularly consequential
day, because earlier that morning, we received a very favorable
jobs report: 531,000 jobs added. It is never wise to make too much
of one piece of economic data, but in this case, it was an addition
to a mounting body of evidence that points to a clear conclusion:
Our economic recovery is on track. We are averaging half-a-million
new jobs per month since January. Gross domestic product (GDP)
now exceeds its pre-pandemic levels. Our unemployment rate is at
its lowest level since the start of the pandemic, and our economy
it on pace to reach full employment 2 years faster than the Con-
gressional Budget Office (CBO) had estimated.
Of course, the progress of our economic recovery can’t be sepa-
rated from our progress against the pandemic, and I know that we
are following the news about the Omicron variant. As the President
said, we are still waiting for more data, but what remains true is
that our best protection against the virus is the vaccine. People
should get vaccinated and boosted.
At this point, I am confident that our recovery remains strong,
and is even quite remarkable when put in context. We should not
forget that last winter, there was a risk that our economy was
going to slip into a prolonged recession. And there is an alternate
reality where right now, millions more people cannot find a job or
are losing the roofs over their heads. It is clear that what has sepa-
rated us from that counterfactual are the bold relief measures Con-
gress has enacted during the crisis: the CARES Act; the Consoli-
dated Appropriations Act; and the American Rescue Plan. And it
is not just the passage of these laws that has made the difference,
but their effective implementation.
Treasury, as you know, was tasked with administering a large
portion of the relief funds provided by Congress under those bills.
During our last quarterly hearing, I spoke extensively about the
State and Local Relief Program, but I wanted to update you on
some other measures.
First, the American Rescue Plan’s expanded child tax credit has
been sent out every month since July, putting about $77 billion in

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
6

the pockets of families of more than 61 million children. Families
are using these funds for essential needs, like food. And, in fact,
according to the Census Bureau, food insecurity among families
with children dropped 24 percent after the July payments, which
is a profound economic and moral victory for the country.
Meanwhile, the Emergency Rental Assistance Program has sig-
nificantly expanded, providing much-needed assistance to over 2
million households. This assistance has helped keep eviction rates
below pre-pandemic levels. This month, we also released guidelines
for the $10 billion State Small Business Credit Initiative (SSBCI),
which will provide targeted lending and investments that will help
small businesses grow and create well-paying jobs.
As consequential as November was, December promises to be
more so. There are two decisions facing Congress that could send
our economy in very different directions. The first is the debt limit.
I cannot overstate how critical it is that Congress address this
issue. America must pay its bills on time and in full. If we do not,
we will eviscerate our current recovery. In a matter of days, the
majority of Americans would suffer financial pain as critical pay-
ments, like Social Security checks and military paychecks, would
not reach their bank accounts, and that would likely be followed by
a deep recession.
The second action involves the Build Back Better legislation. I
applaud the House for passing the bill, and I am hopeful that the
Senate will soon follow. Build Back Better is the right economic de-
cision for many reasons. It will, for example, end the childcare cri-
sis in this country, letting parents return to work. We expect that
these investments will lead to a GDP increase over the long term,
without increasing the national debt or deficit by a dollar. In fact,
the offsets in these bills mean they actually reduce annual deficits
over time.
Thanks to your work, we have ensured that America will recover
from this pandemic. Now, with this bill, we have the chance to en-
sure that America thrives in a post-pandemic world. With that, I
am happy to take your questions.
[The prepared statement of Secretary Yellen can be found on
page 42 of the appendix.]
Chairwoman WATERS. Thank you very much. Chair Powell, you
are now recognized for 5 minutes to present your testimony.
STATEMENT OF THE HONORABLE JEROME H. POWELL, CHAIR-
MAN, BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM
Mr. POWELL. Chairwoman Waters, Ranking Member McHenry,
and other members of the committee, thank you for the opportunity
to testify today.
The economy has continued to strengthen. The rise in delta vari-
ant cases temporarily slowed progress this past summer, restrain-
ing previously-rapid growth in household and business spending,
intensifying supply chain disruptions, and, in some cases, keeping
people from returning to work or looking for a job. Fiscal and mon-
etary policy and the healthy financial positions of households and
businesses continue to support aggregate demand. Recent data sug-
gest that the post-September decline in cases corresponded to a

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
7

pick-up in economic growth. GDP appears on track to grow about
5 percent in 2021, the fastest pace in many years.
As with overall economic activity, conditions in the labor market
have continued to improve. The delta variant contributed to slower
job growth this summer as factors related to the pandemic, such
as caregiving needs and fears of the virus, kept some people out of
the labor force despite strong demand for workers. Nonetheless, Oc-
tober saw a job growth of 531,000, and the unemployment rate fell
to 4.6 percent, indicating a rebound in the pace of labor market im-
provement. There is still ground to cover to reach maximum em-
ployment for both employment and labor force participation, and
we expect progress to continue.
The economic downturn has not fallen equally, and those least
able to shoulder the burden have been hit the hardest. In par-
ticular, despite progress, joblessness continues to fall disproportion-
ately on African Americans and Hispanics. Pandemic-related sup-
ply and demand imbalances have contributed to notable price in-
crease in some areas. Supply chain problems have made it difficult
for producers to meet strong demand, particularly for goods. In-
creases in energy prices and rents are also pushing inflation up-
ward. As a result, overall inflation is running well above our 2-per-
cent longer-run goal, with the PCE Price Index up 5 percent over
the 12 months ending in October.
Most forecasters, including at the Fed, continue to expect that in-
flation will move down significantly over the next year as supply
and demand imbalances abate. It is difficult to predict the persist-
ence and effects of supply constraints, but it now appears that fac-
tors pushing inflation upward will linger well into next year. In ad-
dition, with the rapid improvement in the labor shortage, slack is
diminishing and wages are rising at a brisk pace.
We understand that high inflation imposes significant burdens,
especially on those less able to meet the higher costs of essentials
like food, housing, and transportation. We are committed to our
price stability goal. We will use our tools both to support the econ-
omy and a strong labor market and to prevent higher inflation
from becoming entrenched.
The recent rise in COVID-19 cases and the emergence of the Om-
icron variant pose downside risks to employment and economic ac-
tivity and increased uncertainty for inflation. Greater concerns
about the virus could reduce people’s willingness to work in person,
which would slow progress in the labor and intensify supply chain
disruptions.
To conclude, we understand that our actions affect communities,
families, and businesses across the country. Everything we do is in
service to our public mission. We at the Fed will do everything we
can to support a full recovery in employment and achieve our price
stability goal. Thank you.
[The prepared statement of Chair Powell can be found on page
38 of the appendix.]
Chairwoman WATERS. Thank you very much. I now recognize
myself for 5 minutes for questions.
As the pandemic was raging last year, many members of this
committee suggested that for all the pain and disruption that the
virus was causing, Americans would respond with strength, cre-

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
8

ativity, and ingenuity, as we have done in other crises. That is a
guiding principle of Build Back Better. It is not enough to just get
back to the way things were before. We must shape a recovery that
builds a new, stronger, and more equitable economy for the future.
So, let’s talk about the progress we are making.
Chair Powell, the American Rescue Plan that passed in March
helped accelerate vaccinations and re-openings over the last 9
months. The economy has added over 5.6 million jobs, and workers
have started to see meaningful wage growth for the first time in
decades. Do you view these wage growth trends as positive? How
does your economic recovery compare with other major economies?
And do you still think that inflation will be temporary, and if so,
why?
Mr. POWELL. Thank you, Madam Chairwoman. On wages, we
have seen wages moving up significantly, and at this point, of
course, we like to see wages move up. Everyone likes to see wages
move up. That is how incomes rise generation to generation. And
particularly at the lower end of the wage spectrum, we are seeing
wages move up. At this point, we don’t see them moving up at a
troubling rate that would tend to spark higher inflation, but that
is something we are watching very carefully.
In terms of other economies, our recovery is the strongest. It is
stronger than the others. We had stronger fiscal support, frankly,
and so part of it is that, but our recovery is really the most ad-
vanced of any of the largest ones.
In terms of the temporary nature of inflation, I would say that
the inflation that we are seeing is still clearly connected to the pan-
demic-related factors. I would also add, though, that it has spread
more broadly in the economy, and I think that the risk of per-
sistent higher inflation has clearly risen. And I think that our pol-
icy has adapted to that and will continue to adapt.
Chairwoman WATERS. If you could expound a little bit more on
what is happening, I remember when we first started to talk about
inflation, we basically all talked about it in terms of it being transi-
tory. And I think that what you just alluded to, relative to how the
economy will act or recover—are you directly talking about stimu-
lating the economy with, for example, Build Back Better, and that
will help with the inflation that we are experiencing?
Mr. POWELL. I do think that forecasters at the Fed, and pretty
much all forecasters, do expect that inflation will move down over
the second half of next year, closer to our longer-run goal of 2 per-
cent. But as I mentioned, we have seen inflation be more per-
sistent. We have seen the factors that are causing higher inflation
to be more persistent. There, I am thinking of the combination of
very high demand, but also the supply side difficulties that we are
having with blockages and that sort of thing and shortages.
In terms of the effects of the Build Back Better bill, that is not
something that is appropriate for me to comment on.
Chairwoman WATERS. Thank you.
Secretary Yellen, when you were the Fed Chair, you were known
for looking beyond the top line unemployment rate to other figures,
like the rate of employees quitting, the so-called quits rate, to de-
termine whether the economy was reaching full employment. The
quits rate has surpassed the previous records, leading some to label

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
9

what has happened in the economy as the, ‘‘Great Resignation.’’
When Chair Powell testified in our committee in July, he identified
childcare and school closures as one of the biggest barriers to fur-
ther labor market recovery. Can you explain what the quit rate
tells us about the economy today, and do you believe that the in-
vestments that the Build Back Better Act would make in childcare
and universal Pre-K will help with this?
Secretary YELLEN. The quit rate, when it is high, and as you
mentioned, it is the highest it has been in the history of this series,
it signifies a tight labor market, one where workers are leaving
their jobs because they feel confident about their ability to get an-
other job, or are getting outside offers and feel good about the labor
market. And that is what we have and we see it reflected in sur-
veys of workers who feel that jobs are plentiful. And, of course,
businesses almost universally complain now about the difficulty of
hiring workers, but this is a very unusual shock that has hit the
economy.
And at the same time, we see that for a large number of workers,
their participation in the labor force has declined, and it hasn’t yet
gotten back up to normal levels. In some cases, it is because there
were early retirements, and, of course, the pandemic did result in,
unfortunately, a large death toll. But I think there are still many
people, especially low-income workers, who don’t feel confident
about the health consequences of working, especially in face-to-face
type jobs, and so those people are still out of the labor force. And
I think as we get greater control over the pandemic, the supply of
workers will increase as those people come back to work.
Chairwoman WATERS. The gentleman from North Carolina, Mr.
McHenry, who is the ranking member of the committee, is now rec-
ognized for 5 minutes.
Mr. MCHENRY. Chair Powell, the last time you were here, in fact,
both in September and July, I asked you about this. The Fed incor-
porates new spending from the fiscal house, from Congress and the
White House. They incorporate that into projections, and the ef-
fects of your monetary decisions with the knowns of fiscal policy.
And at the time, and you have said this twice before, and I think
you will say it again, but a lot depends on the details. Certainly,
you incorporate that information, but a lot depends on the details.
Is that still true?
Mr. POWELL. Yes.
Mr. MCHENRY. Okay. So in light of that, we had in February a
Democrat-only proposal that made it into law, that $2 trillion, and
just last week, another bill that the Administration supports that
enhances the deficit. According to the Congressional Budget Office,
it raises the deficit by $400 billion, and so we have those two large
fiscal pieces here.
When Chair Waters asked the Chairman of the Federal Reserve
whether or not spending more money from the fiscal house will im-
prove inflation, instead of improve, I want to translate for the pub-
lic. When a Democrat says, ‘‘improve inflation,’’ it means enhance
or raise inflation, just to be clear, okay? So my friends on the left,
when they say, ‘‘improve inflation,’’ they want more of it.
Secretary Yellen, to this point, these things are imprecise. Policy-
making is imprecise. But back in February, there was an output

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
10

gap this Administration acknowledged, and economic projections,
and came to Congress for fiscal stimulus in the name of COVID,
but a fiscal stimulus, right? Is it fair to say that maybe you over-
shot in February?
Secretary YELLEN. I think it is fair to say that we had a sizable
fiscal stimulus. We were very concerned that the most significant
risk facing the American economy was a shortage of jobs and a pro-
longed downturn that would scar many people, particularly the
most—
Mr. MCHENRY. But in February, in the output gap, versus what
the fiscal stimulus was that your Administration pushed for and
got, perhaps you overshot. Is that fair to say? Is that a fair as-
sumption?
Secretary YELLEN. I don’t think that is a fair assumption.
Mr. MCHENRY. It is not?
Secretary YELLEN. We addressed what was very significant risk,
and as Chair Powell just mentioned, the United States—
Mr. MCHENRY. Okay. So, you think that that fiscal—
Secretary YELLEN. —agree—
Mr. MCHENRY. Reclaiming my time, Madam Secretary.
Secretary YELLEN. No. Look, the inflation—
Mr. MCHENRY. I am going to ask a very particular question
about the output gap. The output gap at the beginning of the year
was $300 to $400 billion, right? Economists on the left and the
right were saying that that was about right.
Secretary YELLEN. I think it was extremely hard under the cir-
cumstances to have any certainty—
Mr. MCHENRY. Okay. And I am asking you a very reasonable
question, as a policymaker.
Secretary YELLEN. —about what was the output gap.
Mr. MCHENRY. Okay. As a policymaker, I am just asking you—
you are a noted economist, who was the Chair of the Federal Re-
serve. You are now in a very different position having to, I think,
sell what is a pretty lousy economic agenda, but you are doing a
great job trying to sell this Administration’s agenda. The economic
question that I hear from economists on the left now, and your
former San Francisco Fed even acknowledges, is that February
stimulus contributed to the inflation we are now experiencing.
Secretary YELLEN. Look, inflation—
Mr. MCHENRY. Is that a fair assumption or not?
Secretary YELLEN. Inflation is a matter of demand and supply,
and it is certainly true that the American Rescue Plan put money
in people’s pockets, helped them meet expenses that they had, and
contributed to strong demand in the U.S. economy. But if you look
at the amount of inflation that we have and its causes, that is, at
most, a small contributor. The pandemic and what it has done to
supply chains diverting demand away from services and massively
onto goods has resulted in supply chain problems, and the impact
we have seen that has now been long-lasting on labor supply due
to the pandemic. I would say those are very important factors.
Mr. MCHENRY. But there is a distinction here between a supply
shock and a demand issue, right? Is that fair to say?
Secretary YELLEN. The Recovery Plan did boost demand, and
that is one reason that most households are in a favorable financial

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
11

position, much better than they otherwise would have been, and it
has enabled their spending. But the fact that the spending because
of the pandemic has been so focused on goods as opposed to serv-
ices has contributed massively to the supply chain problems that
are boosting prices.
Mr. MCHENRY. Okay. So, Madam Secretary, Chairman Powell,
the Congress, and the public, and this Administration wants to
point everything onto the Federal Reserve on inflation. That is sim-
ply not the case. It is the multiple trillions of dollars that this Con-
gress and this Administration is spending that is putting jet fuel
on the fires of this economy. It is making things worse.
Mr. PERLMUTTER. Regular order.
Mr. MCHENRY. It is the policies of this Administration—
Ms. DEAN. [presiding]. The gentleman’s time has expired.
Mr. MCHENRY. The Chair went over time, and I am going over
time as well, so let me just say this.
Ms. DEAN. I was not—
Mr. MCHENRY. It is the Administration’s agenda here that it—
I will finish my sentence here, Madam Chairwoman, okay? It is the
Administration’s agenda that is driving up the cost of things, and
is making the American people worse off, not better off. Inflation
is outpacing wage increases. This is on the Democrat House, Sen-
ate, and White House. I yield back.
Ms. DEAN. Thank you. The gentleman yields back.
The gentleman from Colorado, Mr. Perlmutter, who is also the
Chair of our Subcommittee on Consumer Protection and Financial
Institutions, is now recognized for 5 minutes.
Mr. PERLMUTTER. Thank you. Good morning, and thank you both
for your service. A couple of things—I was listening to the Repub-
licans talk about inflation, but I think a more important topic we
should be talking about is the fact that since ex-President Trump
was defeated by Joe Biden in November of last year, we have
added almost 6 million jobs, some 620,000 per month, and we have
seen the stock market rise from 26,000 to 36,000—now it has
backed off to about 35,000—in the last year at $1.4 billion per
point. It is almost up $13 trillion since Joe Biden won the election
last year. We have seen GDP up dramatically over the last year.
And my friends, I appreciate that the Republicans want to talk
about inflation because that is all they can talk about.
I would like to ask my first question of you, Secretary Yellen.
Unemployment is falling at the fastest rate in 50 years and is now
at 4.6 percent. Prior to the American Rescue Plan passing, the
CBO projected it would take until the 4th quarter of 2023 to get
to 4.6 percent unemployment, so we are 2 years ahead. Madam
Secretary, my question is on Build Back Better and how will it help
in terms of the recovery and create more opportunities for everyday
Americans?
Secretary YELLEN. Thank you for that question. Build Back Bet-
ter is really focused on addressing long-term issues in our economy
that have been holding back economic growth and contributing to
economic inequality. An important aspect of Build Back Better is
what it does for children and households with children: 2 years of
universal early childhood education for 3- and 4-year-olds and sub-
sidies for childcare to make quality childcare affordable for the

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
12

great majority of households, along with a continuation, at least for
a year, of the child tax credit that has made it possible for so many
families to support the needs of their children, keep roofs over their
heads, and diminish food insecurity. And these childcare provisions
as well as other parts of the program should serve to boost labor
force participation, particularly of women, where we have lagged
behind most other developed countries. And research suggests that
our failure to provide adequate childcare and paid family leave is
an important contributor. In addition—
Mr. PERLMUTTER. Let me change the subject for one second, to
a subject that I have asked both of you about in the past, the Safe
Banking Act, which involves allowing financial institutions to pro-
vide financial services to the cannabis industry and those that
serve the cannabis industry. And you may know that we passed it
with big bipartisan votes out of this committee, off the House Floor
to the Senate last cycle, this cycle, and we amended the National
Defense Authorization Act. That is just to remind you where we
are.
In October, Cassidy Collins, a Senior Counsel in the Office of the
Chief Counsel of the IRS noted the special type of collection chal-
lenge the IRS undertakes regarding tax collection from cannabis-
related businesses forced to operate in cash only. It is estimated
that in just 3 States, nearly $50 million in taxes went unassessed
because of unique issues surrounding the cannabis industry.
Madam Secretary, do you agree that if these businesses were sim-
ply allowed to access the banking system and didn’t have to trans-
act business only in cash, it would make the IRS’ job easier?
Secretary YELLEN. Yes, of course, it would.
Mr. PERLMUTTER. I yield back.
Ms. DEAN. The gentleman yields back.
The gentlewoman from Missouri, Mrs. Wagner, is now recognized
for 5 minutes.
Mrs. WAGNER. Thank you, Madam Chairwoman. Secretary
Yellen and Chair Powell, thank you for joining us today. And as
I expressed to you earlier, Chair Powell, I want to congratulate you
again on your renomination for another term leading the Federal
Reserve Board, and I look forward to continuing to work with you.
Chair Powell, you responded that our best expectation—this is
your quote—‘‘Our best expectation is there will be modest upward
pressure on prices this year, but they won’t be particularly large
or persistent in the future.’’
Chair Powell, since that hearing 8 months ago, I have asked you
about higher inflation. And yes, to my good friend, the gentleman
from Colorado, we are going to talk about inflation. That is all that
people are talking about in my district, Missouri’s 2nd Congres-
sional District. They want to know why these prices keep going
higher and higher and higher and higher. And no, I don’t think
blame necessarily falls at the foot of the Fed. It is Democrat poli-
cies and overspending.
But I digress. I asked you about higher inflation 2 more times,
sir, and Americans have experienced surging increases in, as I
said, food, fuel, and housing, leading up to the most expensive
Thanksgiving, Christmas, and holiday season on record. Is it your

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
13

view, sir, that these price increases still aren’t, ‘‘particularly large
or persistent?’’
Mr. POWELL. No, that is no longer my view.
Mrs. WAGNER. Thank you for that answer. Chair Powell, yester-
day in the Senate Banking Committee, you stated that you believe
it is time to retire the word, ‘‘transitory.’’ I couldn’t agree more.
And to explain more clearly what the Fed means when referring
to transitory inflation, I think most Americans, sir, define, ‘‘transi-
tory,’’ as, ‘‘temporary,’’ but the strain on their monthly budgets and
paychecks from this inflation does not seem transitory or tem-
porary. If that is not what you mean, then could you explain the
Fed’s meaning, please?
Mr. POWELL. Sure. The word, ‘‘transitory,’’ to some, as you sug-
gest, has a sense of short-lived, a matter of months kind of thing,
whereas we are using it in a specific way to say that transitory to
us means that this episode, however lengthy, will not leave a per-
sistent long-run string of high inflation behind it. And the problem
is that our whole role that we play really revolves around having
clear communication. When you have a word that means different
things to different people, we just need to move on and find a bet-
ter way to explain ourselves. And most forecasters still do over-
whelmingly believe that inflation will come down significantly in
the second half of next year. But as I have said, the risks of higher
inflation have moved up more persistent—
Mrs. WAGNER. Will soaring debt and deficits, and excessive
spending, and dumping stimulus spending after stimulus spending
after stimulus spending into our economy be a driver of inflation?
Mr. POWELL. I guess I would say that I don’t want to comment
on fiscal policy directly.
Mrs. WAGNER. I am just saying, in general.
Mr. POWELL. In general, if you go back to last March, the median
of the blue chip, the best resource forecasters thought that inflation
would be right about at our target, in March of this year. What
was wrong with that analysis was really that we understood de-
mand would be strong, but we didn’t understand how significant
problems on the supply side, would be, which are very hard. They
were unique.
Mrs. WAGNER. And how much money there would be in house-
holds and in the system.
Mr. POWELL. Demand is very, very strong, no question, from fis-
cal policy and also from—
Mrs. WAGNER. Fiscal policy. I agree.
Mr. POWELL. —a quickly rebounding economy. The economy is
very strong now.
Mrs. WAGNER. I agree. Secretary Yellen, let me ask you. The
CBO, and they reflect one of the more conservative scores, has said
that Biden’s spending bill, the most recent one, will add $367 bil-
lion to the deficit. Could you describe the long-term consequences
of too much fiscal spending on financial markets and the price of
consumer goods?
Secretary YELLEN. Let me first put the CBO number that you
mentioned in perspective. They did score Build Back Better as re-
sulting in $367 billion in deficits over 10 years. Not in a year, but
over 10 years.

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
14

Mrs. WAGNER. There were a lot of gimmicks that went through
to get that number, too. Let’s just be honest.
Secretary YELLEN. However, that score, they made clear, does
not include the revenue that will come from enhancement of re-
sources for tax enforcement. It doesn’t include the Treasury—
Mrs. WAGNER. How does this overspending on our financial mar-
kets—
Ms. DEAN. The gentlewoman’s time has expired.
Mrs. WAGNER. —and deal with the price of consumer goods?
Ms. DEAN. The gentlewoman’s—
Mrs. WAGNER. I would like the gentlelady to—
Ms. DEAN. The gentlewoman’s time has expired. The gentleman
from Texas, Mr. Gonzalez, is now recognized for 5 minutes.
Mr. GONZALEZ OF TEXAS. Thank you, Madam Chairwoman, and
I would like to thank Secretary Yellen and Chair Powell for being
here with us on such an important occasion, at this critical mo-
ment, and to talk about a couple of issues that have affected my
district. My first question is to Secretary Yellen.
Secretary, when you testified before this committee in July, you
identified caregiving needs as one of the major barriers people face
in getting back to work following the COVID pandemic. Over 80
percent of South Texans residing in my congressional district iden-
tify as Latino, but only 191⁄2 percent of 3- and 4-year-olds are en-
rolled in publicly-funded preschool. What impact do you think the
Build Back Better Act will have in supporting our economic recov-
ery and getting folks back to work? I know we are talking about
this labor shortage, but, specifically, do you believe investing in
childcare and universal pre-K will bolster our economic and labor
market recovery?
Secretary YELLEN. Yes, I absolutely do. As I mentioned pre-
viously, one of the reasons, that even before the pandemic, women’s
labor force participation in the United States fell short of that in
many developed countries is the lack of public support for childcare
and paid family leave. And during the pandemic, this became so
much worse because of the issues in childcare and schools not
being open. But many childcare facilities closed, and for people who
work in childcare that involves face-to-face contact, health concerns
have held people back from going to work there.
So, Build Back Better will subsidize childcare so that it is afford-
able for almost all American families and provide 2 years of uni-
versal pre-K for 3- and 4-year-olds. And research that Treasury re-
cently summarized in a working paper shows that this will boost
labor supply, particularly that of women. And more recently, the
Congressional Budget Office also published a paper that opines
that this is likely to have positive impacts on employment.
Mr. GONZALEZ OF TEXAS. Thank you. And as you know, in the
CARES Act, we established the Paycheck Protection Program
(PPP), which has been administered by the Small Business Admin-
istration (SBA) in concert with Treasury, to provide economic relief
and emergency payroll support to small businesses hit hardest by
the pandemic. The program provided a lifeline for many small busi-
nesses in my district and across the country. However, we struggle
to reach businesses in communities of color. And as I mentioned
earlier, over 80 percent of my district is Latino, and over 19,000

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
15

businesses applied for PPP, of which only 231⁄4 identified as Latino.
How can we look at this information and learn how to better reach
minority-owned businesses to ensure they have the same access to
these resources, and what are we doing to make this happen?
Secretary YELLEN. Yes. In the more recent Payroll Protection
Program, priority was given to Community Development Financial
Institutions (CDFIs) and Minority Depository Institutions (MDIs)
to have access to those funds in order to provide better support to
minority areas. And going forward, Congress has provided consid-
erable resources to CDFIs and MDIs, and what we have found is
that these institutions have great ability to reach businesses in un-
derserved areas. So, the CDFI program that we run in Treasury is
very focused on making sure that support gets out, and we expect
these institutions to play a significant role in the State Small Busi-
ness Credit Initiative for which we recently issued guidelines.
Mr. GONZALEZ OF TEXAS. Thank you. And lastly, I just want to
ask a question on the Emergency Capital Investment Program that
was established and consolidated in the Appropriations Act of 2021
to encourage low- and moderate-income community financial insti-
tutions to bolster their efforts to support and engage with small
businesses in their communities. I understand the deadline to sub-
mit—
Ms. DEAN. The gentleman’s time has expired.
Mr. GONZALEZ OF OHIO. Okay. Thank you. I yield back.
Ms. DEAN. The gentleman from Texas, Mr. Taylor, is now recog-
nized for 5 minutes.
Mr. TAYLOR. Thank you, Madam Chairwoman. I appreciate the
opportunity to be here with you.
Chairman Powell, I am sure you are familiar with Milton Fried-
man’s book, ‘‘Free to Choose.’’
Mr. POWELL. Yes.
Mr. TAYLOR. This is an important college textbook, I would think,
on economics, and I would commend Chapter 9 to you, ‘‘The Cure
for Inflation.’’ I think Mr. Friedman lays out some important prem-
ises of what creates inflation. And I am sure you are familiar with
the fact that the M2 money supply has gone up very dramatically.
You are familiar with the Federal Reserve holdings and trillions of
dollars of debt, the very dramatic increase on your balance sheet—
I know you are aware of this because you were there—and the
money in circulation. And this comports with, again, going back to
Chapter 9 of Milton Friedman’s book, and he goes in and talks
about the inflation that took place in the 1970s, and he has a series
of charts showing the supply of money. So, here is the United
States, and he goes on and shows the supply of money in Germany
and Japan, and the increase in prices, and then also, in the United
Kingdom and Brazil.
And so all of this is going to a very central point that when you
increase money, and actually let me quote Mr. Friedman here for
a second: ‘‘When the quantity of money increases more rapidly than
the quantity of goods and services available for purchase, we have
inflation.’’ You have printed too much money, sir, and that money
has created inflation. To stop the inflation, I would recommend to
you to stop printing the money. You indicated yesterday that you

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
16

are going to start to slow down the printing of money. I think you
should stop it and stop it right now.
Inflation is on the minds of Americans. In poll after poll for the
last many months, for 70 to 80 percent of Americans, it is a top
issue. They are concerned about inflation. Inflation is eating away
their purchasing power. It is actually robbing them of the increases
in wages that we have seen because their purchasing power is
down because of the inflation created by the money that is being
printed. Would you like to respond to that?
Mr. POWELL. Sure. Price stability is one of our two goals, the
other being maximum employment, and we have to balance those
two goals when they are in tension as they are right now. But I
assure you we will use our tools to make sure that this high infla-
tion we are experiencing does not become entrenched. If I may also
add, though, the connection between monetary aggregates and ei-
ther growth or inflation was very strong for a long, long time,
which ended about 40 years ago. So, the so-called velocity of money
became quite variable. And now we think more of just the imbal-
ances between supply and demand in the real economy rather than
monetary aggregates, which isn’t to say that was wrong when writ-
ten. I think it was probably correct when it was written, but it has
been a different economy and a different financial system for some
time. Nonetheless, your point on inflation is well taken.
Mr. TAYLOR. And I appreciate that. Secretary Yellen, don’t you
think that the deficit spending of this Administration is on an un-
paralleled level? The $2 trillion in deficit spending in February,
dumping money into the economy, has created the inflation that we
see today.
Secretary YELLEN. Well, the Build Back Better Plan that is
under consideration now is paid for.
Mr. TAYLOR. Okay. But the $2 trillion in February, was that paid
for?
Secretary YELLEN. The Rescue Plan was not paid for.
Mr. TAYLOR. Okay. So, that is $2 trillion of deficit spending.
Secretary YELLEN. There was a very good reason to pass that.
We faced a major risk in terms of seeing our workforce, particu-
larly the most vulnerable members of the American society, scarred
permanently, losing homes, being unable to put food on their ta-
bles, take care of their children, and being permanently financially
harmed, as well as there was a shortage of demand in the economy
that could have resulted in long-lasting joblessness and high unem-
ployment. And the plan that was enacted into law was focused on
dealing with that, and it has been successful with the—
Mr. TAYLOR. Did it create inflation? Did the $2 trillion of deficit
spending create inflation?
Secretary YELLEN. It did boost demand, and that is one of several
factors that are involved in inflation. But absent the pandemic and
the supply chain problems we have had, and the negative impact
the pandemic has had on the supply of labor—
Mr. TAYLOR. Secretary Yellen, what is interesting—
Secretary Yellen —would be—
Mr. TAYLOR. Secretary Yellen, just to finish here, what is inter-
esting is that Milton Friedman wrote in 1979, ‘‘No government is
going to accept responsibility for producing inflation,’’ and you,

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
17

ma’am, have just embodied that denial because your deficit spend-
ing is creating the inflation that Americans need relief from now.
I yield back.
Ms. DEAN. The gentleman’s time has expired. The gentleman
from Guam, Mr. San Nicolas, is now recognized for 5 minutes.
Mr. SAN NICOLAS. Thank you, Madam Chairwoman. I would like
to begin by clarifying the fact that the deficit spending just referred
to was to address the pandemic concerns that were impacting this
country, the unemployment of our people, the fact that there were
so many businesses that needed support. And one of the reasons
why we enacted the relief packages that we did was to make sure
that we didn’t collapse our economy as a result of these pandemic
circumstances. So, let’s make sure we are bifurcating the issues
here and not just hammering away on what happened in the past
and trying to tie it into the present. And with that, I would like
to talk about the present.
It looks like the narrative of the Minority is to try and pin the
inflationary circumstances of this country on the fiscal policy that
is being pursued by the sitting government. And I think it is im-
portant for us to remember that just a few months ago, the very
same Minority, in similar hearings, were stating that they were
upset that the rollout of relief funding was not happening fast
enough. That is entirely juxtaposed to the inflationary arguments
being presented today. They were arguing for us to push even more
money into the financial system, into the monetary supply. So, I
really hope that we can go back to that mentality, because getting
help to the American people during the pandemic was and is a pri-
ority, and continuing to get help to the American people in our in-
frastructure and in the many good things in Build Back Better
should also continue to be a priority.
It needs to further be reminded that Build Back Better has not
even been enacted yet. Its fiscal impacts have not been material-
ized. It is not factoring into the money supply. And we recently just
had testimony that inflation is running at a certain clip up to Octo-
ber—I believe it was mentioned by Chairman Powell—at 5 percent.
And I think that is important for us to contextualize because we
are suffering from inflation, but the inflationary pressures are not
as a result of the recently-passed Build Back Better bill that still
remains to be enacted.
With that being said, I would like, without objection, Madam
Chairwoman, to enter into the record an article dated October 15,
2021, by Paul Hannon in London, Ryan Dube in Lima, and Stella
Yifan Xie in Hong Kong, under The Wall Street Journal entitled,
‘‘Inflation Surges Worldwide as COVID-19 Lockdowns End and
Supply Chains Can’t Cope.’’
Ms. DEAN. Without objection, it is so ordered.
Mr. SAN NICOLAS. And in that vein, I would like to pose a ques-
tion to Chairman Powell. Mr. Chairman, is the inflation that we
are enduring here in America today, is it just occurring in America
or is there a global inflationary environment?
Mr. POWELL. As you mentioned, if you look at Western Europe,
Germany in particular, if you look at the United Kingdom and you
look at Canada, you are seeing high rates of inflation in many of

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
18

these countries, less so in Asia, but certainly in most parts of Eu-
rope and Canada and the United States.
Mr. SAN NICOLAS. And is it fair to state that these inflationary
pressures that are occurring globally are predominantly as a result
of the normalization that is starting to occur from the economies
getting back on their feet due to the pandemic?
Mr. POWELL. Yes. When you see something happening every-
where around the world, you look for common factors, and those
would be just the reopening of the economy. COVID continues to
impose supply-side constraints, so whatever demands there are run
up against hard constraints, which is unusual for market econo-
mies, and you are seeing high inflation everywhere. Many of the
same features that we are seeing here, you are seeing elsewhere,
but different countries are feeling it to different degrees.
Mr. SAN NICOLAS. So just in that context, let’s not hold back the
American people by creating some kind of inflationary scare, mak-
ing it seem like it is a fiscal policy issue. This is a global infla-
tionary environment. Let’s continue to take care of the American
people, while we allow the experts who are testifying before us
today to continue guiding us as we try and tackle inflation.
Moving on to Secretary Yellen, I want to first begin by recog-
nizing some of your staff, J.J. Ricchetti and Arian Rubio, Special
Assistants who have been working closely with our office. They
help us to do our job in engaging Treasury and allow you to come
here today and do your job, to be able to answer questions directly
from us.
I just had one quick question, Secretary Yellen. My local gov-
ernor is holding off on expending some resources that were pro-
vided under the local relief package. I think they are waiting to see
what the final rule is on the spending of the local recovery funds.
Is a final rule going to be materially different from the interim rule
or can we expect it to be materially the same?
Secretary YELLEN. We are in the final stages of producing the
final rule. It is undergoing review. We had thousands of comments
and have tried to respond. Until that rule comes out, and we expect
it to come out shortly, the interim rule applies and can be relied
upon.
Ms. DEAN. The gentleman’s time has expired, just as a courtesy.
Thank you.
All Members are instructed, if they have not exhausted their
questions, to submit them in writing for the record.
At this time, the gentleman from New York, Mr. Zeldin, is recog-
nized for 5 minutes.
Mr. ZELDIN. Thank you, Madam Chairwoman. Thank you to Sec-
retary Yellen and Chairman Powell for being here today. And
thank you to Chairwoman Waters and Ranking Member McHenry
for holding this hearing.
First, to start with you, Secretary Yellen, just now in response
to Mr. Taylor’s questioning, I believe you said that it is your posi-
tion that the Build Back Better bill is fully paid for. Did I hear you
correctly?
Secretary YELLEN. Let me be clear. We would agree with the
CBO analysis that led to a score of a $367 billion deficit over 10
years, but CBO was explicit that their analysis did not include rev-

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
19

enue that would result from an $80 billion investment over 10
years in the IRS. And the Office of Tax Analysis issued a paper
with our own estimate based on our data and information that we
have from the IRS about the likely payoff from that, and we esti-
mate that at $400 billion.
So, when we put together those two pieces of information, it is
more than fully paid for.
Mr. ZELDIN. I appreciate you clarifying that. So, the Administra-
tion’s position is that you believe that it is fully paid for by
ramping up the amount of IRS agents that are out there by several
tens of thousands and going after more Americans to try to get
them to pay more in taxes. I believe the number is up over 80,000
more IRS agents, and we have some strong disagreement with re-
gards to that proposal. I am hearing from a lot of constituents who
don’t want to see several tens of thousands of additional IRS
agents added, to go after hard-working Americans across the coun-
try because we already have enough IRS agents out there to go
after individuals. And they are also concerned with the proposal to
be spying on bank accounts and transactions at low-dollar
amounts.
Chairman Powell, you were asked a question with regards to—
you were talking about inflation, and I just want to understand
this correctly. You said that in the second half of next year, you
believe that inflation will start coming down. Is that accurate?
Mr. POWELL. Our forecast—and that of many, I would say almost
all forecasters—does expect that inflation will be coming down
meaningfully in the second half of next year. That is an expecta-
tion, and it is a forecast.
Mr. ZELDIN. And just so that I understand, is that something
with which you agree?
Mr. POWELL. I think it is likely, but I don’t think—the point is
we can’t act as though we are sure of that. We are not at all sure
of that. Inflation has been more persistent and higher than we
have expected, and we have to use our policy to address the range
of plausible outcomes, not just the most likely one, which is that
one. That is the most likely but there are other possibilities, and
we are well aware of that.
Mr. ZELDIN. And when you say that answer, I just want to un-
derstand that in the context of an additional question with regard
to the Build Back Better bill. You were asked whether or not that
would—what kind of an effect that would have on inflation, and
you refused to comment on that. So my question is, the prediction
that in the second half of next year, it is likely that inflation would
come down, is that a prediction assuming that the Build Back Bet-
ter bill is law or is not law, that the trillions of dollars is spent or
not spent?
Mr. POWELL. It is really not our role to comment on fiscal pro-
posals, indirectly or directly.
Mr. ZELDIN. No, that is not what I am asking. The prediction
that inflation is going to go down in the second half of next year
is either built on an assumption that there is going to be trillions
of dollars spent or not spent.
Mr. POWELL. The principle—

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
20

Mr. ZELDIN. Which assumption was used in making that pre-
diction?
Mr. POWELL. —driving assumptions would be these, that the
goods inflation that we are seeing will subside because the supply
chain problems will sort themselves out. At the same time, though,
you are going to see rent inflation going up and you are going to
see possibly—
Mr. ZELDIN. I think you might be misunderstanding me, Mr.
Chairman.
Mr. POWELL. —pushing up.
Mr. ZELDIN. With all due respect, I am trying to understand
whether or not—
Mr. POWELL. There will be a fiscal prediction. It will be in there.
People will make different assumptions. But, of course, we will as-
sume—at this point, we are assuming that something passes, but
we do not know exactly what it is going to be. It is very hard to
be precise, because again, we don’t know what will pass.
Mr. ZELDIN. That leaves far more questions than answers with
regards to the prediction. I yield back.
Ms. DEAN. The gentleman’s time has expired.
The gentlewoman from Massachusetts, Ms. Pressley, who is also
the Vice Chair of our Subcommittee on Consumer Protection and
Financial Institutions, is now recognized for 5 minutes.
Ms. PRESSLEY. Thank you, Madam Chairwoman. The House just
passed the Build Back Better Act. We are closer than ever to deliv-
ering overdue support for workers, for families, and for the econ-
omy. There is truly just so much for us to feel hopeful about.
Unfortunately, many Republicans are working overtime to dis-
tract from these historic accomplishments. Today, they speak about
inflation and they speak about it without any nuance or any con-
text, and they refuse to put forth serious solutions. They use their
platforms to discourage people from getting vaccinated, which will
only prolong pandemic-induced inflation. They spread lies that the
Build Back Better Act will add to the deficit, despite 3 years ago
enthusiastically passing Trump’s tax break for the wealthy bill,
knowing it would add $2 trillion to the deficit.
I am tired of this fear mongering and misinformation, so let’s
today, in this moment, set the record straight about the Build Back
Better Act. Secretary Yellen, please answer yes or no to these ques-
tions wherever possible. Would providing universal pre-K and dras-
tically cutting the cost of childcare have a positive impact on the
economy?
Secretary YELLEN. Yes, I believe it would. It would promote high-
er labor force participation, and these investments in children
would have a significant payoff, making them more successful and
better-prepared to succeed in our economy.
Ms. PRESSLEY. And would making prescription drugs cheaper for
seniors and families have a positive impact on the economy? Yes
or no?
Secretary YELLEN. Yes, it would certainly cut the cost of living,
especially for retirees who have been struggling with the cost of
prescription drugs, but many others as well.
Ms. PRESSLEY. And would investing in more affordable housing
have a positive impact on the economy? Yes or no?

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
21

Secretary YELLEN. Yes, I think that has been a very significant
problem for decades and has made it exceptionally difficult, espe-
cially for lower-income families to manage in expensive parts of the
country.
Ms. PRESSLEY. And would expansion of the child tax credit, a tax
cut for the lowest-earning families have a positive impact on the
economy? Yes or no?
Secretary YELLEN. Yes, and it has already done so. In the
months after the child tax credit has been paid out we have seen
a substantial decrease in the number of families reporting food in-
security.
Ms. PRESSLEY. So, zero Republicans—zero—voted for the Build
Back Better Act, despite it containing substantial serious and pop-
ular solutions to combat inflation, supply chain issues, and finan-
cial hardship, solutions that are fully paid for. To try to justify
their de novo, they are spreading lies about this bill. They say the
bill will cause long-term inflation. Wrong. That is a falsehood. They
say it will add to the deficit. Wrong. That is a falsehood. Anything
to delay solutions and distract the public from their government
spending hypocrisy.
Secretary Yellen, what are the real causes of inflation and how
will policies that stop the spread of COVID-19 and support labor
participation help to fight it?
Secretary YELLEN. To my mind, the real causes of inflation re-
flect the impact the pandemic has had on the economy. The pro-
grams that have supported income have kept demand at a solid
pace and enabled our economy to grow the fastest of any economy,
to bring down unemployment toward more normal levels. But be-
cause of the pandemic, demand shifted massively, away from serv-
ices and toward goods. That huge demand for goods has resulted
in massive supply chain bottlenecks that have crippled our ports
and our transportation system and caused a shortage of semi-
conductors that have led to huge increases in the price of new and
used vehicles.
And because of the pandemic, a substantial number of workers
have not returned to the labor force, I believe because they are con-
cerned about the health consequences of working in face-to-face
type jobs and probably also because of childcare concerns.
Ms. PRESSLEY. Secretary Yellen, in the remaining time I have, I
do want to give you the floor to talk about the revenue-raising pro-
vision that will pay for the Build Back Better Act investments.
How will they both make—
Ms. DEAN. The gentlewoman’s time—
Ms. PRESSLEY. Oh, I’m sorry. I yield back. My time is up.
Ms. DEAN. The gentlewoman’s time has expired.
The gentleman from Ohio, Mr. Gonzalez, is now recognized for 5
minutes.
Mr. GONZALEZ OF OHIO. Thank you, Madam Chairwoman, and
thank you to both Chairman Powell and Secretary Yellen for being
with us today. And congratulations to Chairman Powell on your re-
appointment.
Secretary Yellen, I am going to start with you. Earlier you said,
and I think you said it in different ways a few times, that when
supply and demand get out of balance, you can have inflation, and

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
22

the demand side has accelerated while we still have supply chain
bottlenecks. Fair?
Secretary YELLEN. The demand has been strong. Demand has
also shifted away from services and toward goods, which has cre-
ated huge problems, more than the aggregate level of demand.
Mr. GONZALEZ OF OHIO. Yes, ma’am. And the American Rescue
Plan, which was a partisan bill that increased demand, which you
testified to, did it do anything to alleviate supply issues?
Secretary YELLEN. It did not have substantial impacts on supply.
Mr. GONZALEZ OF OHIO. When we say that—and this is my frus-
tration. For a year, a year plus, we negotiated in good faith, for bi-
partisan legislation to be targeted and appropriate with respect to
our response to COVID-19. You all won the election. It is your pre-
rogative to ignore Republican concerns. But you went forward with
the American Rescue Plan, which we warned would increase infla-
tion, specifically for the reasons the Secretary just said. It would
increase demand and do nothing to alleviate supply chain bottle-
necks. That is exactly what happened. You are set to repeat the
exact same mistake with Build Back Better.
Chairman Powell, I want to commend you for retiring the term,
‘‘transitory,’’ as it relates to inflation. My constituents have been
complaining about it for over a year. There are concerns. One, in-
flation is particularly hard on low- and middle-income Americans,
in particular those with fixed incomes. We all know that. It has
been brutal for them.
And two, and I think this is the new risk, risk accumulates over
time the longer rates are at zero, as anyone who invests money in
discounts cash flows at a zero-interest rate can justify virtually any
investment. As we have seen that, and various asset bubbles have
built up over time.
I think the risk shifts. Now, I believe the risk is that we have
let inflation run too hot for too long, and we are in need of a more
sudden course correction, which you suggested yesterday. That
being the case, what are you most concerned with when consid-
ering the ramifications of the taper on the market and the economy
at large? What pockets of risk are you looking at as the taper be-
gins?
Mr. POWELL. Let me just say, I think that the taper need not be
a disruptive event in markets. I don’t expect that it will be. It
hasn’t been so far. We have telegraphed it.
I think if you look at the state of the economy, look at where we
are, look at the most recent run of data, you can see that the high-
ly-accommodative policy that we have, even after the taper is done,
it is really appropriate that we taper, and as I mentioned yester-
day—
Mr. GONZALEZ OF OHIO. I agree.
Mr. POWELL. —in my view, it is appropriate that we consider, at
the next meeting, tapering faster so that it wraps up a few months
earlier.
Mr. GONZALEZ OF OHIO. Yes. I agree. I guess I would encourage
you—and my concern, again, is we have seen asset bubbles accu-
mulate over the course of the pandemic. Investors have done in-
credibly well. I think we should be tapering. I agree with that in
a lot of ways on the monetary front. But I suspect that there is risk

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
23

building up and I just want to make sure that it is on the Fed’s
radar.
I want to shift to—I have 1 minute and 26 seconds to see if I
can get this out. In recent months, Americans, unfortunately, have
seen energy prices significantly increase, especially at the pump.
Some people who talk on Twitter have claimed that this is due to
greedy corporations and speculators driving up prices. Do you be-
lieve that is the reason for increased gas prices?
Mr. POWELL. Energy is a global market, and there are many,
many factors at work there, I would say. It is a combination of very
strong demand across-the-board, and supply-side factors too.
Mr. GONZALEZ OF OHIO. Not greedy corporations and speculators
driving up prices, that is not accurate for why energy prices are
high?
Mr. POWELL. Looking at this from an economic perspective, it is
very strong demand in the face of what have been some supply
blockages and a little bit of discipline on the part of the providers.
Mr. GONZALEZ OF OHIO. Thank you. I agree.
In the summer of 2020, the Federal Reserve updated its State-
ment on Longer-Run Goals and Monetary Policy Strategy to state
that the Fed would seek to achieve inflation above 2 percent for
some time period. Do you have any second thoughts on that, given
that we have seen inflation persist for quite some time, and if we
didn’t change the framework, how would you potentially have re-
sponded differently throughout the pandemic?
Mr. POWELL. The sort of overarching fact of monetary policy in
the last 15 years, and probably the next 15 years, is just that inter-
est rates are significantly closer to the effective to zero, and in that
world it is hard to support the economy and attain growth and
maximum employment and 2 percent inflation. So, the framework
was designed to address a situation in that.
Now, what we have here is an unique historical shock, which is
the beginning of the pandemic, the middle of it, and the end of it,
and a different situation and we have a different part of the frame-
work that deals with that.
Ms. DEAN. The gentleman’s time has expired.
Mr. GONZALEZ OF OHIO. Thank you. I will follow up in writing.
Thank you.
Mr. POWELL. I would be glad to.
Mr. GONZALEZ OF OHIO. Thank you, Mr. Chairman.
Ms. DEAN. Thank you. The gentlewoman from Michigan, Ms.
Tlaib, is now recognized for 5 minutes.
Ms. TLAIB. Thank you so much, Madam Chairwoman, and I
would like to thank both of our witnesses for being here.
Chairman Powell, President Biden stated that with your renomi-
nation, you would use your authority to address the threat that cli-
mate change poses to our financial system. As you know, if we
allow temperatures to rise another 2 degrees this century, we are
surrendering the planet and our environment to corporate pol-
luters, accepting, of course, the disruption to our agriculture, our
trade, migration on a massive, unprecedented scale, and the dev-
astating public health impacts. And Chairman, you should know
this is so personal for me because I am seeing it firsthand in Michi-
gan, where Wayne County has not met Clean Air Act standards

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
24

since 2013. This is the largest populated county in Michigan. And
not only with record floods that have impacted families during the
pandemic, come up 4 times alone in some households over the sum-
mer, it is devastating. We need to do something about it, and I
know it directly impacts our economy.
Chairman Powell, can you outline precisely what your plan is to
fulfill that commitment to address climate risk to our financial sys-
tem?
Mr. POWELL. I would be glad to. The Fed has a couple of ways
that we will address climate that are important, but they are not,
by themselves, going to be enough, the first of which is just to su-
pervise and regulate financial institutions, particularly the large
ones, to make sure that they understand the risks that they are
running and can manage them.
The second really is from a financial stability standpoint. Cli-
mate change has potentially significant effects on financial stability
and also on the broader economy, so, we do a lot of research. Our
researchers are some of the ones who go around the globe, who are
doing the original research to understand the pathway of climate
change through the financial system and the economy. And those
are within our mandate to supervise firms and look after financial
stability. We will be incorporating climate change very much into
those mandates.
Ms. TLAIB. So you know, and I know you have heard it, that be-
tween 2016 to 2020, banks provided, what, $3.8 trillion in direct
fossil fuel financing, with most of that investment coming from
banking. Banks are holding companies under the Fed’s supervision,
and I know you are talking about oversight here. But the Acting
Comptroller of the Currency, Michael Hsu, has announced that the
OCC plans to issue supervisory guidance on climate risk by the end
of the year.
Chairman Powell, does the Fed intend to join this guidance? Why
or why not?
Mr. POWELL. I don’t think we will join this specific guidance. We
are very much tracking and in discussions with the OCC. I think
we will move to certainly provide guidance, and I think we all
want, all the agencies want to have consistent, or ideally, identical
guidance. I don’t think we will actually be in a position to join this
specific guidance at this time but we will get there.
Ms. TLAIB. And you know the OCC will also begin examining
how large banks are addressing climate risk as part of the exam-
ination, starting in 2022. So, does the Fed plan on conducting a
similar assessment in 2022, and what is the Fed planning to do on
assessing climate risk to banks face in 2022?
Mr. POWELL. In 2022, we are already deep into dialogue, and
again, particularly with the largest financial institutions. That is
really where a lot of the work is going on right now, ongoing dia-
logue with all of them. And by the way, they are doing the same
thing we are doing, which is trying to understand the implications
of climate change for their business model, for the things that they
do. And also what we are thinking about is what is the appropriate
supervisory approach, how do we do this, which tools do we use,
for example, climate scenario—

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
25

Ms. TLAIB. Yes, and just on behalf of my residents, I hope dia-
logue turns into guidance and accountability.
Finally, I am glad you have allowed the leadership of other cen-
tral banks—you joined the Network for Greening the Financial
System last year. I really appreciate that. But, as Fed Governor
Brainard has indicated, the U.S. still trails other countries in,
‘‘measuring, monitoring, and managing climate-related financial
risk,’’ and the Governor said, ‘‘We need to catch up.’’
They go on to say, Chairman Powell, about how far back we are
in regard to having a much more active role. And so, Chairman
Powell, the European Central Bank (ECB) has announced that cli-
mate risk will guide its monetary policy. Will the Federal Reserve
do the same? Are you actually aggressively looking at taking this
kind of approach?
Mr. POWELL. I am focused on the United States and our existing
mandates.
Ms. TLAIB. Is that a no?
Mr. POWELL. Well, it—
Ms. TLAIB. Is it no, right now?
Mr. POWELL. It is sort of a broader question—
Ms. TLAIB. Maybe?
Mr. POWELL. —than a yes or a no.
Ms. TLAIB. They are saying, okay, we are going to use climate
risk to guide our monetary policy.
Mr. POWELL. Okay. Narrowly, then, I would say we are not doing
that now. I think that is something we will do in the longer run,
but no, we are not doing that now.
Ms. TLAIB. Not now. Okay.
The ECB’s initial supervisory review revealed that the bank
faced material risks from climate risk, yet have failed to meet the
supervisory expectations laid out by the regulator. Chairman Pow-
ell, do you have similar comprehensive information about how U.S.
banks are positioned—
Ms. DEAN. The gentlewoman’s—
Ms. TLAIB. I will submit the question in writing.
Mr. POWELL. We are developing that.
Ms. TLAIB. You are? Good.
Mr. POWELL. We are in the development phase on that.
Ms. TLAIB. Okay. Thank you.
Ms. DEAN. The gentlewoman’s time has expired.
The gentleman from Texas, Mr. Gooden, is now recognized for 5
minutes.
Mr. GOODEN. Thank you. Secretary Yellen, I have a few ques-
tions. If Build Back Better becomes law, which earlier you stated
it was paid for, and one of the tools for payment was enhanced col-
lections from the IRS, if this does become law would you anticipate
that more Americans will be audited by the IRS?
Secretary YELLEN. I would anticipate that many fewer Ameri-
cans with incomes below $400,000 will be audited, that the IRS
will have the resources to direct their audits in those places where
we have every reason to believe that taxpayers are not paying what
is due, that is, high-income Americans and complex partnerships
and corporations where the sources of income are opaque and the
audit rates have dropped to historically low levels. The auditing

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
26

will be focused in those areas. Those areas are what account for a
$7 trillion tax gap over the next decade.
Mr. GOODEN. And do you think we need 87,000 new IRS employ-
ees for that?
Secretary YELLEN. The auditing staff of the IRS has declined.
The skill level of the auditing force has declined substantially. It
is critical to hire people who have the expertise to conduct these
complex audits. But the hiring will also improve customer service.
The customer service at the IRS has fallen to unacceptably low lev-
els.
Mr. GOODEN. I will agree with you there. Thank you for those
answers.
Back to inflation. In March, you said that fears that the Admin-
istration’s $2-trillion relief bill could trigger a rapid rise in inflation
were misplaced. And we heard earlier today that that was quite a
large factor in where we are today with respect to inflation.
I realize you are selling this plan as great for the future and with
calming these inflation fears, but isn’t it difficult for us to accept
perhaps, on my side of the aisle, that we are not going to just con-
tinue to kick the can down the road and make things worse when
your predictions were so wrong back in February? Do you really
not think that spending another several trillion dollars will—
Secretary YELLEN. First of all, we are talking about a decade. We
are not talking about a single year. The spending from the Amer-
ican Rescue Plan, which was $1.9 trillion, was largely concentrated
this year. Build Back Better is a decade-long plan. It is a small
plan relate to the total size of the economy and GDP over a decade,
and it is paid for. So, it does not involve an increase in deficits ac-
cording to a combination of CBO and Treasury reckoning over the
next decade, and beyond that, it puts in place investments that will
continue to bring down deficits.
And finally, I would say it will improve the supply side of the
economy, which is, in the long run, a factor that will tend to miti-
gate ongoing inflationary pressures.
Mr. GOODEN. Thank you. And Chairman Powell, would you agree
with that analysis, that this increased spending, these multiple
trillions of dollars over the next year, will that help us get to that
point that we are at in the end of next year where you see inflation
reducing?
Mr. POWELL. I’m sorry. We really don’t comment on existing leg-
islation. It is kind of out of bounds for us. This is what the CBO
will do. They will make an estimate—
Mr. GOODEN. Just to confirm your discussion with Congressman
Zeldin, your analysis that the inflationary numbers are anticipated
to perhaps reduce at the end of next year is based on this Build
Back Better passing?
Mr. POWELL. We have to see the final bill and how much of it
is paid for. You have to look at the spending in the first couple of
years. You have to look at exactly how much of it is paid for to
really make a sophisticated judgment about that. But it is 10 years
of spending. So, I am really reluctant to get pulled into com-
menting on something on which we don’t really have the final facts.
Mr. GOODEN. Thank you. I yield back.

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
27

Ms. DEAN. The gentleman yields back. I now recognize myself for
5 minutes.
Welcome back, Secretary Yellen. Welcome back, Chair Powell.
And Chair Powell, congratulations on your renomination as Fed
Chair.
My colleagues on the other side of the aisle have spent a tremen-
dous amount of time attacking the Build Back Better Act as waste-
ful spending that will increase the deficit and fuel inflation, as we
have seen through this conversation. I, of course, disagree with
that. Not only is this legislation paid for, but it makes critical,
long-term, overdue investments that will improve productivity and
address the supply chain bottlenecks, part of the cause of height-
ened inflation.
The Build Back Better Act critically makes investments close to
more than $7 trillion, projected 10-year tax gap, that is largely due
to tax evasion by the wealthy and by corporations. I am reminded
of the quote by Benjamin Franklin, ‘‘There are only two things cer-
tain: death and taxes.’’ However, we know, from reality, and Sec-
retary Yellen you have spoken about this, that taxes are not cer-
tain for everybody, and it is time we made a fair, equal playing
field.
So, rather than the boogeyman of 87,000 agents coming after
hard-working Americans, could we be clearer? What are the ways
that wealthy individuals and corporations fail to pay taxes, in some
cases? It is not everybody. We know that. How do some avoid or
fail to pay taxes, and that is what we are trying to go after.
Secretary YELLEN. The rates of compliance for income streams
that have third-party reporting to the IRS, like wages and salaries,
95, 97, 98, something like that, percentage of income is reported
and taxes are paid as due.
Ms. DEAN. Can you paint a picture—
Secretary YELLEN. That is not where the problem is; the problem
is opaque sources of income, when individuals earn income that
isn’t wage and salary income, the IRS doesn’t know about it. They
have to rely on the honesty of the taxpayer to report what they
have earned. They don’t have additional sources of information.
And for complex partnerships and for companies, similarly, the
sources of income and amounts are opaque.
And if we had high auditing rates, that would probably promote
more honest reporting. But audit rates have dropped to unbeliev-
ably low levels over the last decade. And so, the investment in the
IRS to enhance its auditing capacity, not only will that directly en-
able greater tax collections but a lot of research shows that it will
improve honesty in reporting in the first place when the odds of
being audited rise.
Ms. DEAN. That would be valuable because as Treasury as esti-
mated, the tax gap could be as high as $7 trillion over the next dec-
ade, in the future decade. How that much money is currently fall-
ing through the cracks, and we here, in Congress, wouldn’t want
to address that is staggering to me.
Chair Powell, in the remaining time that I have, when you ap-
peared before this Committee in July, I asked you about the need
for greater public and private investment. You talked about how in-
vestment raises the potential growth rate, increasing productivity,

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
28

and raising living standards. I also asked you about the impact of
supply chain vulnerabilities on inflation, which you repeatedly tes-
tified to be one of the major drivers of inflation.
As part of the Build Back Better Act, I worked to include lan-
guage to increase our investment in domestic manufacturing and
support supply chain resiliency. Ultimately, this legislation took
the form of authorizing $500 million for the use of the Defense Pro-
duction Act for the purposes of supporting manufacturing right
here.
Chair Powell, how would this kind of domestic investment in
manufacturing address continued supply chain challenges and com-
bat inflation?
Mr. POWELL. I am going to have to decline to answer. I do not
want to get into commenting on particular aspects of this specific
bill. It is just not our role. I assent that we do not have the capa-
bility to do it. It is just that we really have to respect that we are
not part of fiscal policy. We do our jobs.
Ms. DEAN. I respect that. How about the fact, if we can encour-
age and create greater domestic manufacturing, not speaking of the
legislation then, what would that do in terms of inflation?
Mr. POWELL. A significant part of the inflation that we are seeing
is due to longer-length supply chains from Asia. So to the extent—
as an actual matter, if you made things locally here, in this par-
ticular situation, you would see lower inflation. But by the time—
Ms. DEAN. Thank you, and I have to—
Mr. POWELL. —this will be passed—
Ms. DEAN. —gavel myself off because my time has expired.
Thank you, Chair Powell.
The gentleman from Texas, Mr. Sessions, is now recognized for
5 minutes.
Mr. SESSIONS. Thank you very much, Madam Chairwoman.
Madam Secretary, I want to, without trying to be too much, as it
were, that we are fighting each other here over politics, I have
found it very interesting that your remarks wanted to be in line
with the Administration, of which you serve as a Cabinet officer,
but it gets confusing for a Member of Congress, and I believe the
American people, to speak directly to the fact, the case, or the truth
that we decide.
You have used the words, ‘‘honesty in reporting,’’ I believe 3
times today. You reference that this Build Back Better is being
completely paid for, but then you put a caveat there, but CBO did
not report it that way because of the revenue that might come in
from whatever today we are hearing, 80,000 or 87,000 new IRS
agents.
What am I, as a member of this committee, to take away as the
position of the Treasury Department as they properly respond to
questions from Members of Congress or the media about the truth
of the matter? Are you in favor of the Build Back Better or the
CBO score?
Secretary YELLEN. We respect the CBO and agree with the CBO
analysis of those portions of the bill that CBO scored. CBO re-
ported that over the next decade, the aggregate deficit resulting
from the bill would be $367 billion.
Mr. SESSIONS. Yes, ma’am, and that—

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
29

Secretary YELLEN. But they also made clear—
Mr. SESSIONS. I don’t want to argue with you, so are you sug-
gesting—
Secretary YELLEN. That is correct, that it coincides—
Mr. SESSIONS. —do you think it is fair that you would, and the
Administration would continue the dialogue, it is completely paid
for, but—
Secretary YELLEN. I think that is completely—
Mr. SESSIONS. —the honesty—
Secretary YELLEN. —I am sorry, I—
Mr. SESSIONS. —in reporting is Congress looks at the CBO.
Secretary YELLEN. Congress has to look at the footnotes in the
CBO report as well, and CBO made clear that their score did not
include any revenue from additional IRS enforcement. They made
that completely clear in their written report.
Mr. SESSIONS. Yes, ma’am.
Secretary YELLEN. And they have an estimate of what that
would be, but they have also stated previously that their method-
ology assumes very little shift in the behavior of taxpayers. And
the Treasury Department has its own analysis and their outside re-
searchers who have analysis of what the impact of these IRS re-
sources will be. Our estimate, Treasury’s estimate, is it will gen-
erate $400 billion over 10 years. And if you combine that with
CBO’s estimate of the remainder, which is a deficit of 367, those
two things come out in positive territory.
Mr. SESSIONS. So, you want a Rube Goldberg drawing, if this
happens, then we, as the Administration, can say, and the Presi-
dent, with a masked face can say, ‘‘It is paid for.’’ But, in fact, hon-
esty in reporting is what ought to be.
I still would disagree with the gentlewoman. You are the Treas-
ury Secretary. I am not. You are entitled to your opinion. I still
think that because the honesty in reporting is necessary, it would
be honest to say, ‘‘And CBO does not concur.’’ Because I believe it
is important to tell people, by and large, the truth. The truth of the
matter is that you will be adding 87,000 net new employees to a
department that may take 5 or 6 years to materialize.
Secretary YELLEN. That is—
Mr. SESSIONS. Another question please, ma’am. How many IRS
agents—I apologize, I have exceeded my time. I will provide, in
writing, a request to you, and I want to thank the chairwoman, for
the time. Thank you.
Chairwoman WATERS. Thank you very much.
The gentlewoman from New York, Ms. Ocasio-Cortez, is now rec-
ognized for 5 minutes.
Ms. OCASIO-CORTEZ. Thank you, Madam Chairwoman, and thank
you to Secretary Yellen and Chair Powell for being with us today.
One of the things that I also wanted to focus in on is the very
important topic of climate change in terms of the Treasury and the
Federal Reserve’s role in that. The United States just returned
from COP26 in Glasgow, where participating nations agreed to re-
duce carbon emissions in order to remain within the 1.5 degree
Celsius benchmark, as acknowledged by the Paris Agreement.
The Financial Stability Oversight Council, or FSOC, recently re-
leased a report exploring the risks that climate change poses to our

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
30

financial system. And while it is the first time that FSOC has des-
ignated climate change as a threat to U.S. financial stability, I was
disappointed to see that the report, which is intended to serve as
a blueprint for Federal regulators, makes no mention of any
timelines or policies needed to stay within that 1.5 degree Celsius
target. As a matter of fact, the FSOC report, in discussing climate
change, doesn’t discuss the 1.5 degree Celsius target at all, and in-
stead it focuses on general data disclosure and review.
Secretary Yellen, can you explain why the report fails to make
mention of globally-acknowledged targets for climate to prevent
further climate change degradation?
Secretary YELLEN. FSOC’s mission and responsibility is to iden-
tify threats to the financial stability of the United States and to co-
ordinate across regulatory agencies to make sure that they are ad-
dressed. Treasury is also involved with the Administration in try-
ing to put in place policies—economic policies, tax policies, spend-
ing policies—that will address climate change itself and, of course,
very substantial policies are included in Build Back Better, and the
infrastructure plan also contains policies that address climate
change and are oriented toward trying to meet our commitment to
the 1.5 target.
Ms. OCASIO-CORTEZ. Thank you, Secretary Yellen. As a general
note, I do think it is important that perhaps we consider the fact
that there are substantially different financial risks between 1.5
degrees Celsius, 2 degrees, and beyond. But when we look at some
of our partners around the world, Sweden’s Riksbank will only pur-
chase bond holdings from companies complying with their climate
standards. The Swiss Central Bank has announced that they will
exclude coal investments from its massive holdings. The European
Central Bank conducts stress testing with respect to climate.
Do you believe that the United States is behind the rest of the
world when it comes to mitigating the risk that climate change
poses to our financial system and the commitments we are willing
to make to do so?
Mr. POWELL. I take it you are asking me that question, or were
you asking Secretary Yellen?
Ms. OCASIO-CORTEZ. Oh, I apologize. I was asking Secretary
Yellen, but Chairman Powell, you are welcome to weigh in as well.
Mr. POWELL. Thank you. I am really focused on our domestic
context and doing what we think is right under our laws and our
authorities as the Fed, and I would say that principally what we
are working on is regulation and supervision of the largest finan-
cial institutions, and also financial stability, more broadly.
Ms. OCASIO-CORTEZ. A May report from the International Energy
Agency (IEA) found that new fossil fuel exploration extraction was
incompatible with a 1.5 degree Celsius objective, and that, ‘‘There
is no need for investment in new fossil fuel supply in our net zero
pathway.’’ And with respect to the U.S. mitigating the catastrophic
impacts of essentially going beyond 1.5, potentially going beyond 2
degrees Celsius, do we agree—or, Secretary Yellen, do you agree
with this assessment that we should consider phasing out invest-
ments in new fossil fuel supplies?
Secretary YELLEN. I certainly learned a lot from the IEA report
and have no basis to question their judgment. As Chair Powell in-

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
31

dicated, the FSOC’s mission and the Fed’s mission is safety and
soundness of financial institutions, and we don’t have authority to
tell institutions that they must pursue lending policies that support
the Paris commitment. But it is very noticeable that at Glasgow,
all of the major global financial institutions voluntarily committed
to align their lending with the Paris commitments, and certainly,
Treasury will be monitoring very closely their performance, and we
are heartened to see these important commitments.
Ms. OCASIO-CORTEZ. Thank you very much.
Chairwoman WATERS. Thank you very much. The gentlelady’s
time has expired.
The gentleman from Oklahoma, Mr. Lucas, is now recognized for
5 minutes.
Mr. LUCAS. Thank you, Madam Chairwoman, for holding this
hearing, and thank you, Chair Powell and Secretary Yellen, for ap-
pearing before the committee, and like my colleagues, Chairman
Powell, I would like to congratulate you on your renomination for
another term. I would acknowledge to you that I am not sure the
President did you a favor, but thank you for being willing to do this
again.
That said, let’s talk about a number of issues, and I will try and
roll through them in some sort of a concise fashion. Since the onset
of the pandemic, the United States has added more than $5 trillion
to its total national debt, standing at about $29 trillion. And as the
Secretary has alluded to, apparently we need to raise the debt ceil-
ing very soon to address that even. And that doesn’t count the
extra trillions that have gone on the Federal Reserve System’s bal-
ance sheet. The U.S. is now set to exceed the debt-to-GDP ratio in
a way not seen since the end of the Second World War.
Chairman Powell, speak to us from a macroeconomic perspective.
When is the right time to prioritize the threat of U.S. debt rapidly
outpacing economic growth? We have spent a lot of money in the
last couple of years.
Mr. POWELL. And as I generally would say, as is appropriate, I
think, for me to say in my role, the U.S. needs to get back on a
sustainable fiscal path. The right time to do that is when the econ-
omy is strong, when the taxes are rolling in, when employment is
high, and the right way to do it is to have a longer-term plan really
to get the economy growing faster than the debt. By definition, it
is unsustainable to have the debt ultimately growing faster than
the economy, and we have that now.
Mr. LUCAS. Chairman, you and I were both young men in the
Carter-Reagan period, under your predecessor, Chairman Volcker,
when we went through an inflationary cycle that was even more
horrendous than this, and the effort that it took to bring that pe-
riod to a conclusion. I guess I would like to visit, for a moment, just
about the fundamental issues, again, not addressing particular leg-
islation, just the fundamental issues.
The amount of money, through congressional activity, that we
put into circulation, and in 2020, I think in a bipartisan way we
voted an incredible amount of money out of this place, because the
wheels were coming off in the spring and summer of 2020 with
COVID, and no one wanted to return to a 1929, 1941 period. So,
we were willing to do whatever it took.

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
32

But that now brings us to this point of addressing inflation and
getting a grip on that. Could you describe how—and I know you
don’t comment on legislation—policymakers at the Fed evaluate
the results of these kinds of forecasts on the economy?
Mr. POWELL. What we are really looking at is so many things
cause inflation, but really it is an imbalance between supply and
demand. In the real economy, that is what it is about. And we ac-
tually see fiscal stimulus, that the stimulative aspect of fiscal pol-
icy is actually declining and will turn into a headwind next year.
You have to distinguish between the change in the level, if you
will. So, as deficits are coming down overall, you are going to see
less in the way of fiscal stimulus to grow off of this high level of
growth that we have. We had a very stimulative 2020, if that
makes sense.
Mr. LUCAS. The buzz will lead to a hangover. Yes.
Mr. POWELL. What we are looking at is another strong year next
year. Most forecasters see strong growth, but they also see the sup-
ply chains getting untangled, and they see the economy, the supply
side rising to meet strong demand, and we see inflation coming
down. Again, it is not a certainty. It is a forecast.
Mr. LUCAS. But the balancing act of policymakers, as the supply
increases we still have to address the money that is available to
chase those few resources or this process won’t come to an end.
Turning to you, Secretary, we have discussed, several of my col-
leagues have, climate-related issues. I am concerned, coming from
a district that produces lots of different forms of energy, and con-
sumes massive amounts of different forms of energy, that when the
majority can’t pass a bill to outlaw certain forms of energy, and
they can’t pass a bill to tax it to death, that the route they are
going to take is to use regulatory policy to strangle the capital
available to those industries.
Could you touch on that for a moment? Is it the intention of the
regulators to create standards such that banks cannot support any
particular energy industry that may ask for capital, that may jus-
tify a loan?
Secretary YELLEN. As Chair of FSOC, I would say our focus is
on financial stability, and the regulators, like the Federal Reserve,
are focused on safety and soundness of institutions, and that
means making sure they hold adequate capital to manage the risk.
Mr. LUCAS. There is a fascinating report from the New York
Fed—
Secretary YELLEN. It is not a—
Mr. LUCAS. —that I hope you will review. With that I yield back,
Madam Chairwoman.
Chairwoman WATERS. Thank you very much.
The gentleman from Illinois, Mr. Garcia, is now recognized for 5
minutes.
Mr. GARCIA OF ILLINOIS. Thank you, Madam Chairwoman, and
of course, I thank you and the ranking member for convening this
hearing. And, of course, thank you to our witnesses for joining us
today to discuss the CARES Act oversight and our pandemic re-
sponse. From when we passed the CARES Act until today, we have
made remarkable progress. Our recovery has been impressive, es-

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
33

pecially compared to other countries, but it has been uneven and
unequal as well. It is our job to fix that.
Secretary Yellen, I represent a working-class, immigrant district,
including many families with children. In fact, it’s one of the
youngest districts in the country. The stimulus checks and the
child tax credit were vital in my community. That is why I have
fought so hard to ensure that mixed-status families and Individual
Taxpayer Identification Number (ITIN) holders are finally able to
access these vital benefits in the American Rescue Plan. More than
half of Latino children have at least one immigrant parent, and at
least 90 percent of these children are U.S. citizens, meaning they
are entitled to these benefits, but they often can’t get them.
The question for you—millions of ITINs expired at the end of last
year, and the ITIN process is plagued by delays. Sometimes, the
IRS holds onto original documents for months, a terrifying prospect
for an immigrant family. What are Treasury and the IRS doing to
streamline the application process for ITIN filers?
Secretary YELLEN. I can get back to you, or have my staff, with
greater detail on this. But we have been trying to speed the deliv-
ery, for example, of the child tax payments to individuals who
didn’t file a return in either 2019 or 2020. Many ITINs may be in
that category, and it has been an objective of our outreach to make
sure that there are tools available to apply for those payments. We
made an application available on mobile devices that is in Spanish
as well, to try to make sure that they receive the payments they
are entitled to, but I would be glad to get back to you with more
detail on this.
Mr. GARCIA OF ILLINOIS. Thank you. I will take you up on that
and follow up with you and your folks.
Data shows that Latinos are less likely than Whites to report re-
ceiving monthly child tax credit payments. This is disturbing, since
Latino children are more likely to live in poverty. What can Treas-
ury and the IRS do to monitor the success of the tax credit in the
Latino community and what can Congress do to ensure that the tax
credit reaches everyone that is entitled to it?
Secretary YELLEN. I would just say that we have tried, through
an extensive outreach program, and working with Members of Con-
gress as well, to make sure that there is awareness, especially in
low-income and minority communities of eligibility for these pay-
ments, especially the child tax payments. And it is a question of
getting the world out and making sure that families know how to
apply.
Mr. GARCIA OF ILLINOIS. And do you think that Members of Con-
gress have any other role to help ensure that everyone who is eligi-
ble gets it?
Secretary YELLEN. We have asked Members of Congress to help
us get the word out. The IRS has had an extensive outreach pro-
gram, but certainly Members of Congress can help publicize the
availability of these benefits in their districts.
Mr. GARCIA OF ILLINOIS. Thank you, Secretary. I look forward to
following up with you and, of course, working together to ensure
that these benefits reach every community in this country.
Thank you, Madam Chairwoman. I yield back.
Chairwoman WATERS. Thank you.

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
34

The gentleman from Missouri, Mr. Luetkemeyer, is now recog-
nized for 5 minutes.
Mr. LUETKEMEYER. Thank you, Madam Chairwoman.
Chairman Powell, congratulations on your renomination. I look
forward to working with you over your next 4 years.
Also, Chairman Powell, the Fed oversees 753 financial institu-
tions for compliance, with numerous measures related to the safety
and soundness of the banking system. If one of those institutions
chose to not follow a law passed by Congress or a rule the Fed pro-
mulgated, the Fed can take a myriad of enforcement actions includ-
ing cease and desist orders, removal and prohibition orders, and
monetary policies. In other words, if you break the law, there are
consequences. Isn’t that correct?
Mr. POWELL. That is correct.
Mr. LUETKEMEYER. Thank you. Secretary Yellen, do you believe
the Fed should punish those entities when they decide not to follow
the law? Do you believe that the Fed should punish those entities
when they do not follow the law? Those banks, if they are not fol-
lowing the law?
Secretary YELLEN. Yes, if they don’t follow the law.
Mr. LUETKEMEYER. Thank you. If you are going to hold the banks
and society accountable to the law, shouldn’t we also hold Cabinet
members accountable when they do not follow the law?
Secretary YELLEN. Yes.
Mr. LUETKEMEYER. Thank you for that. Secretary Yellen, I am
the ranking member of the House Small Business Committee, as
you well know. The CARES Act put the Secretary of the Treasury
in charge of the PPP program. You, by law, were supposed to show
up by the end of April, April 23rd, which is now 222 days, over 7
months, and you will get to grace the threshold of that committee
hearing room and give your report. Why do you continue to ignore
and thumb your nose at the Small Business Committee and your
job to adhere to the law, which you just said is important as a Cab-
inet member?
Secretary YELLEN. I believe that congressional oversight is very
important, and that Congress and committees should be partners
with us in serving the American people. I have, over the last 10
months, testified 12 times, and—
Mr. LUETKEMEYER. Madam Chairwoman, with all due respect,
you are not answering my question. It is very specific. Yes, you
have been able to accommodate every other committee on this Hill
except the Small Business Committee, which you are required, by
law, to show up to. Why are you not there?
Secretary YELLEN. Well, I—
Mr. LUETKEMEYER. Why are you not at the Small Business Com-
mittee?
Secretary YELLEN. —do have the ability to delegate responsibil-
ities—
Mr. LUETKEMEYER. You have not delegated to anybody yet. There
is nobody who has shown up for 222 days now, past—
Secretary YELLEN. I have offered my Deputy Treasury Secretary
to testify before the committee, and—
Mr. LUETKEMEYER. Madam Secretary—
Secretary YELLEN. —that is something that I do have—

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
35

Mr. LUETKEMEYER. —reclaiming my time, with all due respect,
you do not delegate an authority like that. You are required by law
to show up. As you just said, multiple times, you have been to
other hearings across the spectrum of the House and the Senate,
and yet you refuse to come to the Small Business Committee. Is it
beneath you to show up at our committee hearing, which is against
the law, by the way?
Secretary YELLEN. —the Treasury has had, during the Biden Ad-
ministration, essentially no role in the Paycheck Protection Pro-
gram.
Mr. LUETKEMEYER. Well, that is a problem for the Biden Admin-
istration. That is not the problem of the—you should be doing your
job.
Secretary YELLEN. It is the Small Business Administration that
has responsibility—
Mr. LUETKEMEYER. No, it does not, Madam Secretary.
Secretary YELLEN. —for conducting—
Mr. LUETKEMEYER. Madam Secretary, with all due respect, it
does not. The CARES Act gave the Secretary of the Treasury au-
thority over that. I spent 2 or 3 weeks with the leadership team
of this committee, working with Secretary Mnuchin, to put that
plan together. It is in your purview. It is in your jurisdiction. It is
your job to oversee that particular program, and it is your job to
be able to report on it, as per the law. You just thumb your nose
at the law over and over again. It can’t continue.
As you just said, there should be consequences to Cabinet mem-
bers who do not follow the law. Amazing. It is breathtaking.
I have about a minute left, so let me move on quickly here.
Chairman Powell, I am very concerned about the continued in-
vestment in China by all of the folks in this country, the invest-
ment folks. To me, it falls under monetary policy, but I will see
what your opinion is here.
As we continue to throw more money in the economy, it seems
like there is more money that is shifting over to China and invest-
ing in the Chinese bonds, they are investing in their companies, we
are investing in their securities. Are you alarmed by this at all, by
our investing in China and their economy, which would be com-
peting against us and would have a direct impact on our economic
ability to survive down the road?
Mr. POWELL. Representative Luetkemeyer, we really don’t have
a role in that. The SEC would have a role. If investors are invest-
ing in Chinese bonds and things like that, that would really be an
issue for the SEC but not so much for us.
Mr. LUETKEMEYER. Are you concerned about it at all, the level
of investment over there?
Mr. POWELL. I am mostly concerned about inflation and stable
prices and maximum employment here at home.
Mr. LUETKEMEYER. Okay. Well, that investment, I think, would
have a dramatic impact because of the money flowing in there
versus it is flowing back here. To me, it would be able to set up
our own supply chains over here to be able to be more helpful.
Thank you very much. I yield back.
Chairwoman WATERS. Thank you very much.

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
36

I would like to thank Secretary Yellen and Chair Powell for their
testimony today.
The Chair notes that some Members may have additional ques-
tions for these witnesses, which they may wish to submit in writ-
ing. Without objection, the hearing record will remain open for 5
legislative days for Members to submit written questions to these
witnesses and to place their responses in the record. Also, without
objection, Members will have 5 legislative days to submit extra-
neous materials to the Chair for inclusion in the record.
With that, this hearing is adjourned.
[Whereupon, at 12:14 p.m., the hearing was adjourned.]

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 K:\DOCS\HBA335.000 TERRI
APPENDIX

December 1, 2021

(37)

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00041 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
38

Insert offset folio 1 here 46301.001

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00042 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
39

Insert offset folio 2 here 46301.002

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00043 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
40

Insert offset folio 3 here 46301.003

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00044 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
41

Insert offset folio 4 here 46301.004

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00045 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
42

Insert offset folio 5 here 46301.005

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00046 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
43

Insert offset folio 6 here 46301.006

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00047 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
44

Insert offset folio 7 here 46301.007

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00048 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
45

Insert offset folio 8 here 46301.008

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00049 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
46

Insert offset folio 9 here 46301.009

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00050 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
47

Insert offset folio 10 here 46301.010

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00051 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
48

Insert offset folio 11 here 46301.011

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00052 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
49

Insert offset folio 12 here 46301.012

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00053 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
50

Insert offset folio 13 here 46301.013

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00054 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
51

Insert offset folio 14 here 46301.014

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00055 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
52

Insert offset folio 15 here 46301.015

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00056 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
53

Insert offset folio 16 here 46301.016

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00057 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
54

Insert offset folio 17 here 46301.017

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00058 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
55

Insert offset folio 18 here 46301.018

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00059 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
56

Insert offset folio 19 here 46301.019

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00060 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
57

Insert offset folio 20 here 46301.020

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00061 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
58

Insert offset folio 21 here 46301.021

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00062 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
59

Insert offset folio 22 here 46301.022

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00063 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
60

Insert offset folio 23 here 46301.023

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00064 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
61

Insert offset folio 24 here 46301.024

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00065 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
62

Insert offset folio 25 here 46301.025

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00066 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
63

Insert offset folio 26 here 46301.026

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00067 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
64

Insert offset folio 27 here 46301.027

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00068 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
65

Insert offset folio 28 here 46301.028

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00069 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
66

Insert offset folio 29 here 46301.029

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00070 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
67

Insert offset folio 30 here 46301.030

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00071 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI
68

Insert offset folio 31 here 46301.031

VerDate Nov 24 2008 16:59 Feb 25, 2022 Jkt 095071 PO 00000 Frm 00072 Fmt 6601 Sfmt 6601 K:\DOCS\HBA335.000 TERRI

File and source

File: CHRG_CHRG-117hhrg46301_CHRG-117hhrg46301.pdf
Size: 8,669,019 bytes
SHA-256: 67cfb8cddad41265cffdfad6bd684ab126630587d003ea7709718538c425bcd5
Our copy: CHRG_CHRG-117hhrg46301_CHRG-117hhrg46301.pdf
Original: www.govinfo.gov