Fed's Powell clearly backs Democrats' large-scale stimulus proposal, Sen. Sherrod Brown says
Hollis Johnson/Business Insider
- It's "clear" Fed Chair Powell supports large-scale fiscal stimulus, Sen. Sherrod Brown said Tuesday.
- Passing too-little a plan risks "long-ter, generational scarring" in the economy, the senator added.
- Wealthy Americans have recovered but new stimulus is needed to lift lower-income groups, Brown said.
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Federal Reserve Chair Jerome Powell's testimony to the Senate Banking Committee further supported President Joe Biden's call for massive fiscal support, Sen. Sherrod Brown said Tuesday.
The central bank chief completed the first of his two regular hearings on the state of the economy on Tuesday, emphasizing to senators that, though his outlook has improved, the economy remains far from a full rebound. Powell, in typical Fed-chair behavior, avoided directly addressing fiscal policy and Democrats' $1.9 trillion proposal, and instead eased inflation concerns and highlighted the importance of economic equality.
The omission of explicit support for new stimulus shouldn't worry Democrats, Brown said in a Bloomberg TV interview.
"It's clear though that [Powell] thinks we need to go big, as President Biden does," the Senate Banking Committee Chairman said, adding an inadequate response to the pandemic risks "long-term, generational scarring" in the economy.
Powell began testifying to the House Financial Services Committee at 10 a.m. ET on Wednesday.
The Fed chair displayed a markedly more optimistic view of the recovery on Tuesday. Falling daily COVID-19 case counts and vaccine rollouts "offer hope for a return to more normal conditions later this year," Powell said in his opening remarks.
Still, the path to pre-pandemic levels of activity remains "highly uncertain" and hinges on the spread of the virus, the central bank chief said. Brown reiterated the cautious outlook. Wealthy Americans have largely bounced back, but minorities and lower-income communities are still stuck in a harsh downturn, the senator said.
"We're not at the place yet where this economy is going to take off," he said. "Most people in this country still need help and we need to move to do that."
The committee chair also urged the importance of learning from the last recession recovery. The government's fiscal-stimulus response to the financial crisis garnered criticism over the past decade for doing too little to fuel growth. The lack of adequate state and local government aid, in particular, dragged on the pace of recovery.
Making the same mistake today could leave Americans hit hardest by the pandemic at an economic disadvantage for years to come, Brown said.
"Many people still haven't really recovered from [the financial crisis]," he added. "We've got to make sure that doesn't happen here."
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