Treasury Secretary Steven Mnuchin urged Congress to appropriate more money to combat the effects of the coronavirus pandemic, saying at a hearing yesterday that he was ready to sit down with Democratic leaders to resume negotiations at any time, the Wall Street Journal reported. For more than a month since key provisions of the landmark CARES Act expired, Democrats and Republicans have been at loggerheads over the size and content of another relief package. House Democrats in May proposed an additional $3.5 trillion of relief, while Senate Republicans rolled out a $1 trillion bill in July. Without a new agreement, jobless workers have gone without a $600 federal supplement to weekly unemployment insurance since July 31, and a federal eviction moratorium expired on July 25, leaving millions of tenants at risk of losing their homes. In yesterday’s hearing, Mnuchin suggested that the gap between the two sides may be narrowing and mentioned a new, higher number for the administration’s proposed ceiling for a follow-on bill: $1.5 trillion. The secretary also indicated that the Trump administration has softened its opposition to a Democratic proposal to apportion more money for state and local governments. Read more. (Subscription required.)
In related news, Fed Governor Lael Brainard said yesterday that the Federal Reserve “in coming months” will need to roll out new efforts to help the economy overcome the impact of the coronavirus pandemic and live up to the U.S. central bank’s new promise of stronger job growth and higher inflation, Reuters reported. “With the recovery likely to face COVID-19-related headwinds for some time, in coming months, it will be important for monetary policy to pivot from stabilization to accommodation,” Brainard said, and do what’s appropriate to hit the new goals of “maximum employment and average inflation of 2% over time.” That decision “will be guided” by the new strategy which trades risks of higher inflation with efforts to promote further job growth, she said. Brainard, among the architects of the new long-term strategy the central bank adopted last week, is the first Fed official to tie that new approach directly to the need for further monetary stimulus, likely in the form of more aggressive bond-buying or more ambitious promises about returning the country to low unemployment. Read more.
