Capitol Hill Economic Week’s Roundup

Update 688: Capitol Hill Econ. Week’s Roundup
McCarthy Muscles Through Debt Bill; Biden to Run

This week saw the release of GDP and inflation data that will largely guide the Federal Open Market Committee in its monetary policy meeting early next week. The meeting comes amidst renewed concern over the stability of First Republic Bank, whose fate is uncertain after shares plummeted drastically this week. Will it find a buyer? Or be the next to crumble? More on that next week. 

Today’s update sheds light on these recent data reports and highlights some of the most notable economic policy activity on the Hill this week. From the passage of Kevin McCarthy’s infamous debt limit bill to the ten-hour long House Financial Services markup, we have everything you need to know. See below. 

Good weekends all… 

Dana


Highlights of the Week 

  • Biden Announces Bid for Reelection; “Not a Time to be Complacent” 

During the early hours of Tuesday morning, President Joe Biden took to social media to formally announce his bid for reelection in the 2024 presidential race. In a three-minute long video posted to Twitter, Biden touted his administration’s historic legislative accomplishments and highlighted the importance of personal freedoms and equal opportunity under his first term as Commander in Chief. 

Perhaps more notably, the President used this opportunity to seize on the GOP madness, emphasizing that our democracy is still at risk and faces an immense threat from former President Donald Trump. Biden argued that “MAGA extremists are lining up to take on our bedrock freedoms,” and cited some of the Republican Party’s most devastating threats, including stripping Social Security, cutting taxes from the ultrawealthy, and dictating what healthcare decisions women can make, among other things. 

Albeit long-awaited, Biden’s message was strong and clear: the fight for our democracy is incomplete and “this is not a time to be complacent.” The 80-year-old will spend the next 18 months working to boost his approval ratings among voters and ultimately try and convince the American people to let him finish the job and re-elect him to a second term as president of the United States.  

  • House Passes Drastic Debt Limit Bill

On Wednesday night, the House passed the Limit, Save, Grow Act, largely along party lines. Only four Republicans voted against the bill, which would immediately slash discretionary spending in Fiscal Year 2024 by 13 percent in inflation-adjusted terms and impose a 1 percent annual cap on growth over the next ten years, resulting in a cut of 24 percent by 2034. According to the Center on Budget and Policy Priorities, protecting both defense and veterans’ health care would require cutting other discretionary programs by 33 percent in 2024 and 59 percent in 2025. 

The bill also expands requirements for SNAP, Medicaid, and TANF beneficiaries, many of whom would be at risk of losing their benefits due to difficulties navigating red tape. The Department of Health and Human Services estimates that the new rules would put 21 million Americans at risk of losing their healthcare coverage, and CBO estimates that 275,000 people on average would lose their SNAP benefits each month. Imposing these additional requirements would save the federal government approximately $120 billion over ten years by taking healthcare, food, and income assistance away from currently eligible beneficiaries. These savings roughly equal the cost of rescinding funds provided to the IRS in the Inflation Reduction Act to expand enforcement activity.

The bill will not pass the Senate, and President Biden has announced that he would veto it if it ever reached his desk. However, Republicans are hoping that their show of unified support for the extreme measures in the Limit, Save, Grow Act will give them leverage in negotiations with the White House and Congressional Democrats, who have refused to negotiate over the full faith and credit of the United States.

20/20’s Top Numbers of the Week 

  •  1st Qtr GDP Data, March PCE

The Bureau of Economic Analysis released its GDP advance estimate for the first quarter of 2023 this week. Real GDP grew at an annual rate of 1.1 percent in the first portion of this year, a slowdown from the previous quarter, which clocked in at 2.6 percent. The slowdown was driven primarily by downturns in private inventory investment and nonresidential fixed investment.

Last month the personal consumption expenditures price index (PCE) – the inflation measure primarily used by the Federal Reserve in determining its policy choices – increased by 0.1 percent following a 0.3 percent increase in the prior month. Consumer prices ticked up 4.2 percent year on year. Meanwhile, core PCE increased 0.3 percent, in line with the previous month. The numbers are unlikely to significantly shift the Federal Reserve Board’s attitude ahead of its meeting next week.

  • First Republic Bank

This week, shares in First Republic Bank fell as fears grew that the bank would fail, or possibly be rescued. While the bank’s efforts to reach a deal seem unlikely to succeed and government officials continue to coordinate talks to rescue the bank, we will be watching as the situation evolves over the weekend and into next week. 

This comes after 11 of America’s 20 largest banks injected a combined $30 billion into First Republic Bank in March. At the end of 2022, First Republic Bank was the 14th-largest U.S. bank and had $213 billion in assets. 

Hearings & Markups

  • House Financial Services Ten-Hour Marks Up of Capital Market and CFPB Bills

This week, the House Financial Services Committee held a contentious ten-hour markup of 15 bills. Ranking Member Maxine Waters (D-CA) began the hearing by citing Chair Patrick McHenry’s (R-NC) unexpected addition of two partisan legislative packages — the CFPB Transparency and Accountability Reform Act and the Expanding Access to Capital Act — and the standalone Improving Disclosure for Investors Act. 

The bills under consideration primarily focused on adjusting the rules that govern capital markets. These include bills that would expand the definition of an accredited investor to allow those with demonstrated expertise to invest in private markets, despite having a net worth below the current required threshold of $1 million. 

One partisan package — the Expanding Access to Capital Act — combines 19 bills discussed in a series of four hearings held by the Subcommittee on Capital Markets. The package would deregulate venture capital funds by weakening disclosures and legal protections investors rely on to keep capital markets safe.

The CFPB Transparency and Accountability Reform Act continues Republicans’ ongoing attack on the Consumer Financial Protection Bureau and its work to protect consumers. The package combines seven bills discussed in the Subcommittee on Financial Institutions and Monetary Policy’s hearing specifically targeting the Bureau last month. It would abolish the Bureau’s single director leadership structure, move the Bureau into the appropriations process, and add requirements that make it harder for the Bureau to issue guidance, orders, rules, and regulations. 

Ranking Member Waters entered into the record a letter that consumer advocacy organizations including 20/20 Vision signed on to, opposing the package which every Democrat present voted against. While two Republican members joined Democrats in opposing the package, they did so because they thought the package did not go far enough in attacking the CFPB and have publicly supported the Bureau’s abolition. 

  • Senate Banking Eyes Credit Reporting Agencies 

On Thursday, the heads of the three major nationwide consumer reporting companies Equifax, TransUnion, and Experian testified before the Senate Committee on Banking, Housing, and Urban Affairs. 

Several senators, including Chair Sherrod Brown (D-OH) and Senator Elizabeth Warren (D-MA), focused their questioning on the continued inclusion of medical debt in many credit reports although the incurrence of such debt is not predictive of creditworthiness. In 2022, the CFPB found that medical collections tradelines appear on 43 million credit reports, totaling about $88 billion. When pushed by Brown, every CEO present refused to commit to removing medical debt from the credit reports they issue. 

The hearing also considered the potential expansion of the use of alternative or nontraditional data, including utility and cell phone bills, in credit reports. When pushed on the need to make tenant screening reports available to tenants whose applications may have been rejected multiple times by landlords, the CEO of TransUnion, the agency most relevant to the issue, did not commit to allowing tenants access to that information. He instead placed the responsibility on individual landlords. 

  • Senate Banking Surveys Housing 

The Senate Committee on Banking, Housing, and Urban Affairs convened on Wednesday for their second housing-focused hearing of the year, as members explored various ways and means to address America’s housing crisis. The hearing focused predominantly on ways to address the lack of housing stock in the U.S. – a years-old issue that was only exacerbated by the pandemic – and also touched largely on the racial wealth gap in homeownership, private equity interference in the market, and reforms on federal land use. 

Key members of the committee used this hearing as an opportunity to introduce and/or highlight previous forms of legislation that work to address housing accessibility and availability in America, including but not limited to: 

Housing policy and the need for reform have been largely ignored over the past several years despite it being a highly bipartisan issue. These bills prove that members on both sides of the aisle agree there is a problem, but the likelihood of finding consensus in this Congress – let alone passing a bill – is marginal at best. 

  • Senate HELP Advances Su to Labor Secretary

The Senate Health, Education, Labor, and Pensions Committee voted along party lines on Wednesday to advance the nomination of Judy Su for Labor Secretary. Su faces staunch opposition from Republicans and business groups, who have criticized her support for a California law aimed at protecting workers from misclassification. The former California Labor Secretary has strong support from HELP Committee Democrats and unions but faces a tough vote in the full chamber between recent absences and a small number of undecided Democrats in vulnerable seats.

Coming Up Next Week

The House will break for recess next week while the Senate remains in session. The FOMC will have its next meeting on Tuesday and Wednesday when the Fed is expected to raise rates by another 25 basis points.

Today the Fed, FDIC, and GAO released reports on last month’s failures of Silicon Valley Bank and Signature Bank. The reports detail the failures of bank management and the regulators’ supervision and regulation of the banks ahead of their collapses. These reviews provide the most comprehensive look yet at the supervisory and regulatory issues that agencies and legislators must examine to shore up stability in the financial system.  

Update 688: Capitol Hill Econ. Week’s Roundup
McCarthy Muscles Through Debt Bill; Biden to Run

This week saw the release of GDP and inflation data that will largely guide the Federal Open Market Committee in its monetary policy meeting early next week. The meeting comes amidst renewed concern over the stability of First Republic Bank, whose fate is uncertain after shares plummeted drastically this week. Will it find a buyer? Or be the next to crumble? More on that next week. 

Today’s update sheds light on these recent data reports and highlights some of the most notable economic policy activity on the Hill this week. From the passage of Kevin McCarthy’s infamous debt limit bill to the ten-hour long House Financial Services markup, we have everything you need to know. See below. 

Good weekends all… 

Dana


Highlights of the Week 

  • Biden Announces Bid for Reelection; “Not a Time to be Complacent” 

During the early hours of Tuesday morning, President Joe Biden took to social media to formally announce his bid for reelection in the 2024 presidential race. In a three-minute long video posted to Twitter, Biden touted his administration’s historic legislative accomplishments and highlighted the importance of personal freedoms and equal opportunity under his first term as Commander in Chief. 

Perhaps more notably, the President used this opportunity to seize on the GOP madness, emphasizing that our democracy is still at risk and faces an immense threat from former President Donald Trump. Biden argued that “MAGA extremists are lining up to take on our bedrock freedoms,” and cited some of the Republican Party’s most devastating threats, including stripping Social Security, cutting taxes from the ultrawealthy, and dictating what healthcare decisions women can make, among other things. 

Albeit long-awaited, Biden’s message was strong and clear: the fight for our democracy is incomplete and “this is not a time to be complacent.” The 80-year-old will spend the next 18 months working to boost his approval ratings among voters and ultimately try and convince the American people to let him finish the job and re-elect him to a second term as president of the United States.  

  • House Passes Drastic Debt Limit Bill

On Wednesday night, the House passed the Limit, Save, Grow Act, largely along party lines. Only four Republicans voted against the bill, which would immediately slash discretionary spending in Fiscal Year 2024 by 13 percent in inflation-adjusted terms and impose a 1 percent annual cap on growth over the next ten years, resulting in a cut of 24 percent by 2034. According to the Center on Budget and Policy Priorities, protecting both defense and veterans’ health care would require cutting other discretionary programs by 33 percent in 2024 and 59 percent in 2025. 

The bill also expands requirements for SNAP, Medicaid, and TANF beneficiaries, many of whom would be at risk of losing their benefits due to difficulties navigating red tape. The Department of Health and Human Services estimates that the new rules would put 21 million Americans at risk of losing their healthcare coverage, and CBO estimates that 275,000 people on average would lose their SNAP benefits each month. Imposing these additional requirements would save the federal government approximately $120 billion over ten years by taking healthcare, food, and income assistance away from currently eligible beneficiaries. These savings roughly equal the cost of rescinding funds provided to the IRS in the Inflation Reduction Act to expand enforcement activity.

The bill will not pass the Senate, and President Biden has announced that he would veto it if it ever reached his desk. However, Republicans are hoping that their show of unified support for the extreme measures in the Limit, Save, Grow Act will give them leverage in negotiations with the White House and Congressional Democrats, who have refused to negotiate over the full faith and credit of the United States.

20/20’s Top Numbers of the Week 

  •  1st Qtr GDP Data, March PCE

The Bureau of Economic Analysis released its GDP advance estimate for the first quarter of 2023 this week. Real GDP grew at an annual rate of 1.1 percent in the first portion of this year, a slowdown from the previous quarter, which clocked in at 2.6 percent. The slowdown was driven primarily by downturns in private inventory investment and nonresidential fixed investment.

Last month the personal consumption expenditures price index (PCE) – the inflation measure primarily used by the Federal Reserve in determining its policy choices – increased by 0.1 percent following a 0.3 percent increase in the prior month. Consumer prices ticked up 4.2 percent year on year. Meanwhile, core PCE increased 0.3 percent, in line with the previous month. The numbers are unlikely to significantly shift the Federal Reserve Board’s attitude ahead of its meeting next week.

  • First Republic Bank

This week, shares in First Republic Bank fell as fears grew that the bank would fail, or possibly be rescued. While the bank’s efforts to reach a deal seem unlikely to succeed and government officials continue to coordinate talks to rescue the bank, we will be watching as the situation evolves over the weekend and into next week. 

This comes after 11 of America’s 20 largest banks injected a combined $30 billion into First Republic Bank in March. At the end of 2022, First Republic Bank was the 14th-largest U.S. bank and had $213 billion in assets. 

Hearings & Markups

  • House Financial Services Ten-Hour Marks Up of Capital Market and CFPB Bills

This week, the House Financial Services Committee held a contentious ten-hour markup of 15 bills. Ranking Member Maxine Waters (D-CA) began the hearing by citing Chair Patrick McHenry’s (R-NC) unexpected addition of two partisan legislative packages — the CFPB Transparency and Accountability Reform Act and the Expanding Access to Capital Act — and the standalone Improving Disclosure for Investors Act. 

The bills under consideration primarily focused on adjusting the rules that govern capital markets. These include bills that would expand the definition of an accredited investor to allow those with demonstrated expertise to invest in private markets, despite having a net worth below the current required threshold of $1 million. 

One partisan package — the Expanding Access to Capital Act — combines 19 bills discussed in a series of four hearings held by the Subcommittee on Capital Markets. The package would deregulate venture capital funds by weakening disclosures and legal protections investors rely on to keep capital markets safe.

The CFPB Transparency and Accountability Reform Act continues Republicans’ ongoing attack on the Consumer Financial Protection Bureau and its work to protect consumers. The package combines seven bills discussed in the Subcommittee on Financial Institutions and Monetary Policy’s hearing specifically targeting the Bureau last month. It would abolish the Bureau’s single director leadership structure, move the Bureau into the appropriations process, and add requirements that make it harder for the Bureau to issue guidance, orders, rules, and regulations. 

Ranking Member Waters entered into the record a letter that consumer advocacy organizations including 20/20 Vision signed on to, opposing the package which every Democrat present voted against. While two Republican members joined Democrats in opposing the package, they did so because they thought the package did not go far enough in attacking the CFPB and have publicly supported the Bureau’s abolition. 

  • Senate Banking Eyes Credit Reporting Agencies 

On Thursday, the heads of the three major nationwide consumer reporting companies Equifax, TransUnion, and Experian testified before the Senate Committee on Banking, Housing, and Urban Affairs. 

Several senators, including Chair Sherrod Brown (D-OH) and Senator Elizabeth Warren (D-MA), focused their questioning on the continued inclusion of medical debt in many credit reports although the incurrence of such debt is not predictive of creditworthiness. In 2022, the CFPB found that medical collections tradelines appear on 43 million credit reports, totaling about $88 billion. When pushed by Brown, every CEO present refused to commit to removing medical debt from the credit reports they issue. 

The hearing also considered the potential expansion of the use of alternative or nontraditional data, including utility and cell phone bills, in credit reports. When pushed on the need to make tenant screening reports available to tenants whose applications may have been rejected multiple times by landlords, the CEO of TransUnion, the agency most relevant to the issue, did not commit to allowing tenants access to that information. He instead placed the responsibility on individual landlords. 

  • Senate Banking Surveys Housing 

The Senate Committee on Banking, Housing, and Urban Affairs convened on Wednesday for their second housing-focused hearing of the year, as members explored various ways and means to address America’s housing crisis. The hearing focused predominantly on ways to address the lack of housing stock in the U.S. – a years-old issue that was only exacerbated by the pandemic – and also touched largely on the racial wealth gap in homeownership, private equity interference in the market, and reforms on federal land use. 

Key members of the committee used this hearing as an opportunity to introduce and/or highlight previous forms of legislation that work to address housing accessibility and availability in America, including but not limited to: 

Housing policy and the need for reform have been largely ignored over the past several years despite it being a highly bipartisan issue. These bills prove that members on both sides of the aisle agree there is a problem, but the likelihood of finding consensus in this Congress – let alone passing a bill – is marginal at best. 

  • Senate HELP Advances Su to Labor Secretary

The Senate Health, Education, Labor, and Pensions Committee voted along party lines on Wednesday to advance the nomination of Judy Su for Labor Secretary. Su faces staunch opposition from Republicans and business groups, who have criticized her support for a California law aimed at protecting workers from misclassification. The former California Labor Secretary has strong support from HELP Committee Democrats and unions but faces a tough vote in the full chamber between recent absences and a small number of undecided Democrats in vulnerable seats.

Coming Up Next Week

The House will break for recess next week while the Senate remains in session. The FOMC will have its next meeting on Tuesday and Wednesday when the Fed is expected to raise rates by another 25 basis points.

Today the Fed, FDIC, and GAO released reports on last month’s failures of Silicon Valley Bank and Signature Bank. The reports detail the failures of bank management and the regulators’ supervision and regulation of the banks ahead of their collapses. These reviews provide the most comprehensive look yet at the supervisory and regulatory issues that agencies and legislators must examine to shore up stability in the financial system.