Update 837: Nomination Hearings Lead Week’s Roundup

January 30, 2025 | Banking, Child Tax Credit, Housing, Nominations, Stock Trading, tariffs, Taxes, Update, Weekly Round Up | By

Update 837 — Key Nomination Hearings,
CPI Report, CTC Bill Lead Week Roundup

This week, Trump’s nominees for Treasury Secretary, HUD Secretary, and OMB Director faced pointed questioning by Democratic Senators ahead of coming confirmation votes by the committees of jurisdiction and the full Senate. The three nominees addressed a broad range of economic issues with some sounding alarming views, but all appeared poised to be confirmed in the coming weeks. 

New data released this week also showed that core inflation – which has been in line with recent underlying price trends – ticked down slightly, showing inflation remaining relatively stable at slightly above three percent over the last six months. This week also saw the introduction of a bill to “expand” the Child Tax Credit promoting dangerous conservative priorities. We explore these developments, along with last week’s reintroduction of a strong bill to ban Congressional stock trading, below.

Good weekends all…

Best,

Dana

Headline

Trump’s Cabinet Picks Face Nomination Hearings

“Today, an oligarchy is taking shape in America of extreme wealth, power, and influence that literally threatens our entire democracy, our basic rights and freedoms, and a fair shot for everyone to get ahead.” President Biden’s warning to Americans, delivered in a farewell address in his final days in office, came as a swath of Trump’s nominees took to the Hill for confirmation hearings. 

Trump’s cabinet picks include multiple billionaires and, as Senator Bernie Sanders (I-VT) noted this week, three of Trump’s allies – Elon Musk, Jeff Bezos, and Mark Zuckerberg — are now worth almost $1 trillion, more than half of the bottom of our society, some 170 million people. 

The threat of Trump and his chosen economic leaders worsening existing wealth inequality to the benefit of themselves and their allies, at the expense of working Americans, was a consistent thread in key confirmation hearings this week. We cover these below. 

Scott Bessent, Treasury Secretary

Yesterday, Trump’s nominee for Treasury Secretary, Scott Bessent, came before the Senate Finance Committee for his confirmation hearing. As Treasury Secretary, Bessent – a hedge fund tycoon with no history of public service – would be largely responsible for U.S. economic policy, which was executed successfully under the Biden administration and current Treasury Secretary Janet Yellen, even if popularly underappreciated. 

The hearing kicked off on a positive note, with Bessent confirming to Finance Ranking Member Ron Wyden (D-OR) that Direct File – a tool that allows taxpayers to file their taxes for free, directly with the IRS – will remain available for the 2025 tax filing season. A pilot program for Direct File launched last year in 12 states with rave reviews: 90 percent of users rated their experience positively and 86 percent said it increased their trust in the IRS. This year, 30 million taxpayers in 25 states will be eligible for Direct File despite Republican efforts to kill the program at the behest of the tax preparation industry. But Bessent is not likely to support a strong or even adequately funded IRS and has himself been accused of skirting almost $1 billion in Medicare payroll taxes using a loophole the IRS has been and currently is trying to close. 

Bessent faced questioning on a myriad of additional issues of economic import that we cover below, including tax policy, trade policy/tariffs, and deregulation of the banking sector. 

Tax Policy 

Individual and estate provisions of the Tax Cuts and Jobs Act (TCJA) will expire at the end of this year, making tax policy perhaps the highest legislative economic policy priority for the incoming administration. In the hearing, Bessent reinforced his stance as a proponent of tax cuts and so-called “pro-growth” tax policy, arguing that extending expiring TCJA provisions is crucial to “getting our fiscal house in order” and failure to do so would lead to “economic crisis,” despite evidence from the CBO and leading organizations like the Tax Policy Center that the opposite is true. 

Democrats such as Finance Ranking Member Ron Wyden (D-OR) highlighted the skew of the TCJA toward wealthy individuals and corporations as well as the lack of evidence that resulting economic growth justified the $2 trillion cost of the original legislation. Bessent, joined by supportive Republican Senators, pushed back against this argument regardless of the lack of supporting evidence, arguing that the TCJA led to a significant and progressive economic boom and another round of tax cuts would undoubtedly do the same. Fiscally, in Bessent’s eyes, the U.S. has a spending problem, not a revenue problem and he believes we can grow our way out of the current fiscal crisis by lowering taxes and increasing business investment, an idea many experts are skeptical about. 

If confirmed, Bessent will be a strong advocate for another round of regressive tax cuts, much of the benefit of which will go to wealthy individuals and corporations. The CBO has estimated that an across-the-board extension of the 2017 tax cuts will cost $4.6 trillion and, if the results of the TCJA are any indication, Bessent’s stance on tax policy will only serve to worsen the U.S. fiscal condition and the economy he would be charged with leading. 

Tariffs/Trade Policy

Scott Bessent also faced questions on trade policy given Trump’s campaign promise to advance wide-sweeping tariffs on his first day in office. Bessent, a strong advocate of tariffs, said the Trump administration plans to use tariffs for three purposes: 

  • “to address unfair trade practices by an industry or country,”
  • “as a revenue raiser,” and
  • “as a skilled negotiating tool.”

Bessent pushed back against concerns about the resulting price increases many economists have warned of. He argued that countries, namely China, that would be subject to Trump’s new tariffs, would respond by lowering their prices in order “to maintain market share.”

While Bessent depends on a largely academic reading of tariff theory in his defense of the policy (as Senator Wyden noted in the hearing), consumers will likely face higher prices as companies have historically passed on their rising costs and these price increases would only be compounded by retaliatory tariffs from other countries. 

Deregulation of the Banking Sector

Bessent also faced questions about the stability of the American banking system. Responding to questions by Senator Tim Scott (R-SC), Chair of the Senate Committee on Banking, Housing, and Urban Affairs, Bessent noted the high level of consolidation in the banking sector, saying “The top five banks have become too big a share of banking assets.” Bessent however, seemed to suggest that government regulation rather than unchecked mergers within the industry were responsible for hampering small banks, saying “Regulation has constrained the industry.” 

Bessent also mentioned that he believes that “the banking system is well capitalized, perhaps overcapitalized.” To be clear, capital functions as a cushion against bank losses and higher capital requirements would boost banks’ resilience in the face of stress. 

Russell Vought, Director of OMB

Russell Vought, President-elect Trump’s nominee to lead the Office of Management and Budget (OMB), appeared this week for his confirmation hearing in front of the Senate Committee on Homeland Security and Government Affairs (HSGAC). In contrast to some of Trump’s other nominees, Vought is a D.C. insider who has worked for right-wing think tanks like the Heritage Foundation and previously served in this same position as OMB Director during Trump’s first term. . Because of his track record at OMB and partial authorship of the Heritage Foundation’s “Project 2025” – a comprehensive policy document that many believe is a roadmap for the upcoming Republican agenda – most Senators focused their attention on his previous actions and statements as opposed to his qualifications for the role. 

One issue brought up frequently by Democrats was government spending, as Vought has been a strong proponent of slashing spending and would be responsible for enacting many of the spending cuts proposed by Trump and his allies. The biggest spending concern for many Democrats related to Vought’s potential use of budget impoundment, which in simple terms is the withholding of funds Congress appropriates by the executive. Supreme Court precedent has deemed impoundment unconstitutional in multiple challenges and the process is further restricted by the Impoundment Control Act (ICA), yet, under Vought’s leadership, the OMB withheld funding appropriated by Congress like Ukraine assistance (which led to Trump’s first impeachment) and hurricane relief for Puerto Rico. Additionally, Vought and the Trump administration have signaled their intent to again use this tactic to cut spending, circumventing Congress’ power of the purse. When asked about impoundment, Vought did little to quell Democratic fears, stating that he disagreed with the premise that past OMB actions were unconstitutional and pointing to past uses of impoundment by presidents before precedent was set in the 1970s. 

While the hearing covered many other areas of focus ranging from telework for federal employees to government shutdowns, impoundment is perhaps the biggest risk related to the executive control of America’s spending facing our democracy if Vought is again confirmed as Director of the OMB. Congress’s power of the purse is crucial to our government, the strength of which relies on checks and balances that prevent any one branch from gaining outsized power and control. Vought is likely to be confirmed in the coming weeks, but Republican Senators should question his willingness to take away one of their most crucial powers at the demand of President-elect Trump. 

Vought will be back on Capitol Hill next week for another confirmation hearing in front of the Senate Budget Committee. 

Eric Scott Turner, HUD Secretary

Before the Senate Banking Committee, former NFL defensive back and Texas state legislator Scott Turner had one of the less contentious confirmation hearings so far. Turner himself focused mostly on the broad strokes of his plans, helping to increase home construction and lowering housing costs for Americans. 

Turner did not go much into policy specifics, however, and he did not commit to supporting increased funding for HUD’s consistently underfunded housing support programs, instead focusing on how HUD regulations on new housing could be reduced and how “ineffective” programs could be eliminated. The Democrats, such as Senator Andy Kim (D-NJ), pressed him for more details. Turner responded by stressing the need for the U.S. to “get our fiscal house in this country in order” to bring down inflation and interest rates. Senator Warren (D-MA) questioned him about his limited public experience, which essentially amounts to his two terms as a Texas state legislator and leading Trump’s Opportunity and Revitalization Council during his first term. 

At the end of the day, as this is one of Trump’s least controversial picks and Democrats and Republicans are largely in agreement on the need for affordable housing construction, Turner is not only likely to be confirmed but to get significant bipartisan support.

Other Developments

CPI Inflation Ticks Up to 2.9% in December 

Inflation, as measured by the Consumer Price Index (CPI), rose by 0.4 percent on a monthly basis and by 2.9 percent on an annualized basis last month, up from 2.7 percent in November, 2.6 percent in October, and 2.4 percent in September. This marks the fastest one-month increase in consumer prices since February 2024, according to the December CPI report released by the Bureau of Labor Statistics on Wednesday. 

The overall increase in consumer prices shows that while inflation has fallen significantly from its peak of 9.1 percent in mid-2022, progress towards the Federal Reserve’s target of two percent is unsteady. 

Core CPI – which excludes food and energy prices – provides a clearer picture and suggests that progress on inflation has slowed since mid-2024. Core CPI rose by 0.2 percent on a monthly basis and by 3.2 percent on an annualized basis in December, slightly down from the 3.3 percent annualized increase in each of the three months prior. Core CPI has remained relatively stable, rising on an annualized basis by between 3.2 and 3.3 percent each month since June 2024. 

Source: CNBC

The uptick in headline inflation last month was largely a function of the 2.6 percent rise in energy prices over the month, including a 4.4 percent increase in gasoline prices and a 4.4 percent increase in fuel oil prices. Energy prices often rise in January primarily because of increased demand during colder winter months, leading to higher consumption of heating fuels. Food prices also rose by 0.3 percent on a monthly basis in December, with grocery prices rising by 0.3 percent over the month.

Shelter prices, which had held inflation at elevated levels for much of the past two years, rose by 0.3 percent last month. This marks the smallest one-year increase in shelter prices since January 2022. 

The new inflation data is the last major economic data to be released ahead of the Federal Open Market Committee’s (FOMC) meeting in the last week of January, during which Committee officials will decide whether to cut interest rates once again or hit pause. The rise in headline inflation and stalled progress in core inflation is likely to further incline Committee officials to hold interest rates steady at the 4.25 to 4.5 percent range. 

Representative Moore Introduces Harmful CTC Bill

On Monday, Representative Blake Moore (R-UT) introduced the Family First Act in what he and many Republicans are framing as an “expansion” to the Child Tax Credit (CTC). Moore’s dangerous bill is almost identical to Senator Mitt Romney’s (R-UT) Family Security Act introduced in 2024 and would: 

  • increase the maximum benefit from $2,000 to $4,200 for families with children five years old or younger and $3,000 for families with children six to 17 years old,
  • establish a $2,800 credit for pregnant women,
  • require that families earn at least $20,000 to get maximum benefits with earnings thresholds indexed for inflation, and
  • require that parents and each claimed child have a Social Security Number.

A few of the provisions within Moore’s proposals have harmful implications for many families. The new credit for pregnant women is a part of the larger conservative effort to promote fetal personhood as part of their anti-abortion strategy. Similarly, Moore’s bill would deny mixed-status families from qualifying for the credit in which the parents have an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number. 

Last January, Senate Finance Chairman Wyden (D-OR) and Chairman Smith (R-MO) of the House Ways and Means Committee introduced the Tax Relief for American Workers and Families Act. The CTC portion of this bill raised the cap for the benefit and expanded benefits for families on a “per-child” basis. It also instituted refundability to ensure those families who do not earn enough to qualify for the credit get the assistance they need while including a look-back provision that allows families to use prior years’ incomes to calculate their benefits. 

Note that Moore’s bill would be “fully offset” in the fairly unlikely event that Congress does not extend the Tax Cuts and Jobs Act (TCJA). If the TCJA is extended, the bill would be estimated to cost $800 billion over the next decade given the particular offsets. 

Democrats have long been pushing for fair and equitable expansions of the Child Tax Credit and proposals like Representative Moore’s hide under the guise of “expansion” to promote harmful conservative priorities. 

Bipartisan Bill to Ban Cong. Stock Trading 

Momentum to ban stock trading by members of Congress has continued this Congress, with multiple bills being introduced over the past two weeks. President Biden also reiterated his support for a ban in a recent interview. 

Notably, Representatives Brian Fitzpatrick (R-PA), Alexandria Ocasio-Cortez (D-NY), Cory Mills (R-FL), and Raja Krishnamoorthi (D-IL) led the reintroduction of H.R.253, the Bipartisan Restoring Faith in Government Act in the House last Thursday. The bill would prohibit members of Congress, their spouses, and dependents from owning or trading individual stocks while they serve. 

The bill demonstrates the broad range of support for a ban on Congressional stock trading among members, with members of progressive and moderate caucuses leading the bill. 20/20 Vision is proud to endorse the legislation.

Look Ahead

Wednesday, January 22

Other Related Articles