Transcripts For CSPAN3 Former Federal Reserve Chairs Bernanke Yellen Testify On COVID-19... 20240712

Come to order. Without objection, the chair is authorized to declare a recess of the committee at any time. I now recognize myself for an opening statement. Today, a select subcommittee is pleased to welcome our distinguished panel, dr. Ben bernanke and dr. Janet yellen. Dr. Bernanke was appointed chair of the Federal Reserve by president george w. Bush in 2006 and oversaw the Federal Reserves response to the Global Financial crisis. Before his tenure as fed chair, dr. Bernanke served as the chair of president bushs council of economic advisers. Dr. Yellen served as vice chair of the Federal Reserve until 2010 to 2014, before being appointed chair in 2014 by president barack obama. Dr. Yellen also previously served in the white house as chair of the council of economic advisers. This is the first time that either dr. Bernanke or dr. Yellen has testified before Congress Since stepping down from the Federal Reserve these extraordinary times require congress to seek out advice from experts with extraordinary experiences. As Congress Works to end this economic crisis and enable a strong recovery, we are fortunate to benefit from their individual insights and gain from their unique position as Federal Reserve chairs in the last economic crisis and recovery. I want to thank both of them for agreeing to testify today. Six months into this crisis, the coronavirus pandemic continues to spiral out of control. To date, over 3 million americans have tested positive for the virus, including a recordbreaking 75,600 confirmed yesterday. And more than 140,000 americans have died, far more than any other country. This administration has not only failed to fix the problem, it has made things worse. It clearly states, to reopen without a plan to keep everyone safe. As a result, we have new epicenters in florida, arizona, texas, and here in my home state of south carolina. Floridas pro capita infection is now 20 higher than new yorks was at the peak of the outbreak in april. And now the administration is undermining its own Public Health experts in the rush to reopen schools, again without a plan. Our nations unemployment is at an historic high. According to recent estimates, nearly 33 million americans are collecting Unemployment Benefits. Just last week, several Federal Reserve officials expressed that the countrys modern recovery is, quote, starting to level off. This economic crisis has been especially damaging to communities of color who, as i witnessed, recently wrote or quoted, bearing a greatest of covid19 deaths and also face higher rates of unemployment than their white counterparts. So, the question for todays hearing is, what can we do about it . First, we cannot address our economic woes until we first address the urgent Public Health crisis. It is far pastime for the white house to take responsibility for this crisis and provide the muchneeded federal leadership and declare a National Strategy to fight this pandemic. Second, the Federal Reserve and treasury must act quickly to use the authority and Funding Congress provided to help americans families. Families. This is an unprecedented crisis that requires an unprecedented response. While taken significant steps to protect the market and businesses, it has done less to protect workers. In fact, the feds primary mechanism to protect jobs, the main Street Lending program, has struggled to get off the ground. The feds should do more to ensure the main Street Lending program is accessible for the Small Businesses who most need it and deserve this assistance and to protect the Program Designed to help. Third, the white house must work with congress to act boldly and decisively to prevent an economic catastrophe. American families and Small Businesses cannot wait any longer for relief. Congress must pass another economic recovery package that includes support for low wage workers and the unemployed. New assistance to states and localities and programs that invest in Public Health. On may 15th, more than two months ago, the house passed the h. E. R. O. E. S. Act to do exactly that. I urge my colleagues in the senate to end the delays and pass this vital legislation. Id also like to address one final point. After we announce this year, my republican colleagues suggested we add the witness who is not a Federal Reserve chair or a former Federal Reserve chair. Now ive accepted. Every other witness my republican colleagues oppose, and i think its been five thus far. I look forward to hearing from this witness at a future date. But today, my goal is to hear from the unique insights from chair bernanke and chair yellin on that effort to help our nation recover from the 2008 financial crisis as leaders of the fed. For example, after bernanke has stated, and i quote, the initial 2009 Fiscal Program was, perhaps, not adequately sized given the size of the problem. We must not make that same that same mistake again. Our Witnesses Today served honorably on the president s of both parties. Im hoping all my colleagues will participate in this hearing in a bipartisan manner and help us search for solutions to benefit the American People. The chair now recognizes the distinguished Ranking Member for his opening statement. Thank you, mr. Chairman. I want to thank our witnesses for appearing before the subcommittee as well. They both have distinguished careers that can offer important insights on the hearing about responding to our nations economic crisis, which is todays topic. But with due respect, mr. Chairman, both of todays witnesses were selected by the majority. I know you and i spoke about this, but i requested as rule 11 of the house of representatives actually requires that the minority get to also have a witness so that the select committee can hear from a diversity of perspectives. Whether they are from both parties bringing an issue, thats not the house rules, which is why i asked for a witness as well. Somebody who is widely regarded as an expert on the economy. Hes testified before Congress Dozens of times. In fact, he was a former head of the congressional budget office. Hes the person tasked to inform us, congress, on understanding budget and impacts of policy decisions. So mr. Chairman, i know you denied that witness. We talked about it. But because of that decision, were also being denied the diversity of opinion we should be getting on todays topic. We should all request and seek that the house rules, as they require, welcome that diversity of opinion, which is why both parties are allowed to invite witnesses to provide us with pertinent testimony. That was denied today to us at this hearing and unfortunately hinders our ability to get all of the facts. But with that, mr. Chairman, pursuant to clause 2j 1 of rule 11, im requesting we get what were allowed under the rules and that is a minority day of hearing on this subject. The rules require it. They were not followed in the request that we made. It doesnt allow the chair to select both a republican and democrat. It allows the chair to select witnesses but it also allows the minority to select a witness. We did that. It was denied. In lieu of that, were allowed to have a minority day of hearing. I want to invoke that, mr. Chairman. I know you and i our staffs can work through that. As a point of order, i did want to bring that up, mr. Chairman. Why dont we now talk about the state of the economy. Yes, mr. Chairman. May i interrupt you for a moment. On that point of order. I understand you have some people. I received the letter, and i will take it under advisement. I will commit to you today that i will consider your request in accordance with the house rules. In fact, as i understand it, one of the witnesses that you have requested already appeared before this Committee Just last month. With that, i would yield back. Thank you. Im sure you and i will be able to deal with this in a manner. Thank you, mr. Chairman. Im confident well be able to work through this as well. Now, why dont we talk about the economy. Unemployment in february was 3. 5 . Thats the lowest in 50 years. The Unemployment Rate for africanamericans and hispanics was the lowest in reported history of this country. Hourly wage were growing at the fastest pace weve seen in over a decade. America was experiencing the hottest economy weve ever seen in every segment of our country was reaping those benefits. Then a Global Pandemic hit our chores. China lied about it. The experts looked to for guidance in a pandemic, the World Health Organization was corruptly complicit in actually regurgitating chinas lies. America got hit hard and hit fast like the rest of the world did in this Global Pandemic, the worst weve seen in over 100 years. Immediately america came together to fight the invisible enemy and prevent our hospitals from being overwhelmed. We did so without knowing nearly as much as we do today about this unique destructive virus. All we could really do was shut down and put the largest, most prosperous economy in Human History on pause. The pause was necessary but it came at a staggering cost. From the lowest unemployment in 50 years to over 40 million jobs lost. Income equality made worse. 40 of people making less than 40,000 were laid off. Children lost irretrievably months of inschool learning. Vaccinations plummeted. Progress on the Opioid Crisis we made working together was reversed. What america must now decide is whether those losses are going to be shortterm costs or will they be longterm, irrevocable damage. I proudly supported the c. A. R. E. S. Act. In fact, virtually all members of congress did. There are some important structural Building Blocks for recovery in that legislation. We already know about ppp and weve had hearings on the tremendous success that did in saving millions of jobs, but we put billions of dollars in place for ppe to protect our Frontline Health care workers. We put billions in place for testing, for the development of therapies and ultimately a vaccine. But lets be honest about the relief portions of the c. A. R. E. S. Act. What we did was float the u. S. Economy with borrowed money to temporarily compensate for shutting it down. The question before us today is knowing now what we know about the unintended cost of the shutdown, do we continue to extend it or instead focus on the Building Blocks of longterm sustainable and equitable recovery. A few key principles and shared goals should guide us in this direction. Federal policy should reward and support americas workers. Educating our children safely in the classroom is a paramount responsibility. Its not just a goal. Its something we have to achieve. Federal policy should accelerate innovation and research and manufacturing in the United States. Only a healthy growing economy can support longterm sustainable and equitable prosperity. With that, all americans are concerned about continued spread of the virus and all americans have a role and responsibility in helping to slow the spread, as were all Wearing Masks when were out in public. But lets also acknowledge some key developments. The death rate continues to fall because were doing better protecting our most vulnerable population and improving treatment. President trumps operation warp speed is showing great promise including this weeks remarkable announcement of promising results from vaccine trials. Testing capacity and ppe production continue to ramp up. Red tape is being cut and this progress helps all of us who want to end the pandemic. America must continue to forge ahead with this can do attitude and find Practical Solutions to the challenges that must be solved, including safely reopening our schools. Earlier this week Vice President pence brought his task force down to louisiana and i had the honor of spending the day with him, along with our governor who happens to be a democrat talking with School Officials about the importance of getting kids back to school and how to do it safely. The white house coordinator, Coronavirus Response coordinator, respected medical official was there how to safely reopen. Our attitude has to be how you can do it not where you do it. Children need to get back to school and continue education. For many time loss will never be made up. Childrens health will improve, vaccinations, child nutrition for the most vulnerable will improve. American academy of pediatrics issued important report which, among other things, strongly advocates all policy considerations for the coming school year should start with a goal of having students physically present. It goes on to say importance of learning is well documented, already evidence of negative impacts on children because of School Closures in the spring. I would hope we would be focused on the damage to students not reopening as we put our efforts on how to safely reopen. Mr. Chairman, i would like to ask unanimous consent this report by american pediatrics be entered into the record, if theres any objection. But i did want to make that request. Though i do not intend to object well provide you with this report by academy of pediatrics and i would ask it be included if theres no objection. Without objection. Thank you. School reopenings also help the economy because parents can more readily get back to work. We should resolve no business in america ever has to compete with a federal policy that makes unemployment relief pay better than actually going back to work. Small business after Small Business has told me their biggest obstacle to reopening now is getting their workers to come back because the temporary bonus unemployment check in many cases pays more than the actual salary. This policy needs to stop. While some in washington want to continue the shutdown with the federal government continuing to float the economy and have the Federal Reserve keep printing more money, that is not a path to prosperity. We have faced big challenges throughout history. America put a man on the moon. For goodness sake, surely we can reopen our schools and safely manage the economy. I yield back my time. I thank the member for his opening statement. Now i would like to introduce our witnesses. The honorable ben bernanke is a distinguished fellow in residence at Brooklyn Institution and served as chair of board of governors from Federal Reserve from 2006 to 2014. The honorable janet yellen, also a distinguished fellow at the brook lins institution and served as chair of the board of governors from Federal Reserve from 2014 to 2018. The witnesses will be unmuted so we can spare them in. Please raise your righthands. Do you swear or affirm that the testimony youre about to give is the truth, the whole truth, and nothing but the truth, so help you god . I do. Let the record show the witnesses answered in the affirmative. Thank you for that. Your joint statements will be made part of the record. With that, mr. Bernanke, you are now recognized for your testimony. Mr. Chairman, can i yield to dr. Yellen to go first . We coordinated our comments . Yes. The chair recognizes dr. Yellen. Thank you. Members of the committee, i appreciate the opportunity to testify before you today. My remarks will focus on the Economic Impact of the coronavirus and the contribution that fiscal policy can make in addressing it. Former chair bernanke will then discuss the reserves response. In many respects, this recession is unique. Like all recessions, its imposing heavy costs. Most downturns result from developments inside the economy. This recession was triggered by a Public Health crisis. The unusual source of the recession is reflected in the extraordinary decline in Economic Activity earlier this year and the sharp but incomplete rebound of recent months following the first steps toward reopening. The heaviest blows are falling on lower paid workers as well as women and minorities who are overrepresented in the most affected service sectors. They have born a disproportionate loss of jobs and income. Despite the factors determining the economys past will be the course of pandemic itself. To support recovery, and more importantly to save tens of thousands of lives, the spread of the virus and mitigating its effects should be the First Priority for members of congress, local leaders and other policymakers. This requires support for testing and contact tracing, medical research and sufficient hospital capacity. It also requires working to ensure that businesses, schools, and Public Transportation have what they need to reopen safely. If the pandemic comes under better control, economic recovery should follow. The pace of the recovery could be slow and uneven. In the face of ongoing uncertainty, households and businesses may remain cautious for a time. Increasing precautionary saving and reducing spending, hiring, and Capital Investment. The longer the recession lasts, the greater the damage it will inflict on household and business Balance Sheets. In the depth of the recession may leave scars on the economy, so the deterioration of unemployed workers, skills or the closure of many businesses. An important pouille of fiscal and monetary policies should be to speed the recovery and minimize the recessions lasting effects. The fiscal response to the coronavirus is thus far has been quite effective in our view enhanced unemployment and Paycheck Protection Program have helped unemployed workers an their families and many businesses to survive the spring shutdowns. However, a number of programs authorized by congress are coming to an end and new actions are necessary. Our recommendations for further fiscal action are as follows. First, nothing is more important for restoring Economic Growth and improving Public Health. Investments in this area are likely to pay off many times over. Second, with unemployment still at record levels, enhanced Unemployment Insurance should be extended and complementary programs extended. Rather than making a onetime appropriation, we think the congress would be well served by tying supplemental Unemployment Insurance and other support programs to the national or state Unemployment Rate there by creating an automatic stabilizer. Third, congress should provide substantial support to state and local governments. The enormous loss of revenue from the recession together with the new responsibilities imposed by the response to the pandemic has put their budgets deeply in the red. To avoid the recessionary effects by fiscal cuts by those governments, federal support should be substantial and conditions on aid should not be overly restrictive. Following our advice would further increase the already record level federal budget deficit. With Interest Rates extremely low and likely to remain so for sometime, we do not believe the concerns about the deficit and debt should prevent the congress from responding robustly to this emergency. The Top Priorities at this time should be protecting our citizens from the pandemic and pursuing a stronger and equitable economic recovery. Than thanks. Thank you very much, dr. Yellen. We will now hear from dr. Bernanke. Thank you, chairman clyburn, Ranking Member scalise, thank you for the opportunity to testify before you today. In my oral remarks, ill briefly summarize the Federal Reserves response to the Coronavirus Crisis. The Federal Reserve has moved swiftly and forcefully in this crisis. It eased Monetary Policy in march by lowering the federal funds rate nearly to zero and indicating that it plans to keep rates low for several years. The fed may well do more in coming months as reopening proceeds and the outlook for inflation, jobs, and growth become somewhat clearer. In particular to maintain downward pressure on lower Interest Rates federal open Market Committee likely will provide Forward Guidance about the Economic Conditions it would need to see before it considers target rate as well as clarifying plans force security purchases or quantitative easing. The fed has been active beyond Monetary Policy. First the fed has served as marketmaker of last resort by acting to stabilize critical Financial Markets when capital or other regulatory restraints when normal Market Making arbitrage. In march uncertainty led hedge funds and others to scramble for cash by selling longerterm securities. The upsurge in longerterm securities, including treasuries, was more than dealers and other Market Makers could handle resulting in substantial volatility. To stabilize key markets, the fed purchased large quantities for treasuries and mortgagebacked securities. Risk and liquidity premiums in those key markets have since returned closer to normal. Second, the fed has served as lender of last resort to the Financial System. The classic function of central banks. Fortunately the Financial System is in much better shape today than it was during financial crisis. The fed, nevertheless took steps to ensure the system, banks, broker dealers and money market funds has sufficient liquidity to operate normally and keep extending credit. Third, the Federal Reserve with support congress and treasury has also served during the Current Crisis as a lender of last resort to the nonfinancial sector, key credit markets disrupted by pandemic. Using authorities the fed revived financial era facilities to stabilize commercial paper and Asset Backed Securities markets. The fed also added new facilities to lend to corporations and state and local governments and to buy outstanding corporate bonds. By establishing these programs, the fed gave private investors the confident to reengage by reassuring them the government would not allow critical markets to become decides functional. The fed also established the main Street Lending program to lend through banks to medium sized companies. It is too soon to judge its performance. This program is very different from anything the fed has attempted before and poses difficult technical challenges. Questions remain about how many banks and borrowers will participate. The fed and treasury may have to further ease terms for borrowers and increase for banks for this program to have the desired effect. Is there more the fed could do . As i noted, the fed will likely provide more clarity about its Monetary Policy plans and may need to adjust terms or barrelingability requirements of its lending facilities. Broadly speaking, though, the feds response has been quite comprehensive. As chairman powell notes the Feds Authority allow it to lend not spend. Some households will need subsidies and grants and loans to survive this challenging period. Spending is the province of congress. Thank you, mr. Chairman. Thank you very much, dr. Bernanke, and thank you, again, dr. Yellen. We have now come to where each member gets five minutes to ask questions. So im going to begin by giving myself five minutes. I would like to begin by asking dr. Bernanke about the oped piece that he wrote this week. And im going to quote from that oped piece. It said, a new package is needed in order to stabilize demand and restore full benefit full employment. I would like to ask you, dr. Bernanke, what do you think will happen to the economy over the next few months if Congress Fails to pass a new stimulus bill . Well, ill focus on the state and local governments part of this. They are both the first line providers of Financial Services, health, education, and the like, and also big employers. One thing we learned in the after the financial crisis was that because of balanced budget requirements at the state and local level, as states and localities saw big declines in revenues, they had to do serious cuts in their employment and Capital Investment leading to a slower economic recovery. Some recent estimates suggest that the contraction at the state and local level slow growth in the u. S. Economy of the crisis by half a percentage point a year, which is significant. This crisis has had similar effects. On the one hand state and localities have had expenses with the Health Crisis to open safely. On the other hand they have seen big revenue hits. One estimate is the revenue hit for states alone since february is over 500 billion. If no action is taken to help states and localities avoid massive contraction, it will have a negative effect both on recovery and also on Critical Services that they provide to their citizens. Dr. Yellen, mr. Bernanke has given us some insight to what would happen if we do not assist state and local governments. Id like to ask you what would happen if we do not extend support to Public Health agencies to food stamps and other publicist answer programs and Unemployment Insurance. What would happen if we failed to move in those areas. Well, both emphasized that money spent on Public Health yields a very high return. It means that the economy can get back on its feet more rapidly. We can reopen and put people back to work. Of course we also save lives in the process. With respect to Unemployment Insurance, im tremendously concerned that the extended benefits are now scheduled to end july 31st. I think frankly it would be a catastrophe not to extend Unemployment Insurance. It has done a great deal to support the nof a large number of individuals, low wage workers and minorities, 40 of whom have lost their jobs. Its provided a good deal of support for them. The economy more broadly because we need the spending that those unemployed workers can do without it. We would simply see more weakness as their spending contracts. We would see more weakness throughout the entire economy. Those workers, especially lower income workers benefiting from the 600, they have a very high propensity to spend the money that they are given. Weve seen higher income work eers with saving but lower income workers receiving Unemployment Benefits are spending it, which benefits jobs throughout the econo economy. If the Unemployment Rate were lower and we were closer to full employment, i would worry about the disincentives that having more than 100 replacement ratio would involve. At this point really theres such a shortage of jobs that i really dont think i think evidence suggesting this is not really stopping the economy from keeping jobs and putting people back to work. We do suggest Unemployment Benefits could be based on individuals preunemployment wages with Unemployment Rates that might not receive 100 . I dont know at this point if states all have the technical ability to put that into effect. Thank you very much for that. I see that im out of time. I do have one other question but ill let the Ranking Member go now and maybe hell loan me make time later. I yield to the Ranking Member. Is that working, mr. Chairman. I hear you now. Thank you. Well let you get that last question in. I do want to point out when you look at what we need to do to get our economy back open, this isnt a question of reinventing the wheel. Clearly were dealing with serious challenges were all working through. But lets look to what did work to get us to that hottest economy in the world before this. It was robust economy, competitive again putting more money in the pockets of families, letting families have more control over their own destiny, money they worked hard to earn. That was done by the tax cuts and jobs act. We saw unparalleled growth. We saw the ability to bring jobs back. We can do that again once we get through this. A thats why its so encouraging to see what President Trump is doing on operation warp speed. It doesnt get enough focus or attention but seeing full focus of the federal government. Agencies like fda removing red tape so they can focus everything on finding vaccines, therapies, and ultimately a cure for covid19. And we saw already the remarkable progress this week. We hear from Drug Companies in phase three of testing on very effective vaccines. Thats where our focus should be for longterm to get through this. Hopefully it happens soon. I appreciate President Trump and Vice President pence are focusing so much time on that. As we look to the health of the country, opportunities out of this, push people back to work, create more incentives to strengthen this economy and address what china did. We know china ordered ppe. As we all complained about shortages of ppe at the beginning of this, thats because the bulk is made in china. They were hoarding ppe while they were lying to us about this. Thats why we ought to have a hearing on Holding China accountable to see what they did to shut off supply of vital protective equipment for front line hospital workers when we were in the midst of trying to find out what was happening, they horded it. They didnt have the ability to get it. Were making it in america. We ought to have incentives to create more jobs by bringing that back. Its a National Security item. Bring it back to create jobs in america. You look at things, drugs made in china here in america. That is something we ought to look at incentivizing. I hear from Small Businesses who talk about the problems. Problems created by paying people in many cases over 75 of workers in america they have studied are making more money. When you talk to Small Businesses across this country and getting them back to work. I do want to ask dr. Yellen, because you talked about a substantial amount of money to bail out states. Do you have a rough idea of how much money youre talking about . Weve already passed 150 billion to help the states get through this. Are you talking about 500 billion number, a trillion dollar number . Can you quantify what you mean when you talk about this package that will bail out states. As chair bernanke mentioned in his response to the chairs question, there is a study by the center for budget and policy priorities that suggests that i believe its through 2022 that the shortfall for states alone is put at about 550 billion. And theres perhaps not quite as large, but also tremendous shortfalls tlo s local level. I think we are talking about very substantial cutbacks. Chair bernanke and i both happen to be serving on state reopening committees. If i may, i appreciate that. I apologize, limited time. You talk about 550 billion at a starting point not factoring in local governments. I think we all have talked about this but need to recognize it. There were many states not many but a few states with massive short falls, multibillion dollar short falls prior to covid19. The idea federal taxpayers should bail out states with failed tax policies, look at the policies i talked about earlier. Many of those states had short falls because they were taxing their people too high and running the good jobs out of their state. Thats what they should be focused on, focus on fixing the problems they had prior to covid causing their economies to collapse and businesses to flee and good jobs to flee. Fix that now while were in the middle of rebuilding things. Thats where the focus ought to be so they can come back stronger, come back in a more healthy position, not just continue and ask the federal taxpayer to bail out their state problems. Thats where the focus ought to be. I do want to ask mr. Bernanke, American Academy of pediatrics study that talked about the importance of bringing kids back to school for many reasons, health reasons, getting nutrition, also to be learning at the right pace. Do you agree with the academy of pediatrics talking about the importance to children of getting back in school, not just learning at home . Im going to say to the record member your time that has expired but im going to let mr. Bernanke answer the question. Allow you to finish. Ill be brief. My wife is a teacher. I do understand the value of children, of inperson instruction, plus the support that they get. I understand the importance for working parents but there is a concern here, of course, about the health risks. I think that local districts are going to have to make tough decisions based on their local conditions, you know, and based on their evaluation of the Public Health situation. I am not a doctor. I cant make that judgment. Local districts are going to have to use the advice they get from professionals to make those choices. Dr. Birx tuesday talked about some of those steps to do it safely as the academy of pediatrics did, too. No tradeoff with safety but the importance of getting kids back in school in a safe way to be done. We have to do it. With that, mr. Chairman, i yield back. Thank you. Thank you very much, mr. Ranking member. Before going to chair waters, id like you to answer a question. What you raised, mr. Ranking member, is something we ought to take a look at. Weve heard from several of my colleagues recently that the next package ought to be capped at 1 trillion. The package itself is far in excess of that. The h. E. R. O. E. S. Act 3 trillion, 1 trillion devoted to state and local governments. What do you think about capping the next package at 1 trillion . Should that be . If so, why . Dr. Yellen. I would be concerned about capping it when we know that the needs of the state and local governments come alone come close to that. A substantial amount will be needed for Unemployment Insurance and Public Health needs. I dont know what the right number is. We need support also that comes from all of that spending for Economic Activity so that unemployment doesnt rise for aggregate demand and total spending in the economy. At this point we need fiscal support as well. So i would be concerned with a cap of the magnitude you mentioned. Dr. Bernanke, what about that . The reason for the cap would be concerned about the deficit, which i understand. Right now as we talk about in our testimony, real Interest Rates are negative, interest burden is very low. There is a big appetite for debt. Its an opportunity to take advantage of our ability to borrow, do something to help our economy recover. In the longer term we have to worry about sustainability. Right now the priority is doing what needs to be done. As dragsaid, whatever it takes probably the thinking now. Cant hear you, mr. Chairman. Mr. Clyburn i yield to chair waters for five minutes of questions. Ms. Waters thank you very cant hear you, mr. Chairman. To chair waters for five minutes of questions. Thank you very much. This hearing is very important. Im pleased you bought them to talk with us today. Not only are they responsible for Monetary Policy, they have shown us how effective they can be with being the lender of last resort. So both of our chairs have had wonderful reputations and backgrounds for the way that they have managed when they were and i appreciate their observations, their advice to all of us and we fight through this pandemic thats confronting us all. So the first thing i would like to have, dr. Yellen, why powell said with the Interest Rates being low that we should be very generous in the way that we deal with this pandemic and the resources that we allocate to it. If there was ever a time to put substantial support into this economy, now is the time. What is it about the Interest Rates that everybody should understand that made powell say that . Well, when Interest Rates are low, the cost to the federal government in terms of interest burden on the debt is extremely low. I can give you as an example, because Interest Rates were low even before the pandemic hit, and now they have gone lower. Between 2007 and just before the pandemic, the ratio of federal debt to gdp had doubled from 40 to 80 , and yet the interest burden of that debt because Interest Rates fell during that period and stayed low, there was no additional cost relative to the size of the economy. Thats true and will only be more true now. So i agree with chair bernanke that one day in the future, we will have to get deficits after this is over and the economy is recovered, well have to deal with deficits and get them under control. Now is the time when i think its not necessary to worry about it. I guess the final thing id add is that in an economy with unemployed resources, we dont have to worry about the spending diverting activity away from other things. Thank you very much. We have heard the connection between what the experts Health Experts are advising us and how that helps to improve the economy, if, in fact, we wear mavericks, if were social distancing, if we have the ppe we need, all that. So we have been advised that a surge certainly has taken place and we can see the results of that. Every time that happens, it sets us back somewhat from being able to deal with the economy. Is that correct . Regardless of what the rules are, we have seen that people are afraid to engage in activities that risk their health and pull back from it. The worse the outbreak gets, the more truth that is. Whatever helps Public Health enables us to get people back to work. And so because of that, we need leadership. Now that were talking about the schools, i believe we made a mistake with some of our governors and some of our states opening up certain businesses too soon. So were seeing the result of that. So i dont know where all this confidence is coming from about open up these schools, get these children back in. I think mr. Bernanke is correct when he said the localities and our School Districts have to be careful. They have to make sure they can provide safety. Otherwise, we will continue to have surges, our children will get sick, some may even die, and this does not help the economy. Does it . No, it doesnt. We do have to be careful. I mean, the American Academy on pediatrics report and the National Academy report points that out. And its also expensive for the schools to make the modifications they need to be able to open safely. I think Congress Needs to think about funding the expenses that are involved. Of course its an important goal to reopen the schools. I cant imagine who would disagree with the priority that should be last second or so i have here. Minority communities, black communities, latinx communities are suffering. We suffer from a lack of testing. We suffer from our hospitals not having all the ppe. We suffer for not even being eligible for unemployment. We suffer because we still need food stamps, et cetera. I heard about looking at better ways to infuse, you know, capital and resources into minority communities. What are you suggesting we do for minority communities that would help us be able to deal with this pandemic and not becaucause us to die from it with the way were dying and getting sick. With respect to access to capital, it seems to me that businesses in minority communities really face tremendous barriers. I believe its important for congress to do special things in order to provide funds for these, particularly businesses in minority areas. Would be helpful instead of looking for ways by which to keep your business open and pay back money, could we do some grants. I think grants are important for many businesses. Many businesses really didnt benefit low income areas from ppp. They dont have strong relationships with banks but they do with cdfis. I would say i dont know if its really feasible but i would love to see the fed treasury explore a 133, maybe something within the main street facility through cdfis that would be oriented toward these low income and moderate incomes. Its so important for you you and bernanke and economists to sign up with all these other that was so unusual to see so many of you sign onto something that was urging us to, you know, to be very, very generous with this stimulus. We have 3 trillion why did you sign that document . The gentlewomans time has expired. Could you answer that. We encouraged that for the economy. Thank you. Five minutes to chairman jordan. Thank you. Dr. Bernanke, whats more important opening schools or protesting . Opening schools safely is very important. People protest for the causes they feel are important is part of the american ways. I agree with that. I wish you could tell Democratic Leaders that because they think protesting is more important than opening schools. You hear democrats from the level saying they cant open schools but mayor de blasio can stand with a bunch of protesters on fifth avenue in front of trump tower. Mayor garcetti can kneel down to protesters, without a mask, bow down to the mob without a mask, thats fine but he cant open schools. Do you know how many School Districts there are in the country, mr. Bernanke . No, sir. 13,000 School Districts, 56 million kids that deserve to get back in school. As you said earlier, your wife is a teacher, my wife is a teacher, get back in school and get their education. Democrats seem to say, no, no, they cant do that. Democrats, theres lots of things they think protesting is more important. Democrats think protesting is more important than going to church. Democrats think protesting is more important than going to school, more important than going to a loved ones funeral, more important than going to work we have seen from so Many Democrats. And i think whats interesting is we have now seen in portland over the last six weeks some of the weve seen the city burn for the last six weeks. I have yet to see any condemnation come from democrat leaders. Six weeks of this happening. The protest over the last several weeks, 12 Police Officers shot, 130 injured, 60 secret Service People injured just in the district of columbia. Whats more important, d bernanke . Whats more important to Economic Growth, reopening schools or protesting . Well, ive not been involved in any of these commentaries youre referring to. I asked about Economic Growth. Youre an economic schools are important. Protesting for democracy, people have different views on what they think needs to be protested about. Brookings institute, you know what they estimated, just when schools are shut down for a few months, you know what the estimated cost of the economy would be . Im sure its very large because of the effects on working parents. Exactly. 2. 5 trillion. 2. 5 trillion. Just the cost of the protest, the damage, rioting, looting, destruction of property just in one city. Minneapolis, 500 million. As we know, this is happening in cities all across the country. And yet somehow protest is allowed to continue, thats fine. Im all for protests. I want every right under the First Amendment to be recognized and be allowed. Its the hallmark of our country. Democrats say no, no, no. They shut down churches in california but say nothing about the protests continuing to take place. Now forcing kids not to go back to school. Youre familiar with the fact American Academy of pediatricians say kids should be back in school, we should reopen schools. I believe if i saw the study right, it has to be done safely. Of course. Of course safely. But thats all we hear from democrats. We hear we cant open schools. You know how many kids under 17 have died of the coronavirus in the state of california, dr. Bernanke . Probably very few. Congressman, i have no expertise on this. Im not pretending to give you advice on whether to open schools or not. Thats not my area of knowledge. Im just saying the place you work, the Brookings Institute did a study a few years ago what a cost is to our economy, 2. 5 trillion. Why we hear from so Many Democrats we cant do it. I think we can. I think we can do it safely and i think it needs to happen. How about this, whats more important, opening schools or Defunding Police . I think we cant defund police. We need police. There are concerns about Police Community relations and police behavior. You need to have a talk with l. A. Teachers union because the l. A. Teachers union said they wont open their school until they get an increase in classes, bailout for their district, medicare for all, and until the police are did he funded, then they will think about opening the schools to help the students get the education that will allow them to achieve the american dream. Something youve done. I notice your wife is a teacher, you went to m. I. T. , harvard, miss yellen went to yale, she went to brown. You know how important education is to accomplishing the american dream. Tell that to l. A. Teachers union. They said unless police are defunded, they dont want to come back and teach school in the fall. I absolutely agree education is extremely important for everyone. We need Democratic Leaders to step forward and say the same thing, say its just as important as going out, as mayor garcetti did in front of the cancel culture rioters, education is just as important. We need our schools to open. Chairman, i yield back. Thank you so much. Ill say to the gentleman as one of the Democratic Leaders, also a Public School teachers outside of my professional career teaching in the Public Schools, ill also say im sitting in Congress Today because of a successful protest. With that, i yield five minutes to mr. Maloney. Mrs. Maloney. Thank you, mr. Chairman. I had pleasure of hearing testimony from both of our witnesses many years on the Financial Services committee and i have to say its great to hear from you both again. First id like to ask both of you, were in the middle of the worst economic crisis of our lifetime by far. In april a staggering 20 Million People lost their jobs, which was a record for a state. Its the highest its been since the great depression. The Unemployment Rate rose to 14. 7 . But in the last two months, the Unemployment Rate has actually decreased and now its down to 11. 1 . That surprised me because were still seeing millions of people file for Unemployment Insurance every week. So i want to ask both of you, where do you see the Unemployment Rate going . Is it going to get worse before it gets better, or is it going to continue going down in the months ahead . Lets start with you, dr. Bernanke. Its very hard to forecast, but i suspect weve seen some signs lately of some slowing in activity because of the increased concern about the virus. So i dont think well see as rapid a decline as weve seen recently. The cbo had numbers around 10. 5, the fed has numbers around 9 to 10 at the end of the year. Those seem like reasonable ballpark estimates. Maybe a little bit lower than where we are right now but not where wed like to be. Dr. Yellen. I agree. A lot of the workers who lost their jobs were on temporary layoff, and they maintained and this is good that they did their attachment with their previous firms. So as lockdowns ended and reopening started, a reasonable number of those workers were able to go right back to work. But as chair bernanke just said, with the resurgence of the virus, progress is slowing and could even reverse, even if things continued on a good track. I think it will take a number of years, two, three years, to get unemployment down to levels anywhere close to where we were before the pandemic. Thank you. As you both know in the c. A. R. E. S. Act we provided people who lost their jobs with an extra 600 a week from unemployment, businesses were laying off through no fault of their own. If everyone laid off at the coronavirus stopped spending we would see a massive contraction in the economy and possibly even a depression. From both economic and moral perspective, we had to make sure people who were unemployed could keep spending on the necessities of food and clothing and so forth. Its been critical to me and it has prevented a depression boosting aggregate demand. This is set to expire the end of this month, just 14 days, which means in 14 days we could be headed over an economic cliff. Now youre both economists, you know about the importance of an aggregate. I want to ask both of you. Do you believe allowing extra 600 a week in Unemployment Insurance, do you believe we should let it do you think if we had it expire, would it harm the economy . Lets start with you, dr. Bernanke . We gave three priorities for congress on fiscal policy, one was continuation of pandemic ui, important on humanitarian and economic basis. I think you can modify the structure to satisfy colleagues in terms of avoiding 100 replacement in some places or alternatively giving special eitc if they take jobs, if there is a differential. Theres structural but i agree its important to continue support for unemployed, which is enormous as you know. Dr. Yellen . I completely agree with that both on humanitarian grounds and the and the spending is absolutely needed for more pain not to be extended throughout the economy and for unemployment to keep moving down. Similarly for state and local governments, which we also prioritize, if there isnt substantial support there, we are going to see massive layoffs in state and local governments. Again, the loss in spending, the loss in jobs will harm workers throughout the economy. Now for the flip side of the question, do you believe that from a purely Macro Economic standpoint extending the extra 600 a week would boost the economy . What is your analysis of how a straight extension of the Unemployment Insurance would affect the economy . Would it support aggregate demand . Dr. Yellin and then dr. Bernanke and i yield back. Yes, yes it does. I believe it supports aggregate demand and spending in the economy that we need to create jobs. Dr. Bernanke . Weve advocated that the extra Unemployment Insurance be tied in some way to the national Unemployment Rate. So that it goes up. When unemployment goes up and down, when it goes down, that would make it more responsive to changing conditions. Thank you. I yield back. Thank you, gentle lady. The chair now yields five minutes. Thank you, mr. Chairman. And thank our witnesses for being here today. I appreciated your testimony. I serve on the Financial Services committee as well and ive enjoyed the conversation and your testimony over the years. In a march oped in the Financial Times both of you said, i quote, to avoid permanent damage from the virus induced downturn, is important to ensure that credit is available or otherwise sound borrowers who face a temporary period of low income or revenues. End quote. In my personal opinion this is a critical concept for congress that we must understand. Currently with the stimulus of the cares act and the forbearance banks have given customers we havent seen broad dlifrj ensies yet. However as this ends and the institutions and examiners get back to business as usual i am fearful we will see a broad markdown of assets on Balance Sheets and even entire business lines of Financial Institutions similar to what we did in 2008 and 2009. I repeatedly called for financial regulators to provide additional forbearance to Financial Institutions and allow the needed reserve, accounting, and capital relief necessary to allow them to work with their customers. Ive got legislation that i believe accomplished this goal. My questions to you are, do you think the additional forbearance for Financial Institutions is necessary to allow them the needed time to work with their customers and if our economy continues to be shut down are you concerned that the classification of nonperforming loans will drastically impact reserve accounts at depository institutions and in turn decrease access to credit particularly in low and moderate income communities . Id like an answer from both of you please. Mr. Bernanke, you want to start first . Sure. I think forbearance is a bit risky. We saw it in the savings loan crisis. We need to be sure banks are properly valuing assets but the fed has been trying to work with the banks. They changed the accounting standards. They dont have to assess the depth of the recession quite the same way. They changed supplementary leverage ratio. Theyre telling the banks to work with borrowers as you described. Its really good news that the Banking System is in such strong condition but i think it is important to continue to evaluate them for example through the stress tests. If it becomes necessary for some banks to raise new capital that was the thing that stopped the crisis in 2009. If it becomes necessary i hope the bank and other regulators will enforce that. Dr. Yellin . Yes, well, i agree with my former colleague, my current colleague. I think it is important for the fed and the fed has encouraged banks to lend and change regulations in ways that make it easier for banks to lend. It is also very important in my view as ben said that they have the capital necessary to meet the lending needs of the economy and weve seen from the analysis and recent stress tests, the pandemic analysis, that about onequarter of the major banks subject to that stress test are likely to see capital fall below minimum levels. If we have a w shaped, and a second wave of the virus, or if the recovery is very prolonged. It may move necessary for the fed to ask them to raise capital. You kind of made your case with the last comment and i appreciate that. But im concerned. Both of you are looking at it from a big bank perspective. Most of the banks in the country are less than 50 billion in access. You are looking at Credit Unions that are small in size. Those are the ones i think we need to shore up and give the ability to give forbearance to customers because they supply the Small Business loans in this country. Weve had this conversation many, many times. We saw the lack of it in 2008 and 2009 and how devastating it was to the businesses, local communities, jobs, and banks and Credit Unions themselves. I would appreciate a response to that. Well many banks including Community Banks have built substantial financial buffers after the financial crisis and it is appropriate at a time like this to be able to run those buffers down to support the credit needs of their communities. I would agree with ben on forbearances. We need to know whats happening in those banks. One quick question. You guys have both indicated how you would like to see the 600 or any other sort of Unemployment Insurance extended. What do you think is the incentive to get people back to work . What would you support or what kind of idea would you have to get people back to work . Continuing the 600 could be a detriment to people going back to work i am sympathetic to that, sir. You could lower the 600 so the replacement ratio is not above 100 as the concern and provide additional incentives to work for example you could have an enhanced employment tax credit for people that are at work. You could raise that ratio without taking away the necessary support of the unemployed. I know the president is supportive of a payroll tax cut which could me would be incentive to people not only to stay employed, a pay raise, but also for people to go back to work. Thank you. I appreciate your comments. I yield back, mr. Chairman. Thank you. The chair now yields to ms. Valesquez for five minutes i want to relate testimony from a Small Business owner in my community who testified this week and stated ppp which did provide a life line for her is an eightweek solution to an 18month problem so, mr. Chairman, i really thank you for holding this important hearing. 3 out of 4 Small Businesses have experienced decreasing revenue since march. An estimated 7. 5 million Small Businesses are at risk of permanent closure as a result of this crisis. So the bernanke, during the Great Recession when access to capital nearly froze for Small Businesses, congress made changes to the sba traditional loan programs including increasing the guarantees and reducing fees. As congress waits, long term proposals for Small Businesses would you recommend similar changes to fba loan programs to provide access to affordable capital for Small Businesses . Yes, i think the ppp program was very helpful in getting capital out to Small Businesses. Sba could be modified. My colleague dr. Yellin talked about the fed and the treasury lending to cdfis that could be particularly relevant to minority communities for example so i think there are ways to support Small Business. Many Small Businesses are run by the individuals who owns them, supporting the unemployed or supporting people broadly it would also be helpful. And i think there is an issue at some point in the future we have to, this economy may change in very important ways. We have to allow that at some point to happen but for now i would be inclined to want to support Small Businesses being hit by the virus. Thank you. In your testimony you mentioned that because the recession is unprecedented in so many ways forecasting the recovery is difficult. Ppp was enacted to keep employees on payroll but small firms have other fixed costs. Should congress consider the bold step of extending the Eviction Moratorium for individuals past july 27 and expanding it to include Small Businesses . I think with respect to Small Business expenses an approach that looked promising to me that is in the heroes act is an Employee Retention task credit and wont exist now but the heroes act expands it. And for Small Businesses it provides a tax credit for expenses other than wage expenses and that struck me as a promising approach in terms of supporting smaller businesses. Im concerned about those Small Businesses that lack liquidity, that lack the cash that they need in order to be able to pay rent, real estate costs, to remain in those businesses. So tax credit in that respect really doesnt help them. Well, it is a refundable tax credit so they would be eligible to receive the credit even if they dont have profits. Thank you. Dr. Bernanke, Consumer Spending is at the heart of the u. S. Economy and millions of Small Businesses operating in retail, hotel, and leisure are struggling as your testimony indicates. Why is it so critical to extend enhanced Unemployment Insurance now to support individuals and Small Businesses and what amount would you recommend . Well, as i mentioned, the Unemployment Insurance has a humanitarian aspect. We want people to pay their bills and stay in their homes. I think i would add we need to worry about Health Insurance which is another thing that happens when you lose your job. The other purpose of the Unemployment Insurance is to increase people will go out and spend. That will help the economy generally. There is a very powerful sectorial effect and some sectors like restaurants it will be a while before they can operate normally because of the effects of social distancing and so on. It is very hard to get around that problem. Also it is important that the Public Health crisis if it is not adequately addressed we will continue to face an economic uncertainty. Consumers if they dont feel safe they wont go into any restaurant or hotel or any of those Small Businesses. That is correct i yield back. Thank you for yielding back. The chair recognizes for five minutes thank you, mr. Chairman and thanks to our witnesses as well. I am grateful to have this conversation about the economy but i want to convey my disappointment with the minority not being able to have anybody on this panel today. If there was ever a time in this country when americans are literally desperate to provide partisan cooperation, it is now. It is july of 2020. Im just disappointed were having a one sided conversation, the most important conversation weve probably had on this committee about the recovery in this country and i just think that im so disappointed and i think the American People are as well. To get to the point today the pandemic is unlike any crisis in our lifetime. Our country has experienced a devastating loss of life. Emergency actions like stay at home orders were necessary to slow the spread and flatten the curve. But the picture emerging on a broader toll of Americans Health that we cant ignore. Weve heard plenty of anecdotal evidence that loneliness and isolation are especially hard on those battling depression Substance Abuse disorders as well as victims of domestic violence. We know Many Americans are delaying or skipping doctor visits for fear of contracting coronavirus. It is staggering to think of the Ripple Effect this is going to have for years to come as we brace not only for covid19 death toll but spikes and deaths from suicide overdose, heart conditions, cancer, any number of other diseases diagnosed too late. This is an all encompassing tragedy. Right now millions of americans are ready to return to work. Businesses are ready to reopen their doors. This is a positive step i think for americans, mental and financial health. In order to safely reopen our economy, we all need to ensure access for things like ppe, testing, and child care. Common sense tells us every reopening plan should include those. That is why its been discouraging for me to see the democrats playing politics with recovery plans. And the one we are talking about today the heroes act for example was not a serious bill that included all sorts of blank check giveaways such as restoring unlimited deductions for state and local taxes or salt as we all refer to it. The Nonpartisan Committee on taxation has found over half the benefits would go to those with annual incomes of 1 million or more. Only 1 of the benefits would go to those making less than 100,000 a year. Tax experts on both sides left and right agree restoring an unlimited salt deductions bad policy that would do nothing to help our nations economy recovery. The irresponsible bill would also extend the 600 were talking about per week in temporary supplemental Unemployment Benefits from the cares act through january, 2021. I supported the cares act and the unemployment supplement back in march. Much of the economy was going to be shut down for an undetermined amount of time. This benefit helped pay i think we all understand helped pay the rent and put food on the table and brought peace of mind as people found themselves unemployed or furloughed through no fault of their own. But ive heard from Small Business owners all over my districts trying to open responsibly and they are finding the supplement has distorted the job market. It is easy to see why. In my home state of indiana workers receiving 600 per week are getting about three times as much as they would otherwise on unemployment. In many cases a worker can make more money than if they return to work. The Nonpartisan Congressional Budget Office said extending the 600 per week supplement through january of 2021 as the heroes act proposes would weaken the incentive to work, decrease economic output, and decrease unemployment. In short, it would kill our economy. By allowing workers to keep up two weeks of the additional benefit after accepting the job essentially amounting to a 1200 reentry hiring bonus. The university of chicago estimates over twothirds of Unemployment Insurance recipients nationwide are receiving more money in unemployment than they would if they returned to work. What impacts of paying such a large group of people so much more than their normal income happens and do you see our plan as incentivizing rehiring a good thing to incentivize work . During the lockdowns it didnt make a lot of difference because people werent going out to work anyway. Right. Ive said a couple times i think it makes a lot of sense to rethink the structure of ui. And maybe even put rewards on the work side like eitc or the thing about the backtowork bonus is it rewards people who were unemployed and came back and they might earn more than somebody who was there the whole time. So that is a question. But i see no major contradiction between maintaining adequate ui support for those who cant find work but also restructuring so that people have the appropriate incentives to go back to work. I think those things can be done i appreciate that. In my case, you know, well have companies shutting down that cant rehire because it is so big that, the difference between unemployment with that 600 a week. If it went to january of 2021, my district and my state would be in trouble as would the rest of the country. There would be no jobs to go back to by that point. I yield back, mr. Chairman. Thank you, gentle lady, for yielding back. The chair now recognizes mr. Raskin for five minutes. Thank you very much, mr. Chairman. As we meet today we have 3. 6 million coronavirus cases in america, the most in the world just eight days after we hit 3 million. Yesterday posted a single day record of 77,000 new cases in a single day and three of our states, florida, arizona, and texas are now facing record increases and maxed out hospital intensive care capacity. What do our colleagues do . They blame democrat governors and democrat mayors and the Chinese Communist party and the World Health Organization. And anybody but the president of the United States of america. What a fraud this is. What disinformation. What a pathetic and transparent effort to distract america from what is really going on. It is true that china covered up the virus at the beginning. But, mr. Chairman, as i have shown several times before with submissions to the record, donald trump covered up for china 37 different times, praising president xi for his very good leadership, their excellent collaboration in the crisis, and their beautiful, beautiful friendship. So our colleagues have an empty cupboard of excuses if they have to go back to blaming President Trumps very good friend the head of the Chinese Communist party and while praising china in january, february, march, and april President Trump destroyed our opportunity to wage an Effective National response to the Coronavirus Crisis. Instead, burying america in his course of magical thinking, assuring the public the virus would magically disappear one day, and selling to the public with his various pronouncements his belief in different quack miracle cures like injecting people with disinfectant and drinking hydroxychloroquine. Mr. Chairman, i am sorry we have to spend any time on these distractions but they keep pumping out propaganda and we need to answer it. Id like to ask chairman bernanke this. The Federal Reserve is using its section 133 powers untd Federal Reserve act to allocate part of the 454 billion of existing assistance for states and municipalities. Can you describe how much money the fed has allocated to the program for states and localities and do you think, is it your assessment that the fed should be putting more money into the states and localities . Well, the fed is not anywhere close to using its existing capacity. Its only made one or two loans so far. I would still say its been worth while because the announcement of the Program Reduced quite a bit the risk aversion and uncertainty in that market and the market is functioning better on a private basis. So you might consider changing the terms or lengthening the terms but i think a lot of benefit has been felt in terms of reassuring the participants the fed is there as a back stop. Thank you. Chairman yellin, you said something very interesting and i want to be sure i got it right. You said get the pandemic under control and economic recovery will follow. During the course of this crisis some people have seemed to pose the imperative of Public Health and imperative of economic recovery as opposites. You can favor one or the other. But you seem to be saying we need to focus on getting the pandemic under control to advance Public Health in order for the economy to come back. I want to make sure i got you right on that. By and large, there is not much of a tradeoff and that everything that we can do and all the resources that are needed to get the pandemic under control will speed economic recovery. And thats why in our testimony we say that there is a very high payoff on the Public Health side that will benefit our economy. Chairman yellen, President Trump pushed a number of gullible republican governors and mayors to opening everything up way too quickly and at the same time he was not wearing a mask and sending all kinds of terrible mixed messages about the Public Health protocols. Now those very states are having to reverse course and go back to try to institute the Public Health protocols they didnt in the first place and the reopenings have been slowed. Dont you think it is better to take the Public Health problems seriously so we can really reopen the economy . Well, i think that is what weve seen throughout europe and much of the world where they had extreme lockdowns but then got things under control and were able to open up in a way that they had enough testing, contact tracing, masks, and other steps that remained under control, and it is very expensive to have to shut down again to the economy, too. Thank you, mr. Chairman. I yield back. Thank you. The chair now yields five minutes to dr. Greene. Thank you mr. Chairman and Ranking Member and thank you to our witnesses. Americas businesses are facing unprecedented challenges due to this pandemic. Government mandated shutdowns have caused numerous employees to lose their jobs and many businesses to shutter. For the sake of our witnesses, i want to let them know a little about me. After i left the army i started a Health Care Company and i too understand being an entrepreneur is not easy and involves a lot of risk and sleepless nights. Ill never forget waking up in the middle of the night to check the lock box on that nights proceeds many, many nights. During my time as ceo of that company our team took the company from 180,000 in revenue to 212 million in annual revenue in just eight years. I am very proud of what we accomplished. But through all of the difficulties and growing pains that we faced i cant imagine the challenges facing Small Businesses today. With the witnesses understanding a little bit about who i am i want to look at Economic Performance during this pandemic. I know chairman clyburn gave a grave picture of how the economy is crashing. Id like to point out it is really the blue states continuing to crash economically. I can hear the rhetoric now. Look at the increase in cases in tennessee, florida, texas. I cant talk about those states but i can tell you in tennessee, yeah. Our cases are going up but our deaths remain proportionately low and were monitoring our icu beds here in tennessee. Ventilators are at 32 utilization. That means 68 are sitting there waiting. I recall the objective was to flatten the curve not stop every single infection. So protect the at risk populations, use zinsing, and open up. Weve done just that in tennessee. Economically our recovery is setting records Just Announced after an april unemployment of 15. 5 , may 11 , our june unemployment is down to 9 in tennessee. With retail sales booming. Our governor Just Announced last night our Economic Growth in tennessee is only 0. 2 below what we predicted it would be without covid and before it ever happened. We have the lowest debt in the nation per capita, a fully funded pension plan. We are using money we set aside years to distribute additional dollars to businesses and medical providers. It just goes to show it matters who governs. Conservative policies that advance freedom lead to prosperity even in a crisis. In tennessee we appreciate that the Trump Administration has taken bold action to provide economic relief. The president slashed dream line regulations, pushed for payroll tax holiday to ease hiring penalties. Worked with congress to enact the Paycheck Protection Program and billions in additional low interest loans for Small Businesses. If the government is going to force business tows close it has an obligation to provide relief. The president declared war on this virus expediting emergency supplies on a massive scale and amping up Vaccine Development in his words at warp speed. It is critical Congress Works with the president and not just sits there and bashes the president to help america recover. It is equally important we get our economy blasting on all cylinders. The costs of shutdowns are nearly equally as great. Im grateful you guys are here to share your perspectives on the economic challenges our nation is facing. Real quick my first question is to chairman bernanke. How much debt is enough . We are at 22 trillion before this thing happened and now upwards of 10 more trillion. What is too much . Well, first going back to the first part of your comment, there is a lot of evidence that peoples behavior does depend in the local area so i dont know about your state. Well have to see how that works out. But there is that issue and it makes a lot of sense. Id also mention lockdowns are not the only way to address the problem. There are other tools like masks and tests and tracing and so on and i am hopeful that will be used. On debt, you know, like i said, given how low Interest Rates are around the world and that is not just a Monetary Policy thing, this is a global trend that goes on for 30 years of Interest Rates coming down and down, the burden of the debt is not as high as the dollar amount would make you think. And this is a critical situation. How much is too much . I just am looking at what is the number . It is not a number. Its a trajectory. The problem is when it keeps growing and growing and the interest keeps compounding and getting bigger and bigger you get to a point where either the burden of the interest is so high you have to raise taxes or cut spending, or alternatively you run into an inflation situation. That is the kind of outcome you want to avoid. We are not that close now given the level of our debt burden. The money were printing isnt going to cause inflation . No. People said it would after 2008. They were wrong then, too. The gentlemans time is expired. The chair now recognizes for five minutes mr. Foster. Thank you. You know, id like to stay on that same point. One of the factors that prevented adequate fiscal response to the Great Recession was the very politically successful narrative that we were somehow spending ourselves into hyperinflation and debasing the dollar. Dr. Bernanke probably shares with me the fond memories of former senator from Illinois Republican mark kirk traveling to china in 2009 to warn officials that they should not buy u. S. Treasury securities or other u. S. Debt because u. S. Spending was climbing toward the fall and that the Federal Reserve bank was, quote, creating hyperinflation which is a mantra weve heard from republicans again and again and are apparently hearing once more. So, first,did the prediction materialize . Why or why not . What were the actual Interest Rates compared to hyperinflation . Either one of you. I guess start with dr. Bernanke. Well, as you know inflation was very low and in fact the fed has had a great deal of difficulty getting inflation up to the 2 level. Interest rates, which included inflation premium, have been quite low as well. Pretty much in the 2 range until recently now under 1 . Thank you. Are you aware of a worse prediction in Macro Economics . There are a lot of bad predictions in Macro Economics. All right. For the record it would be amusing to see a list and where that appears in the list of the top ten. Going into this crisis how much debt is too much . Going into this crisis the net worth of americans was about 120 trillion. Will the gentleman yield for a moment . We need some people to mute because were getting a lot of feedback. Please if your a he not speaking mute yourselves. Mr. Foster . All right. Going into this crisis the net worth of americans was roughly 120 trillion and the market value of property directly owned by the u. S. Government was hard to estimate but its been estimated in the range of 200 trillion to 300 trillion. So in contrast, did going into this crisis our government had a publicly held debt of roughly 20 trillion and which will probably be around 25 perhaps 30 trillion when the Coronavirus Crisis has been dealt with. So my question is, are there any credible circumstances under which our government would be unable to pay its debts as a result of a fiscally sufficient response to the Coronavirus Crisis . Well, i think it is hard to imagine if something, some shock were to happen that drastically caused Interest Rates to rise and i really cant imagine what that would be. Then the federal government would face strains because of a higher interest burden on the debt and would have to deal with it. Now, eventually some steps do have to be taken in my view to deal with deficits to get them back under control when this is over so that the debt to gdp ratio stabilizes rather than continuing to rise i agree. I think i guess you concur there is no shortterm emergency were facing. No, no. Thank you. In terms of as we contemplate the next relief payment, you know, direct payments to individuals, rental assistance, payroll and unemployment support, grants or subsidies to businesses large and small, you know, subsidize or guarantee loans to businesses or relief to state and local governments. So just putting aside all equity issues, which of these provides the biggest Macro Economic bang for the buck . And where should we look for objective and competent advice on this . Our recommendations were first Public Health. That has a very high return. Both the medical side and also the safe opening side. The second is Unemployment Insurance both because of humanitarian reasons and also because people unemployed spend a great deal of their income. And the third would be state and local. I think those are the priorities. There are other things you might want to look at like supporting Small Business, i think ppp program did a lot of good. But those are the three i think that in our judgment are the most important priorities. So has anyone actually tried to quantify this specifically as the modeling that is done by the cbo and the fed, incorporate the different multipliers for this different kind of spending or not . Are we sort of on our own in congress here . I would imagine the cbo has got estimates. I dont have them to hand. There is a huge amount of work on this. I dont know the cbo estimates. But what different marginal propensityies to spend out of income that goes to different groups in the economy. There is a vast amount of work on that and as ben said Unemployment Compensation to low wage workers virtually all of that is spent and it will be similar for state and local Government Spending that are among our Top Priorities, very high impact on spending in the economy. Thank you. Im out of time and yield back. Thank you, mr. Foster. The chair now recognizes mr. Kim for five minutes. Thank you all for gathering and talking about this. I want to start by responding to a comment made earlier in the hearing. Another member of the committee was pressing his point about schools citing the American Academy of pediatrics about next steps with our kids. I was interested in learning more about this. I quickly researched this and found an important clarifying comment made by the academy regarding the statement being misunderstood and misrepresented. I wanted to read it for you. Strong advocates for the goal of kids physically being present in schools but there are a lot of other things to consider. It goes on to say we have to consider covid activities in the community. They should not be politically motivated. We have to think about what is best for our kids, teachers, and families. In fact shall the American Academy of pediatrics joined with the American Federation of teachers, National Education association and others to issue a joint statement saying, science should drive Decision Making on safely reopening schools. Public Health Agencies must make recommendations based on evidence not politics. We should leave it to Health Experts to tell us when the time is best to open up School Buildings and listen to educators and administrators to shape how we do this. Areas in high level of covid should not be compelled to reopen. A one size fits all approach is not appropriate for returntoschool decisions. Withholding funding from schools that do not open in person fulltime would be a misguided approach. These are incredibly important things to consider here. Im a father of a young boy that is supposed to start school soon. I would love to have him get a great education and be able to enjoy his year in kindergarten. I want everything for him. I dont want anyone to accuse me or anyone else of not wanting my kid or our kids to have the education that they deserve. But my education, my Public School education i got in my district also taught me to respect science and expertise and to make sure families and education professionals are part of that discussion. Going back to the topic of our hearing here i want to just go to chair bernanke. I thank you for what youve been saying, the work youve been doing with regard to state and local government. I was at a Small Business Committee Hearing this morning where treasury secretary mnuchin, i asked him about this issue, and he wouldnt commit to me that he would support this type of aid in the next funding package because we should not, quoteunquote, bail out states with mismanaged budgets is how we talked about it there. So i want to ask your position on this does your state reopening give you any concern additional funding for state governments in the midst of this pandemic will create incentives for mismanagement . No. I think the money could be structured in ways that eliminates that incentive. It could be done in terms of bloc grants for education for example or for health care. It can be done by formulas that dont relate to the existing tax burden, things like population, Unemployment Rate, etcetera. So i think theres ways to provide the money that will not be provided incentive for mismanagement. You can make sure and require that the money not be used to increase Pension Funds or cut taxes for example. So i dont think that is really an issue. And the more important issue is that the states and localities are both big employers and also the front line in terms of Critical Services to the public i appreciate that. In addition to the issue about mismanagement that you addressed i also want to address the use of the term bail out here. It came up in this hearing as well. In my state of new jersey we only get back around 75 cents to 81 cents for every dollar we put into the federal government. Other states get back a dollar, over a dollar. Sometimes over 2 for every dollar they put in. I just dont appreciate this notion that taxpayers are bailing out states like mine. For years residents of my state have been helping other states doing more than our fair share. Now we need help and are asking for what is fair here in the middle of a pandemic. Beyond that point, chair bernanke, you talk about the strong sense of challenges we face at the state level could have dire circumstances on the National Economy. I want to just hear a little bit more from you about that, about if we dont help states, what is that going to do when it comes to our responsibility to our National Economy . I think we made this mistake in the recovery from the 20072009 recession after the Global Financial crisis. We had an 800 billion federal program, Fiscal Program, but the states were forced to contract, layoff people, and an estimate i saw recently as i mentioned before was it cut a half percentage point off the growth rate as the economy tried to recover from the serious recession. So it will have implications for spending and jobs for the economy as a whole as well as for people within new jersey. Thank you so much. Mr. Chairman, back to you. Thank you so much. We have now reached the end of our period of questions. The chair would like to recognize the Ranking Member for a closing statement if he would like to make one. Okay. Thank you again, mr. Chairman. Good to see both doctors bernanke and yellen. And we really have been talking a lot about what we need to do to reopen the economy safely. Always the key term there. There are really good examples out there. It would have been good to hear even more opinions on how it is being done because when you go all around the communities and i get to go to a lot of different places to see what people are doing, smartly. You can learn from what other people are doing as you work to reopen. I know again i talked about the meeting that i had with the Vice President on tuesday. What Vice President pence did is brought his whole team down. You had dr. Birx there. You had all the medical experts. You had the head of the lsu system and the head of the Southern University system. I think it is the only historically black college and University System not just school and they were both talking about what they are doing to safely reopen. It can be done. Both confirmed that. Dr. Birx confirmed it can safely be done. You dont do it if it cant be safely done. It can safely be done. Then our challenge as policy makers is to go figure out how to do it. Not to allow anybody to cop out of saying well its hard and were just not sure so we wont do it. Go talk to the people who are doing it safely because there is a serious cost. A serious cost. When you go back to the academy of pediatrics, they talk about, sure. Youve got to follow guidelines. It is not whether or not to follow guidelines. Youve got to follow the cdc guidelines in your state and local guidelines but you can do it and there is a cost of not doing it. They talk in this report about the damage to kids. There is a cost to kids not just in learning. There are a lot of other things, too. A lot of kids get their basic nutrition from school. A lot of kids with disabilities get their basic needs met in school. Thats not being done if youre closing schools. You know, for some of these School Systems to say theyre not going to reopen or the Teachers Union to say theyre not going to come back to work unless police are defunded or something ludicrous, think about the kids. Mr. Jordan talked about the over 50 million kids that are going to be losing out. Theyre losing out if they dont get their schools reopened. And so, you know, coach talked about this with Vice President pence. Sports some people think are trivial but they are key in ewing communities. It is something in the psyche of people they want their sports to come bachlkt he talked about the human aspect. This applies to over 50 million kids denied that opportunity to go back. He said a year ago today joe burrow was predicted to be a sixthround draft pick. Because he had that opportunity and he worked hard and got to be around the system where he could prove himself in the course of those next eight months he became the number one draft pick maybe one of the most storied histories. All of that would have been denied. Think about the other 50 million plus kids in america that will be denied opportunity if we dont do the hard work of figuring out how to do it. Not whether to do it but actually doing it. It is something we have to challenge ourselves to do like i said. We put a man on the moon and we can absolutely do it. The doctors say you can do it. Dr. Birx. The American Academy of pediatrics. Lets get it done. Chairman, i yield back. Thank you, Ranking Member, for the statement. I just want to reiterate that at the beginning of the hearing, you asked if certain documents could be entered into the record. I did not object and of course i want to point out that last week when President Trump started pushing to fully reopen schools without regard to Public Health guidance the American Academy of pediatrics issued a clarification. You just heard it from mr. Kim. So his statement will go into the record. I want to emphasize, that statement said that science should drive Decision Making on safely reopening schools. I notice, my friend, that you talked about dr. Birx being there with the Vice President and Southern University and lsu being there. The fact is i would love for some elementary School Teachers to have been there. For some kindergarten teachers to have been there. For some superintendents from those public School Districts around louisiana to have been there. They are the ones who are on the front lines. They are the ones who are committed to taking care of these little children all day every day. Not dr. Birx. Not the Vice President. Not the president or the Athletic Director of lsu or Southern University. Im a proud graduate of hvcu. We just closed down our program all for the whole fall. Id love going to home coming and watching my team play. But thats not what this is about. This is about educating our children in a safe, healthy environment. And we need to go with the experts when it comes to that. I went down to lsu when clemson played lsu. Im a big fan of joe burrows. I hope he has a successful career. But he is not going to if he cant stay healthy. If he is not insulated from this virus just because he got the heisman trophy. We got to do whats necessary to keep him healthy. So today in closing, i want to thank chair bernanke and chair yellen for being here today. We appreciate your distinguished records of Government Service and expertise you have shared with us this afternoon. I Hope Congress will use this to chart a path through to the other side of this terrible pandemic. Make clear that the federal governments economic Recovery Efforts so far are not sufficient and without further action we Face Even Greater economic turmoil. This turmoil would have a disproportionate impact on communities of color. Todays hearing has also made clear there are steps our government must take now to put us on the road to economic recovery. First, as our witnesses explained in their written testimony, and i quote, nothing is more important for restoring Economic Growth than improving Public Health end of quote. We cannot hope for an economy to recover until we successfully control this pandemic. Second, Congress Must take bold action now and pass a substantive economic recovery packet like the heroes act that includes substantial support to state and local governments. As the witnesses testified today and im quoting again these governments will have to layoff workers and limit essential services. Until they get federal help. End of quote. Chair bernanke and chair yellen, eloquently explained why the economy cannot afford for congress to do anything less than immediately pass a comprehensive and robust recovery measure. Finally, adjust the terms for eligibility for the lending facilities to make sure that all borrowers have access to credit. And explore additional facilities to support lending to households and Small Businesses that have been harmed by this crisis. Doctors bernanke and yellen steered the nation out of the 2008 financial crisis. Congress and the administration should heed their advice and act now if we hope to get on the path to economic recovery in a manner that is effective, efficient, and equitable. Without objection, all members will have five legislative days within which to submit additional written questions for the witnesses to the chair, which will be forwarded to the witnesses for their response. Ask our witnesses to please respond as promptly as you are able to. This meeting is this hearing is adjourned. Tonight on American History tv, our series on landmark cases produced in cooperation with the National Constitution center. We explore the issues, people, and places involved in some of the nations most Significant Supreme Court cases. We begin at 8 00 eastern with miranda v. Arizona, the 1966 case which established that police must notify subjects of their right to counsel and their right to avoid selfincrimination. Then at 9 35 roe v. Wade the 1973 case which upheld the due process clause of the 14th amendment protects a womans right to terminate a pregnancy. Watch landmark cases tonight on cspan 3 and any time at cspan. Org. Secretary mnuchin suggests the government should consider forgiving all taxpayer backed small loans. He and the head of the Small Business administration testified before a house panel about the effectiveness of the emergency loan progrm,