[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]





 
                 OVERSIGHT OF THE TREASURY DEPARTMENT'S

                AND FEDERAL RESERVE'S PANDEMIC RESPONSE

=======================================================================

                            VIRTUAL HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 23, 2021

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 117-12
                           
                           
                           
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]          
 
 
 
 
                             ______                       
 
 
               U.S. GOVERNMENT PUBLISHING OFFICE 
 44-345 PDF             WASHINGTON : 2021 
 
                           

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York           BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            STEVE STIVERS, Ohio
ED PERLMUTTER, Colorado              ANN WAGNER, Missouri
JIM A. HIMES, Connecticut            ANDY BARR, Kentucky
BILL FOSTER, Illinois                ROGER WILLIAMS, Texas
JOYCE BEATTY, Ohio                   FRENCH HILL, Arkansas
JUAN VARGAS, California              TOM EMMER, Minnesota
JOSH GOTTHEIMER, New Jersey          LEE M. ZELDIN, New York
VICENTE GONZALEZ, Texas              BARRY LOUDERMILK, Georgia
AL LAWSON, Florida                   ALEXANDER X. MOONEY, West Virginia
MICHAEL SAN NICOLAS, Guam            WARREN DAVIDSON, Ohio
CINDY AXNE, Iowa                     TED BUDD, North Carolina
SEAN CASTEN, Illinois                DAVID KUSTOFF, Tennessee
AYANNA PRESSLEY, Massachusetts       TREY HOLLINGSWORTH, Indiana
RITCHIE TORRES, New York             ANTHONY GONZALEZ, Ohio
STEPHEN F. LYNCH, Massachusetts      JOHN ROSE, Tennessee
ALMA ADAMS, North Carolina           BRYAN STEIL, Wisconsin
RASHIDA TLAIB, Michigan              LANCE GOODEN, Texas
MADELEINE DEAN, Pennsylvania         WILLIAM TIMMONS, South Carolina
ALEXANDRIA OCASIO-CORTEZ, New York   VAN TAYLOR, Texas
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts

                   Charla Ouertatani, Staff Director
                   
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    March 23, 2021...............................................     1
Appendix:
    March 23, 2021...............................................    39

                               WITNESSES
                        Tuesday, March 23, 2021

Powell, Hon. Jerome H., Chair, Board of Governors of the Federal 
  Reserve System.................................................     7
Yellen, Hon. Janet L., Secretary, U.S. Department of the Treasury     6

                                APPENDIX

Prepared statements:
    Powell, Hon. Jerome H........................................    40
    Yellen, Hon. Janet L.........................................    45

              Additional Material Submitted for the Record

Powell, Hon. Jerome H.:
    Written responses to questions for the record from Chairwoman 
      Waters.....................................................    58
    Written responses to questions for the record from 
      Representative Beatty......................................    69
    Written responses to questions for the record from 
      Representative Davidson....................................    71
    Written responses to questions for the record from 
      Representative Hill........................................    74
    Written responses to questions for the record from 
      Representative Meeks.......................................    79
    Written responses to questions for the record from 
      Representative Timmons.....................................    82
Yellen, Hon. Janet L.:
    Written responses to questions for the record from 
      Representative Meeks.......................................    83
    Written responses to questions for the record from 
      Representative Green.......................................    85
    Written responses to questions for the record from 
      Representative Pressley....................................    86
    Written responses to questions for the record from 
      Representative Nikema Williams.............................    87
    Written responses to questions for the record from 
      Representative Huizenga....................................    90
    Written responses to questions for the record from 
      Representative Hill........................................    92
    Written responses to questions for the record from 
      Representative Timmons.....................................    94


                       OVERSIGHT OF THE TREASURY

                       DEPARTMENT'S AND FEDERAL

                      RESERVE'S PANDEMIC RESPONSE

                              ----------                              


                        Tuesday, March 23, 2021

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 11:59 a.m., via 
Webex, Hon. Maxine Waters [chairwoman of the committee] 
presiding.
    Members present: Representatives Waters, Maloney, Sherman, 
Meeks, Scott, Green, Cleaver, Perlmutter, Himes, Foster, 
Vargas, Gottheimer, Lawson, Axne, Casten, Lynch, Adams, Dean, 
Garcia of Illinois, Garcia of Texas; McHenry, Lucas, Posey, 
Luetkemeyer, Huizenga, Stivers, Wagner, Barr, Williams of 
Texas, Hill, Emmer, Zeldin, Loudermilk, Mooney, Davidson, Budd, 
Kustoff, Hollingsworth, Rose, Steil, Timmons, and Taylor.
    Chairwoman Waters. The Financial Services Committee will 
come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    As a reminder, I ask all Members to keep themselves muted 
when they are not being recognized by the Chair. The staff has 
been instructed not to mute Members, except when a Member is 
not being recognized by the Chair and there is inadvertent 
background noise.
    Members are also reminded that they may only participate in 
one remote proceeding at a time. If you are participating here 
today, please keep your camera on, and if you choose to attend 
a different remote preceding, please turn your camera off.
    Before we begin today's hearing, I would like to inform all 
Members that our witnesses today have a hard stop at 2:15 p.m., 
Eastern Standard Time.
    Today's hearing is entitled, ``Oversight of the Treasury 
Department's and Federal Reserve's Pandemic Response.''
    I now recognize myself for 4 minutes to give an opening 
statement.
    I would like to welcome Secretary Yellen and Chair Powell. 
I am very pleased that with Democrats' passage of President 
Biden's American Rescue Plan, help is now arriving for millions 
of struggling individuals, families, and small businesses all 
across this country. The Biden plan delivers much-needed relief 
in the form of additional direct payments, expanded child tax 
credits, emergency rental, homeowner, and employment 
assistance, support for small and minority-owned businesses, as 
well as funding for other key programs. The American Rescue 
Plan (ARP) is exactly what the nation needs in the midst of 
this ongoing crisis, and it will help to put us on the path to 
a faster and more equitable recovery. I am also very relieved 
that we have President Biden's capable leadership in the White 
House, and that he is putting in place a team to ensure that 
the pandemic response and the implementation of relief programs 
is efficient, effective, and a top priority so that we can beat 
this deadly virus.
    I would like to take a moment, as we prepare to receive 
testimony from Secretary Yellen for the first time in her role 
as Treasury Secretary, to acknowledge the historic nature of 
her appointment. Starting with Alexander Hamilton in September 
of 1789, the Department of the Treasury has exclusively been 
led by men until now. Over 231 years later, Secretary Yellen 
became the first woman to serve as Treasury Secretary. She is 
also the first person to serve as Treasury Secretary after 
serving as head of both the Federal Reserve and the White House 
Council of Economic Advisers.
    Secretary Yellen, we applaud you, and our committee looks 
forward to continuing to work closely with you. Secretary 
Yellen, I would also like to thank you for your work on 
negotiating an increase in the special drawing rights of $650 
billion at the G-7, as I have previously called for. This 
increase will help vulnerable countries to fight the pandemic 
and will boost the United States' and global economies.
    Chair Powell, I would like to thank you for following my 
recommendation on bank capital requirements and ending the 
temporary exemptions to the Supplemental Leverage Ratio (SLR) 
for big banks. We need to ensure the stability of our financial 
system during this continuing crisis, and strong capital 
requirements are the cornerstone of appropriate prudential bank 
regulation. While we are on the right path with the passage of 
the American Rescue Plan and the Biden Administration's strong 
leadership, we still have a long road ahead of us. Millions of 
people are still out of work, and threats to the economy 
remain. We must ensure that there is indeed a sustained and 
equitable recovery from this historic crisis, so I look forward 
to your testimony.
    I now recognize the ranking member of the committee, the 
gentleman from North Carolina, Mr. McHenry, for 4 minutes.
    Mr. McHenry. Thank you, Madam Chairwoman, and I want to 
thank Secretary Yellen and Chair Powell for being here today.
    It is clear we are in a very different place today than we 
were last March. Our economy is ready to safely reopen, and 
economic projections are increasingly positive. Despite those 
facts, Democrats still chose to muscle through their partisan 
spending package, only 9 percent of which goes toward defeating 
the virus. This package was not targeted to help those most in 
need, and does not get Americans safely back to work or kids 
back in the classroom. The data tells us that targeted support 
is the key to really reaching those groups who need it most, 
and with the addition of $1.9 trillion, there has been a great 
deal of debate about what will happen with this amount of 
liquidity in our financial markets.
    Here is what we do know. Increased taxes, will impede 
growth, and, as we saw in 2008 and 2009, it is harder to 
address long-term unemployment. We see our Central Bank's 
balance sheet growing to levels unseen in human history. Pre-
COVID, we experienced a roaring economy spurred by appropriate 
regulation, lower taxes, and innovative solutions. Instead of 
building on these gains, my Democrat colleagues are approaching 
this crisis like they did in 2009, doing it all over again, 
rehashing old, failed policies that will not build lasting 
growth and lasting prosperity.
    Things are much different. It is a much different country 
now and a much different economy now, and we should remain 
forward-thinking and seek bipartisan solutions to really 
address the needs of our economy.
    I am grateful for the opportunity to be with you here today 
under the guise of a Coronavirus Aid, Relief, and Economic 
Security (CARES) Act oversight hearing, although it is 
interesting that the CARES funding was rescinded in December.
    I think it would be more productive to discuss this larger 
COVID package that was just passed, and I believe there is a 
lot to discuss there. To put that mammoth $1.9 trillion bill 
into perspective, let's put it this way: The Biden 
Administration is going to spend $3.7 billion on average, per 
day, for every day remaining in 2021. That equals $43,000 per 
second. A lot of that money will flow directly from the 
Treasury to States and cities, which introduces a whole new set 
of challenges with respect to preventing waste and fraud. And 
unlike the bipartisan CARES Act, this bill does not contain any 
new layers of oversight to address these challenges.
    Secretary Yellen, at our first CARES quarterly hearing in 
June of 2020, we had a chance to run through our expectations 
with respect to transparency with your predecessor.
    At that hearing, Secretary Mnuchin committed to providing 
key programmatic data to congressional committees to assist 
oversight responsibilities, and he followed through on that 
commitment. Secretary Mnuchin also committed to working with 
the various oversight bodies with jurisdiction under the CARES 
Act, including the Pandemic Response Accountability Committee, 
the Congressional Oversight Commission, three Department's 
Inspectors General, and the Government Accountability Office 
(GAO). Now that we have an additional $1.9 trillion to track, I 
would ask for your commitment along those same lines as 
Secretary Mnuchin committed. That would be encouraging, if you 
continue the practice of your predecessor to cooperate with our 
committee, both Democrats and Republicans, to ensure 
appropriate oversight.
    I want to thank you both for your testimony today, and I 
look forward to the discussion. I yield back.
    Chairwoman Waters. Thank you very much. I now recognize the 
gentleman from Texas, Mr. Green, who is also the Chair of our 
Subcommittee on Oversight and Investigations, for 1 minute.
    Mr. Green. Thank you, Madam Chairwoman. I thank you so much 
for your leadership during these turbulent times. Madam 
Chairwoman, as the CARES Act funding continues to flow, I am 
greatly concerned about the mechanics of how these funds will 
reach their intended beneficiaries. There are two recently-
authorized pandemic response programs the Treasury Department 
is now rolling out, in which I have a special interest.
    The first is the December COVID package that included $9 
billion in emergency capital investment as a program. It is 
called the Emergency Capital Investment Program (ECIP), and 
will provide capital investments and grants to strengthen 
Community Development Financial Institutions (CDFIs), and 
Minority Depository Institutions (MDIs). I am looking forward 
to hearing about the plans for engaging eligible MDIs and CDFIs 
regarding this new resource.
    The second assistance to small businesses, authorized in 
the American Rescue Plan, is through the State Small Business 
Credit Initiative, also known as the SSBCI. This $10 billion 
program provides funding, $2.5 billion of which will go to 
minority-owned businesses, and that can make a real impact in 
the hardest-hit businesses. I look forward to hearing from the 
witnesses in terms of how these programs will benefit the end 
users. I yield back.
    Chairwoman Waters. Thank you. I now recognize the 
subcommittee's ranking member, Mr. Barr, for 1 minute.
    Mr. Barr. Thank you, Madam Chairwoman. Secretary Yellen, 
congratulations on your confirmation. I look forward to working 
with you. And Chairman Powell, thank you for being here.
    Last year, in response to the pandemic, Republicans and 
Democrats worked together on multiple bills that were 
temporary, targeted, and tied to COVID. In partnership with the 
Federal Reserve and Treasury, we were able to direct aid where 
it was needed. Unfortunately, despite last year's bipartisan 
cooperation, the Majority rammed through a partisan $2 trillion 
deficit spending bill that is a Keynesian wish list for their 
pre-COVID priorities.
    While stimulative policies may look good in the short term, 
I worry about the unintended consequences for mid- and long-
term growth. I fear the toxic cocktail of massive deficit 
spending, when we had $1 trillion of funding still unspent from 
last year, increasing risk of inflation, higher long-term 
interest rates, and unprecedented accommodative monetary policy 
that I fear is addicting our economy on easy money, the promise 
of growth-destroying tax increases, and an avalanche of 
regulation, which includes unrelated climate and ESG earnings, 
will stifle long-term prosperity.
    I hope we can work together to mitigate future damage by 
enacting pro-growth, market-oriented solutions to position our 
economy for the long term. Thank you, and I yield back.
    Mr. McHenry. Madam Chairwoman?
    Chairwoman Waters. Yes, Mr. McHenry?
    Mr. McHenry. Madam Chairwoman, I ask a point of personal 
privilege to recognize my staff director, the Republican staff 
director on the Financial Services Committee, Stephen Cote.
    Chairwoman Waters. The gentleman is recognized.
    Mr. McHenry. Thank you, Madam Chairwoman. Chairwoman Waters 
and I know from our service here on the Hill that without 
competent, good staff, this institution couldn't work. And I 
think on a bipartisan basis, we know that our staff carries out 
a lot of the things that we try to achieve legislatively and in 
terms of oversight and working with the Administration to help 
the American people.
    So, Steven Cote has served our institution quite well. He 
will be leaving us in mid-April to go with an establishment 
downtown to go into the private sector, and I want to wish him 
well. I want to thank him for his service to the American 
people, and to our government. He has served in Congress, most 
notably as the staff director of the House Rules Committee 
before coming to this fine committee, the House Financial 
Services Committee, to lead committee Republican staff. He has 
served in the Majority and the Minority in the House of 
Representatives. He also served in the Administration in the 
Office of Management and Budget and various other functions. He 
is a patriot who served his country and served his country 
well.
    I want to thank him for his work, his tenacious spirit, his 
love for the staff and the people that he gets to work with, a 
love for the institution and our government, and a love for his 
country. And I want to thank Stephen for his great work for me 
over the last 2\1/2\ years, for the good work that we have been 
able to get done. So with that, I want to say thank you to Mr. 
Cote for his service, and, Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you very much, Mr. Ranking Member. 
I would like to associate myself with you, and I join with you 
in recognizing Stephen's contributions to the committee and to 
the Congress. Stephen, also called, ``Cote'' by friends and 
enemies alike, has had a long and distinguished career in the 
United States Congress and in the Executive Branch. During his 
20-year career, he has served in a variety of positions and 
institutions. To say he is a tough negotiator is an 
understatement. He is tenacious, he is fierce, and he is 
stubborn. He also has a talent for frustrating several members 
of my staff with his demands. He is a fierce advocate for his 
ranking member and his party, and I do respect that. So, 
Stephen, neither I nor my staff are sorry to see you go.
    [laughter]
    Chairwoman Waters. But in all seriousness, on behalf of the 
Democratic Majority, I thank Stephen for his service to the 
American people and wish him the best of luck in his future 
endeavors. Thank you very much.
    Mr. McHenry. Madam Chairwoman?
    Chairwoman Waters. Yes?
    Mr. McHenry. Thank you for that kindness. Thank you for 
that kindness and the spirit with which you offer it. We both 
have talented staff, and sometimes they go toe-to-toe on our 
behalf, but it is always for love of our country, but sometimes 
for the love of the game, too. So anyway, thank you, Madam 
Chairwoman.
    [laughter]
    Chairwoman Waters. Thank you very much, Mr. Ranking Member. 
That is so true.
    I now want to welcome today's distinguished witnesses to 
the committee.
    First, I want to welcome the Honorable Janet Yellen, 
Secretary of the United States Department of the Treasury, for 
her first appearance before the committee in her new role. 
Secretary Yellen has testified a number of times before the 
committee in her prior capacity as the Chair of the Federal 
Reserve, where she served from 2010 to 2014 as Vice Chair, and 
from 2014 through 2018 as Chair, so I do not believe she needs 
any further introduction.
    I also want to welcome our other distinguished witness, the 
Honorable Jerome Powell, Chairman of the Board of Governors of 
the Federal Reserve System. He has served on the Board of 
Governors since 2012, and as its Chair since 2018. Chair Powell 
has previously testified before the committee, and I believe he 
also does not need any further introduction.
    Each of you will have 5 minutes to summarize your 
testimony. You should be able to see a timer on your screen 
that will indicate how much time you have left, and a chime 
will go off at the end of your time. I would ask you to be 
mindful of the timer, and quickly wrap up your testimony if you 
hear the chime. And without objection, your prepared statements 
will be made a part of the record.
    Secretary Yellen, you are now recognized for 5 minutes to 
present your oral testimony.

  STATEMENT OF THE HONORABLE JANET L. YELLEN, SECRETARY, U.S. 
                   DEPARTMENT OF THE TREASURY

    Secretary Yellen. Chairwoman Waters, Ranking Member 
McHenry, and members of the committee, thank you for having me. 
We are meeting at a hopeful moment for the economy, but still a 
daunting one. While we are seeing signs of recovery, we should 
be clear-eyed about the hole we are digging out of. The country 
is still down nearly 10 million jobs from its pre-pandemic 
peak.
    When Congress passed the CARES and Consolidated 
Appropriations Acts last year, it gave the government some 
powerful tools to address the crisis, but upon taking office, I 
worried that they weren't powerful enough. After all, there 
were and still are some very deep pockets of pain in the data: 
1 in 10 homeowners with a mortgage are behind on their 
payments; and almost 1 in 5 renters are behind on their rent. 
There are 22 million people who say they don't have enough food 
to eat: 1 in 10 adults are hungry in America. I looked at data 
like these and I worried that the COVID economy was going to 
keep hurting millions of people now and haunt them long after 
the health emergency was over.
    We know that when the foundations of someone's life falls 
apart, when they lose the roof over their head or don't have 
the ability to eat dinner every night, the pain can weigh on 
them for years. Their earnings potential is permanently 
lowered, and am I worried about this happening on a mass scale. 
That is why I advocated very hard for the American Rescue Plan, 
and why it is my first and my most enthusiastic message today. 
Thank you.
    With the passage of the Rescue Plan, I am confident that 
people will reach the other side of this pandemic with the 
foundations of their lives intact, and I believe they will be 
met there by a growing economy. In fact, I think we may see a 
return to full employment next year. Of course, the speed and 
strength of our recovery depends, in part, on how we implement 
the legislation. Treasury is tasked with much of that work, and 
there is nothing that I or my team take more seriously. We 
appreciate your oversight on this matter, and I want to briefly 
tell you about how we have been working.
    Since taking office 2 months ago, we have been expediting 
relief to the areas of greatest need, for example, small 
businesses, and especially the smallest small businesses, which 
are disproportionately owned by women and people of color. The 
pandemic has hit these businesses hard. The Paycheck Protection 
Program (PPP) was an early lifeline, but because of issues with 
the program's design, the first rounds often did not reach the 
small sole proprietorships. We are addressing that now. We 
worked with the Small Business Administration (SBA) to tweak 
how the program was implemented. It is allowing the PPP to 
reach millions more micro-businesses and entrepreneurs, 
especially in rural and low-income areas.
    We are also building capacity to support these communities 
over the longer term. Because of the December legislation, 
Treasury now has $12 billion to inject into Community 
Development Financial Institutions (CDFIs) and Minority 
Depository Institutions (MDIs). In turn, these CDFIs and MDIs 
can lend that capital out, helping people buy homes and start 
businesses in places that the financial services sector 
traditionally hasn't served well.
    Then, there are the families I spoke about, the ones 
struggling to keep a roof over their head and food on the 
table. The American Rescue Plan provides more than $30 billion 
to help renters and homeowners at risk of losing their homes, 
and we are making sure that assistance flows as efficiently as 
possible. For instance, the previous Administration put in 
place rules that required tenants and landlords to provide 
quite a bit of documentation to get rental assistance, 
including detailed statements about their income, but some 
people don't have access to those documents. We are cutting 
through the red tape for them while still taking responsible 
steps to prevent fraud and abuse. And, of course, we have been 
sending direct payments to Americans, a lot of Americans. As of 
last week, we had issued over 90 million payments.
    And all of this is just a fraction of Treasury's work. 
There are so many more relief programs, including one that will 
provide $350 billion in aid to State and local governments. 
Implementing all of it is more complicated than it sounds, and 
we are working closely with stakeholders to make sure these 
programs are both efficient and effective.
    Behind these many relief programs, these millions of 
transactions, is a staff of very dedicated and very tired 
Treasury and IRS employees. My final word is to them: Thank 
you. You are putting on a master class in how government should 
work in the furnace of a crisis, and I am grateful to be your 
colleague.
    With that, I am happy to answer any questions you have.
    [The prepared statement of Secretary Yellen can be found on 
page 45 of the appendix.]
    Chairwoman Waters. Thank you very much, Secretary Yellen.
    Chair Powell, you are now recognized for 5 minutes to 
present your oral testimony.

 STATEMENT OF THE HONORABLE JEROME H. POWELL, CHAIR, BOARD OF 
            GOVERNORS OF THE FEDERAL RESERVE SYSTEM

    Mr. Powell. Chairwoman Waters, Ranking Member McHenry, and 
members of the committee, thank you for the opportunity to 
discuss the measures that we have taken to address the hardship 
wrought by the pandemic.
    I would like to start by noting the upcoming 1-year 
anniversary of the CARES Act. With unanimous approval, Congress 
provided by far the fastest and largest response to any post-
war economic downturn, offering fiscal support for households, 
businesses, healthcare providers, and State and local 
governments. This historically-important legislation provided 
critical support in our nation's hour of need. As the virus 
arrived in force, our immediate challenge was to limit the 
severity and duration of the fallout to avoid longer-run 
damage. At the Fed, we also acted with unprecedented speed and 
force, using the full range of policy tools at our disposal.
    Today, the situation is much improved. While the economic 
fallout has been real and widespread, the worst was avoided by 
swift and vigorous action from Congress and the Federal 
Reserve, from across government and cities and towns, and from 
individual communities and the private sector. More people held 
onto their jobs, more businesses kept their doors open, and 
more incomes were saved, but the recovery is far from complete. 
So, at the Fed, we will continue to provide the economy the 
support that it needs for as long as it takes.
    As we have emphasized throughout the pandemic, the path of 
the economy continues to depend on the course of the virus. 
Since January, the number of new cases, hospitalizations, and 
deaths has fallen, and ongoing vaccinations offer hope for a 
return to more normal conditions later this year. In the 
meantime, continued social distancing and mask-wearing will 
help us reach that goal as soon as possible.
    Indicators of economic activity and employment have turned 
up recently. Household spending on goods has risen notably so 
far this year, although spending on services remains low, 
especially in sectors that typically require in-person 
gatherings. The housing sector has more than fully recovered 
from the downturn, while business investment and manufacturing 
production have also picked up. As with overall economic 
activity, conditions in the labor market have recently 
improved. Employment rose by 379,000 in February as the leisure 
and hospitality sector recouped about two-thirds of the jobs it 
lost in December and January.
    Recovery has progressed more quickly than generally 
expected and looks to be strengthening. This is due in 
significant part to the unprecedented fiscal and monetary 
policy actions I mentioned, which provided essential support to 
households, businesses, and communities. However, the sectors 
of the economy most adversely affected by the resurgence of the 
virus and by greater social distancing remain weak, and the 
unemployment rate, still elevated at 6.2 percent, 
underestimates the shortfall, particularly as labor market 
participation remains notably below pre-pandemic levels. We 
welcome this progress, but will not lose sight of the millions 
of Americans who are still hurting, including lower-wage 
workers in the services sector, African Americans, Hispanics, 
and other minority groups that have been especially hard hit.
    The Fed's response has been guided by our mandate to 
promote maximum employment and stable prices for the American 
people, along with our responsibility to promote stability of 
the financial system. When financial markets came under intense 
pressure last year, we took broad and forceful actions, 
deploying both our conventional and emergency lending tools to 
more directly support the flow of credit. Our actions, taken 
together, helped unlock more than $2 trillion in funding to 
support businesses--large and small--nonprofits, and State and 
local governments between April and December. This support, in 
turn, has helped organizations to not have to shutter their 
businesses and put employers in a better position to both keep 
workers on and to hire them back as the recovery continues.
    Our programs serve as a backstop to key credit markets and 
help restore the flow of credit from private lenders through 
normal channels. We deployed these lending powers to an 
unprecedented extent last year. Our emergency lending powers 
require the approval of the Treasury and are available only in 
very unusual circumstances. Many of these programs were 
supported by funding from the CARES Act.
    Those facilities provided essential support through a very 
difficult year. They are now closed, and the Federal Reserve 
has returned the large majority of the Treasury's CARES Act 
equity, as required by law. Our other emergency lending 
facilities are following suit imminently, although we recently 
extended the Paycheck Protection Program Liquidity Facility 
(PPPLF) for another quarter to continue to support the Paycheck 
Protection Program.
    Everything the Fed does is in service to our public 
mission. We are committed to using our full range of tools to 
support the economy and to help ensure that the recovery from 
this difficult period will be as robust as possible on behalf 
of communities, families, and businesses across the country. 
Thank you. I look forward to your questions.
    [The prepared statement of Chairman Powell can be found on 
page 40 of the appendix.]
    Chairwoman Waters. Thank you very, very much, Chairman 
Powell. I now recognize myself for 5 minutes for questions.
    On March 11th, President Biden signed the American Rescue 
Plan Act into law, providing an additional $1.9 trillion 
package that is already helping individuals, families, and 
small businesses. The American Rescue Plan also includes $77 
billion in our committee's jurisdiction, including $21.5 
billion to pay back rent and future rent payments, which will 
not only help renters remain stably housed, but support small 
landlords who have also been struggling. Congress has now 
provided the Treasury Department with more than $46 billion in 
emergency rental assistance to distribute to States, local 
communities, Tribes, and Territories to help struggling 
families pay their rent and utilities. My State of California 
is expected to receive somewhere in the amount of $4.67 
billion.
    However, I am growing increasingly concerned with how the 
program is being implemented by grantees. In particular, 
California just launched a program that greatly limits the 
amount of assistance renters can receive, even if they owe 
more.
    Secretary Yellen, what has been the progress so far in 
implementing the program? What guidance is Treasury providing 
to ensure that grantees are setting up programs that actually 
stabilize renters and make landlords whole?
    Secretary Yellen. Thank you for that question, Chairwoman 
Waters. We have distributed the money to State, local, and 
Tribal grantees. The Consolidated Appropriations Act that 
started this program does specify that grantees can only 
provide assistance to households where one or more individuals 
are experiencing unemployment or hardship, that they 
demonstrate a risk of experiencing homelessness or housing 
stability, and that the household has income at 80 percent of 
the area median or below, and that the assistance can be for up 
to 15 months. We are trying to provide grantees with the 
flexibility to establish their programs and operate them within 
those parameters, but with a great deal of flexibility to 
address local needs as they see fit.
    The role of the Treasury here is to provide policy guidance 
so that grantees can establish and follow their own program 
policies to meet local needs, and we are developing outreach 
and technical assistance so that our grantees can understand 
best practices. Of course, we have a role in monitoring to make 
sure that the payments are reaching the intended populations.
    Chairwoman Waters. Secretary Yellen, I hate to interrupt 
you--my time is going to be up shortly--but I am very concerned 
about the flexibility that the States have. I don't really know 
what all of that means, but I do know that there is a lot of 
confusion because some States had moratorium programs, some 
cities had moratorium programs, the Federal Government has a 
moratorium program, and so I think that is confusing to our 
renters. In addition to that, for the State of California to 
say that they are going to pay 80 percent of the rental 
assistance rather than 100 percent bothers me somewhat, and I 
don't know what other States are doing. I know that the 
government does provide guidance, so I would like to know if 
you can think about any role that we can play to help 
straighten out the confusion and to help stabilize this rental 
assistance?
    Secretary Yellen. Congresswoman, we did distribute 
frequently asked questions, revised from the previous 
Administration, to try to provide additional guidance, but if 
you have concerns, my staff will be glad to work with you and 
your office to see if it is possible to address them.
    Chairwoman Waters. Thank you very much. I appreciate that, 
because there is confusion out there, and I am worried about 
what is happening with this confusion, and whether or not our 
landlords are going to abandon us and not go for another 
moratorium, and so it is a lot of questions. I will get back to 
you, and thank you so very much.
    With that, I now recognize the ranking member, Mr. McHenry 
for 5 minutes.
    Mr. McHenry. Thank you, Madam Chairwoman. And, look, 
Chairman Powell and Secretary Yellen, I previously asked 
questions about the independence of the Fed, trying to get the 
Secretary of the Treasury to opine about that. Dr. Yellen, I 
would suggest that maybe I need to skip that question with you. 
I think you have very practical understanding and knowledge 
here at play, and you will treat your successor as you wish to 
have been treated since he is now sitting in your chair.
    [laughter]
    Mr. McHenry. Well, it is nice to have two folks who 
understand this in these respective seats, but Chairman Powell, 
I want to begin with you and talk about inflation. There 
continues to be a great deal of speculation that we should be 
worried about inflationary pressures, particularly after the 
passage of the most recent $1.9 trillion spending bill, the so-
called stimulus or COVID stimulus bill, and then we see recent 
press reports of an additional $3 trillion of spending 
contemplated by this Administration. Does the Fed share that 
there are inflationary pressures and concerns with this rate of 
spending? What is the view now?
    Mr. Powell. Thanks. Let me start by saying that we are 
strongly committed to our price stability mandate, which, along 
with our maximum employment mandate--those are the two mandates 
that you have given us. We consider that inflation that is 2 
percent over time, in fact, inflation that averages 2 percent 
over time. We do expect that inflation will move up over the 
course of this year, first, because of what we call base 
effects. The very low readings of March and April of last year 
dropped out of the 12-month calculation, and, mechanically, it 
rises, but that goes away quite quickly. Possibly after that, 
we will see a situation in which, as the economy reopens and 
vaccinations continues, there could be a surge in spending and 
there could be some bottlenecks in the economy. We see some of 
that now. We might see some upward pressure on prices.
    Our best view is that the effect on inflation will be 
neither particularly large nor persistent, and part of that 
just is that we have been living in a world of strong 
disinflationary pressures around the world really for a quarter 
of a century, and we don't think that a one-time surge in 
spending leading to temporary price increases would disrupt 
that. However, we have the tools to deal with that. We remain 
strongly committed to inflation expectations anchored at 2 
percent, and we will use our tools as appropriate to achieve 
that.
    As far as further fiscal policy is concerned, it is not up 
to us to comment. As we have discussed on some occasions, we 
don't comment on fiscal policy. We try not to, particularly on 
specific bills and things like that, so I will leave that to 
others.
    Mr. McHenry. Secretary Yellen, about fiscal policy, we 
have, as Chairwoman Waters highlighted, rental assistance, the 
$25 billion of rental assistance to individuals and families 
who were in arrears because of the lockdown, and we have tried 
to support them with some rental assistance. What guardrails 
has the Department of the Treasury put in place to ensure that 
the funds are actually prioritized for individuals and families 
who are in rental arrears?
    Secretary Yellen. It is Treasury's job to establish 
guardrails, and we have done that by issuing a set of 
frequently-answered questions that are essentially guidance 
about how the money needs to be used. It clarifies that 
grantees have flexibility, but also that there are the 
requirements of the statute, and that we will follow up to make 
sure that the payments are going to eligible households and 
that the guidelines of the program are being followed.
    Mr. McHenry. Thank you. Thank you, Secretary Yellen. The 
final question I have is about oversight. Secretary Yellen, 
your predecessor agreed to very onerous, and rigid, and strong 
oversight for the CARES Act, this current $1.9 trillion has 
rescinded all of those things, sadly, except this quarterly 
hearing. And so, what I would like to hear is your voluntary 
commitment to work with Congress, the GAO, the special 
inspectors general, and the Congressional Oversight Commission, 
as well as this committee.
    Secretary Yellen. I think oversight is very important, and 
I pledge to work with this committee and the oversight groups.
    Chairwoman Waters. Thank you very much.
    Mr. McHenry. Thank you, Secretary Yellen, and 
congratulations on your new role. Thank you.
    Secretary Yellen. Thank you.
    Chairwoman Waters. I now recognize Mrs. Maloney for 5 
minutes.
    Mrs. Maloney. Thank you. Thank you so much, Chairwoman 
Waters, for having this hearing, and welcome, Chairman Powell 
and Secretary Yellen. And as the first female Secretary of the 
Treasury in history, and the first to head the Fed, we are so 
proud of you--
    Secretary Yellen. Thank you.
    Mrs. Maloney. --and of your many accomplishments, Secretary 
Yellen. And as this is Women's History Month, you are certainly 
inspiring many young women with more confidence and aspirations 
with your leadership, so thank you.
    As you know, at the end of last year, we were able to reach 
a bipartisan compromise on my Corporate Transparency Act, which 
will crack down on anonymous shell companies, the vehicle of 
choice for criminal activity, money laundering, and terrorism 
financing. I want to thank Ranking Member McHenry for his 
willingness to compromise and Chairwoman Waters for her 
steadfast support of this bill over many, many years.
    The bill requires companies to disclose their true 
beneficial owners to FinCEN, which is an arm of Treasury, and 
FinCEN will collect this information in a database which is 
intended to be state-of-the-art with privacy and security 
protection. Law enforcement calls it the most important tool 
that has been given to them to track illegal money activity in 
30 years, and implementation of this is going to be a massive 
undertaking and will require an enormous amount of resources 
and manpower at Treasury. I worked on this bill as a top 
priority for 12 years, and implementing it and getting it up 
and running is a top priority of mine. It is incredibly 
important, I believe, to our national security. We have to get 
it right.
    And so my question to you is, will you commit to making 
beneficial ownership one of your top priorities as Treasury 
Secretary? We have 2 years to implement it, and I think it will 
make all of us safer. I think it is extremely important.
    Secretary Yellen. I completely agree with you. It is a very 
important piece of legislation, and it is one of our highest 
priorities to implement this promptly and to get it right. We 
have a hiring plan. We recognize that significant resources 
will be required, and we are trying to obtain them. We have 
plans for how to collect the required database, and we are 
actively working to implement this very important piece of 
legislation.
    Mrs. Maloney. Thank you. I want to build on Chairwoman 
Waters' question. I am not going to repeat all of the things 
that were in the important Recovery Act. But my question to 
you, Secretary Yellen and Chairman Powell, is what steps can we 
take to ensure we don't lose a generation of workers who never 
return to the workforce, or that they face these depressed 
wages moving forward? We know that over 11\1/2\ women lost 
their jobs, compared to 9 million men. Black and Latino women 
suffered the highest rate of all, and that the women's labor 
force participation is down 2 percent, and the families are 
suffering. We have many aspects of it. A lot she mentioned, 
from rent to food, to help in so many ways, but I am concerned 
about this labor force that has been hurt. What can we do to 
help them get back into the labor force? And my question is to 
you, Secretary Yellen, first, then to Chairman Powell.
    Secretary Yellen. First of all, in the short term, the 
American Rescue Plan contains substantial support for 
minorities, and particularly for women who have been forced to 
drop out of the labor market. There is an important increase in 
the child tax credit that is going to result in, along with 
other provisions, a 50-percent reduction in the child poverty 
rate. There is money to open and support school openings 
promptly. There is an enhanced child and dependent care credit 
with a successful vaccination program to get women back into 
the labor force. And longer term, when we have gotten to the 
other side of this pandemic, we hope to address in the jobs 
package over the longer term some of the factors that have 
resulted in low wages and low labor force participation for 
women.
    Mrs. Maloney. Thank you. My time has expired.
    Chairwoman Waters. Mrs. Wagner, the gentlelady from 
Missouri, is recognized for 5 minutes.
    Mrs. Wagner. Thank you, Madam Chairwoman, and thank you, 
Chairman Powell and Secretary Yellen, for joining us today. 
Secretary Yellen, and I would ask you please, respectfully, if 
you would keep your answers brief, as the country begins to 
safely reopen and our economy recovers, is examining changes to 
tax policy the correct direction?
    Secretary Yellen. We expect to examine changes to tax 
policy along with programs that will address some of the 
longstanding problems that have held down our productivity and 
labor supply in the United States. We will address 
infrastructure, risks from climate change, education, and 
training.
    Mrs. Wagner. Let me ask you, Madam Secretary, what impact 
would this action have on jobs and workers' wages?
    Secretary Yellen. I think a package that consists of 
investments in people, investments in infrastructure, will help 
to create good jobs in the American economy, and changes to 
this tax structure will help to pay for those programs.
    Mrs. Wagner. Secretary Yellen, what tends to be the impact, 
I guess I would ask, on American consumers, my constituents, 
when corporate taxes are raised? Do the costs usually tend to 
be passed down to them?
    Secretary Yellen. The impact of changes in corporate taxes 
has been studied by economists for a long time, and the impact 
of them on prices and on consumers is very unclear from 
existing studies. We do need to raise revenues in a fair way to 
support the spending that this economy needs to be competitive 
and productive, and--
    Mrs. Wagner. Secretary Yellen, if I could, I think we know 
that raising the corporate tax rate results in higher costs for 
small businesses, schools, and American households. Then why, 
as this country begins to reopen and recover economically, 
would the Biden Administration be proposing tax policies which 
would, in the end, hurt American families and millions of 
struggling small businesses?
    Secretary Yellen. The Biden Administration is not going to 
propose policies that hurt small businesses or Americans. The 
Biden Administration is going to propose investments this 
economy has long needed to be competitive and productive and 
supports our--
    Mrs. Wagner. With all due respect, ma'am, I would say this. 
Certainly, raising taxes on business and industry is going to 
affect consumers and households and American families in a very 
adverse way. Is this being proposed, these tax increases, to 
offset the costs of the recently-enacted partisan stimulus 
package, ma'am?
    Secretary Yellen. No, the stimulus package, the American 
Rescue Plan, was not funded with any increases in taxes, but a 
longer-term plan that addresses critical relief--
    Mrs. Wagner. I really have--
    Secretary Yellen. --for this economy probably would be 
accompanied by some revenue raises.
    Mrs. Wagner. Yes, I would say so, and I would say that the 
plan as it exists right now hasn't been paid for. For example, 
let me just say this. Last month's lumber prices hit an all-
time high, doubling in price from just 3 months ago. Gasoline 
prices jumped 6.4 percent over the previous month, while 
electricity and natural gas prices rose 3.9 percent, not to 
mention housing prices and other manufacturing supply chain 
goods. Are these steady increases a sign that once the economy 
fully reopens, we are likely to see parts of the economy where 
demand is intense, at least for a period of time, leading to 
some additional price pressures?
    Let me ask you this, Chairman Powell, in my limited time. 
Could you describe in detail the wide range of policy tools the 
Fed has at its disposal to address what is obvious inflationary 
pressures that we are seeing already?
    Mr. Powell. Our most basic tools here are to try to achieve 
price stability, and those principally are interest rates and 
moving interest rates up and down. As I mentioned a few minutes 
ago, though, our best expectation is that there will be modest 
upward pressure on prices this year, but that they won't be 
particularly large or persistent into the future. But we do 
have those tools, and we will use them.
    Mrs. Wagner. Thank you. My time has expired. I yield back.
    Chairwoman Waters. Thank you. The gentleman from 
California, Mr. Sherman, is recognized for 5 minutes.
    Mr. Sherman. Thank you. Addressing the comments of Mrs. 
Wagner, most of the studies I have seen, and obviously the 
Secretary of the Treasury has seen far more, indicate that 
increases in corporate income taxes are not passed through to 
consumers, but that the incidence of that tax is borne by those 
who invest capital, and which is disproportionately the top 1 
percent. In contrast, sales taxes are passed through to 
consumers.
    I want to use most of my 5 minutes just to bring to the 
attention of our two august witnesses some matters that I hope 
will merit their personal attention in the days to come. Madam 
Secretary, your predecessor committed to me, from a foreign 
policy standpoint, that the Treasury Department would put a 
reasonable amount of lawyer hours into doing a tax treaty with 
Armenia, and I hope that policy will continue now that the Iran 
government is ready to proceed, having had some discord in the 
past.
    Madam Secretary, you have delayed till May 17th, the April 
15th deadline for Form 1040. It is very important that you do 
the same for the Form 1040ES, the estimated tax payments, a 
voucher that is usually prepared at the same time and is so 
important to gig workers.
    Madam Secretary, 2 days ago, the IRS issued a report 
indicating that one-fifth of the earnings of the top 1 percent 
are going untaxed. I hope very much that you will work with 
Congress to replace and restore the 15,000 enforcement officers 
that the IRS has lost in the past decade. I used to head the 
second-largest tax agency in our country, and it is clear that 
putting more effort into tax collection, particularly from the 
top 1 percent, will collect many more times the cost in 
additional revenue, and will, I think, add to our social 
cohesion because wage earners are paying their taxes.
    Madam Secretary, I hope you will focus on a letter from the 
State of California of May 19th desperately needing guidance on 
the Recovery Act, especially showing a decision by California 
to conform to Federal law. So, Federal law recently is very 
generous to the PPP small businesses. If California conforms to 
that law, that isn't regarded as a tax decrease violative of 
the provisions of the Recovery Act that says that States should 
not be using those funds to cut taxes.
    Chairman Powell, we have talked a lot about wire fraud. 
Your staff has told me they don't plan to solve the problem. I 
hope you get personally involved in making sure our new wire 
transfer system does solve the problem. And, Chairman Powell, I 
want to commend you for your statement yesterday that the Fed 
will not proceed with creating a new Central Bank Digital 
Currency (CBDC) without the support of Congress. And I don't 
think you will have that support, unless the Know Your Customer 
(KYC) provisions are applicable to this new system and it 
doesn't become useful to tax evaders, terrorists, drug dealers, 
et cetera.
    Madam Secretary, believe it or not, I do have a question. 
Chairman Powell, when he was before us last month, testified 
before this committee that Federal legislation is necessary to 
fix the legacy London Interbank Offered Rate (LIBOR) contracts 
so that they can continue to function after the LIBOR Index is 
no longer published by our friends in London. Secretary Yellen, 
would you agree with Chairman Powell that Congress will need to 
act to provide for a smooth transition for this $2 trillion in 
contracts?
    Secretary Yellen. Yes, I would agree. There are certain 
legacy contracts where the transition could be difficult 
without legislation. These are contracts that don't provide for 
a workable fair back rate, and so I think Congress does need to 
provide legislation for the LIBOR transition.
    Mr. Sherman. Thank you, and in my remaining time, can you 
address the issue of States that are conforming their income 
tax laws to Federal income law? Is that going to be regarded as 
a violation of the Recovery Act?
    Secretary Yellen. We are working to provide guidelines on 
what will and won't count, and it is premature for me, until we 
have completed that, to offer you an answer on the specifics.
    Mr. Sherman. Please, it is critical for the people of 
California.
    Secretary Yellen. We will do it quickly.
    Chairwoman Waters. The gentleman's time has expired. Mr. 
Lucas, you are recognized for 5 minutes.
    Mr. Lucas. Thank you, Madam Chairwoman, for holding this 
hearing, and thank you, Chairman Powell and Secretary Yellen, 
for appearing before the committee. And, of course, Secretary 
Yellen, congratulations. I join my colleagues in congratulating 
you on your confirmation as the first woman to serve as 
Secretary of the Treasury. I look forward to the day, hopefully 
not very far off, when all positions of responsibility, all 
opportunities in society will have advanced to the point where 
we won't have to use the phrase, ``first woman.'' Again, that 
day will come, hopefully soon.
    This past Friday, the Fed announced that the temporary 
exclusion of Treasuries and reserves in the supplemental 
leverage ratio will expire at the end of the month. The 
announcement also stated that the Fed will seek public comment 
on potential SLR modifications.
    Chairman Powell, could you comment on if the exclusion of 
Treasuries and reserves over the past year helped improve U.S. 
Treasury market conditions and banks' ability to provide 
credit?
    Mr. Powell. As you know, the Treasury market was 
experiencing significant dysfunction during the height of the 
crisis, and we did a number of things, and, particularly, we 
bought a lot of U.S. Treasuries to restore function. We also 
did this exclusion and so did many other large countries like 
us did something like that. If you look back, we threw the 
kitchen sink at it, and it is hard to say exactly what effect 
it had. We did the exclusion relatively late, and by then, 
there had been quite a lot of market function recovered. So it 
is hard, it is difficult. I would love to give you a straight 
answer, but it is difficult to say just how helpful it was.
    In any case, that danger has long passed.
    Mr. Lucas. Secondly, could you elaborate on the timeline of 
potential SLR modifications that may come in the near future, 
Mr. Chairman?
    Mr. Powell. Yes. We expect to put something out for 
comment, and I can't tell you exactly when that will be, but 
relatively soon. And we are going to run a very transparent 
public process, invite comment, and consider it.
    Really, the point is that because of the substantial 
increase in reserves and Treasuries, the leverage ratio is 
rapidly becoming the binding constraint from a capital 
standpoint, and that wasn't our intention at the Fed from the 
beginning. We like risk-based capital to be binding because it 
forces banks to manage their risks more carefully.
    Mr. Lucas. As everyone on this hearing knows, I have always 
made it a very strong point that the Third Congressional 
District of Oklahoma is a commodity-driven economy. It is 
agriculture, and it is energy. There is concern in my district 
that financial regulators may be moving towards regulation and 
supervision with environmental policy objectives, potentially 
discouraging banks from doing business with entire sectors of 
the economy.
    Chairman Powell, could you respond to that concern of my 
constituents?
    Mr. Powell. Sure. It has been a long-held policy of the Fed 
that we don't tell banks what legal businesses they can lend to 
or order them to lend to. That is not what we do.
    With the climate change--you are getting at the climate 
change work that we are doing. We are at a very early stage of 
understanding the risks to regulated financial institutions 
from climate change. It is a risk that we think the public has 
every right to expect that we will ensure that the banks do 
manage over time.
    And so, again, we're in the early stages of that. I would 
be happy to talk to you offline about that, too.
    Mr. Lucas. Absolutely. And Secretary Yellen, could you 
provide your thoughts on that concern?
    Secretary Yelllen. You want me to weigh in on the issue of 
lending and climate change?
    Mr. Lucas. Yes, that there will potentially be efforts by 
the financial regulators to move towards regulation and 
supervision with environmental policy objectives. My folks are 
concerned that will lead to discouraging banks from doing 
business in certain areas and certain sectors and consequently 
potentially have a dramatic effect on their business model or 
their ability to function.
    Secretary Yellen. Climate change is a top priority for the 
Biden Administration, but we agree that financial regulators 
should be assessing the risks to financial institutions through 
stress testing and other techniques. And investors need 
disclosure of risk, but we have no plan to regulate what 
lending or investments can be done.
    Mr. Lucas. Thank you very much. And I can assure you that I 
and my colleagues will watch all that very closely.
    With that, I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you. The Chair now recognizes the 
gentleman from New York, Mr. Meeks, who is also the Chair of 
the House Foreign Affairs Committee, for 5 minutes. Mr. Meeks?
    [no response]
    Chairwoman Waters. If Mr. Meeks is not available, we will 
move on to Mr. Scott for 5 minutes.
    Mr. Scott. Thank you very much, Madam Chairwoman.
    Chairman Powell, Secretary Yellen, welcome.
    Chairman Powell, first to you, thanks to the Rescue Plan, 
we now have an opportunity to expand the child tax credit. The 
IRS has put forth a Get My Payment website, and I believe it 
could be used in conjunction with the efforts through the FDIC 
and the private sector to bring more Americans into our banking 
system using what is known as Bank On certified safe accounts, 
but only if it is able to be moved at the moment when we 
capture it.
    Because currently, the IRS Get My Payment tool is only open 
for the status checks. But consumers are unable to add or 
change delivery information as they were able to do so with the 
delivery of the first stimulus checks.
    So, Chairman Powell, explain that. Don't you agree that 
this is an opportunity to increase financial inclusion through 
the use of certified Bank On safe accounts, Get My Payment?
    Mr. Powell. I would agree with you that greater 
inclusiveness in the financial system is a goal of the highest 
priority for us and really for all financial regulators and for 
the country. I am not familiar with the particular practice you 
are referring to, but I will be happy to look into that and get 
back to you.
    Mr. Scott. Okay, please do. And then there is another one 
with the Treasury Department called, Get My Payment. All of 
these things are good, but I appreciate your looking into them 
as quickly as you can so that if they are there, we need to use 
them now because so many of our people cannot get the money 
quickly because they don't have the kind of high standing 
within our financial system. When you put these things in like 
Bank On and Get My Payment, we need to use them right now. So, 
I appreciate your looking into that.
    Secretary Yellen, let me move to you. The American Rescue 
Plan also included $350 billion in assistance to State and 
local governments to make up for the lost revenue and to ease 
the economic impact of the COVID-19 pandemic. Could you tell me 
when local governments can expect Treasury to release guidance 
on the American Rescue Plan?
    Secretary Yellen. I think we have to issue guidance quite 
quickly, I think within 60 days, and to distribute the funds. 
And we are working very hard to sort through the issues that we 
need to in order to provide clarity about the purpose of the 
funds and how they can be used.
    Mr. Scott. Okay. Madam Chairwoman, I am concerned. We have 
the Treasury Secretary here, and we have the Chairman of the 
Federal Reserve here. And we passed this bill, and we put 
certain things in it to increase the delivery. And everybody 
cannot get this payment through electronic accounts. Most of 
the people that you and I have been very concerned about 
getting inclusion are not getting these funds as quickly.
    I just want to encourage--and I know you agree--but I want 
to take a moment here. We passed it. It is there. Please, 
please, Treasury Secretary, please Federal Reserve Chair, all 
of us need to hurry up. We put these things in place so we 
could reach those who have been excluded very quickly. They 
need the money as quickly as everyone else.
    Thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you very much, Mr. Scott. I now 
recognize the gentleman from Florida, Mr. Posey, for 5 minutes.
    Mr. Posey. Thank you, Chairwoman Waters, for calling this 
hearing today.
    We continue to live in a period of uncertainty, but there 
is some good news on the horizon for our economy as it appears 
poised to recover rapidly as the vaccine is given to more and 
more people. Chair Powell told us in his semi-annual appearance 
a few weeks ago that the economy could grow by as much as 6 
percent during this year alone.
    At the same time, other factors could cloud the horizon, 
such as our unprecedented level of deficit spending, increases 
in nominal Treasury and corporate bond yields, the mysterious 
enthusiasm for raising taxes, and the headlong pursuit of 
climate change mitigation measures that threaten affordable 
energy and our recently-acquired energy independence.
    Secretary Yellen, you recently said that the Treasury 
Department could facilitate bank stress tests for climate 
change, but you wouldn't expect results would be used for 
capital requirements or other regulation. If these climate 
stress tests have no regulatory purpose, what would the purpose 
of such stress tests be?
    Secretary Yellen. The purpose of the, maybe we should call 
it ``scenario analysis'' rather than ``stress test,'' is for 
financial institutions and for the regulators to better 
understand the risks that climate change poses to the health 
and resilience of core financial institutions, and it will help 
those institutions better manage and understand the risks.
    Mr. Posey. Are we doing any studies of the risk from solar 
interaction with our planet? A couple of years ago, we missed a 
solar eruption that would have knocked out a lot of satellites 
and kind of put us in the Dark Age. Are we checking on natural 
phenomena like that as well?
    Mr. Powell. Let me say--
    Secretary Yellen. Go ahead.
    Mr. Powell. Yes, I can say, since we directly supervise 
financial institutions, we do supervise for institutions that 
are in areas of the country that are susceptible to significant 
weather problems, such as hurricanes and things like that. So, 
we do that.
    But just in response to your question, I would say that.
    Mr. Posey. How would this be used? Some people think it 
will be a Federal informercial, like the old Al Gore movie or 
something like that. How do you plan to utilize this 
information?
    Mr. Powell. Let me say that, first of all, many, many of 
the large financial institutions are already doing this, and 
the reason they are doing it is just what the Secretary said. 
It is to try to understand at an early stage of this science 
really, understand what are the risks that are involved in 
climate change.
    And that one way to do that is to run simulations and ask, 
``What would happen if? What would happen that?'' There are no 
regulatory consequences contemplated. It is an exploration in 
understanding better what the risks are to the core of our 
financial system, and we feel like that is our obligation is to 
understand that.
    And again, the financial institutions are very much 
actively doing this on their own. It is not something we are 
forcing them to do at this point.
    Mr. Posey. Who is doing it? Give me some examples of who 
might be doing that right now?
    Mr. Powell. I am not going to name individual financial 
institutions. Many of the large banks are very active in trying 
to understand how climate change would affect their business 
over the long sweep of time. Many or even all financial--and by 
the way, that is also true of large industrial companies in the 
United States.
    Mr. Posey. And are they sharing that information with you?
    Mr. Powell. They are sharing with the public.
    Mr. Posey. Does it seem consistent?
    Mr. Powell. I think it is early days. Honestly, it is 
really very early days in trying to understand what all of this 
means. It clearly can have longer-term implications for our 
economy, for our financial system, and for the people that we 
all serve. And I think our obligation is to try to understand 
that. And again, I would say it is early days, but we feel like 
we have a responsibility to start the process of understanding.
    Mr. Posey. Do you think you will discover revelations that 
they have missed or--
    Mr. Powell. I think we have a job, which is to ensure that 
the institutions we regulate are resilient to the risks that 
they are running. The public will expect that, and they have 
every right to expect that over time. So, we don't have a new 
mandate. This is consistent with our existing mandate of 
supervision of financial institutions. It is just the same 
mandate and a different risk.
    Chairwoman Waters. The gentleman's time has expired. The 
gentleman from Texas, Mr. Green, is recognized for 5 minutes.
    Mr. Green. Thank you very much, Madam Chairwoman.
    Madam Chairwoman, I don't want the historic aspect of this 
hearing to escape us. I am a senior member of this committee. I 
have witnessed many persons appearing before this committee, 
many Secretaries of the Treasury and Chairs of the Fed, and I 
must tell, you a paradigm shift is taking place, and I don't 
want it to be overlooked under your leadership.
    I have here the statement of the Chairperson of the Fed, 
and in his statement, he says--while addressing progress that 
is being made, he states, ``We welcome this progress, but we 
will not lose sight of the millions of Americans who are still 
hurting, including lower-wage workers in the service sector--
African Americans, Hispanics, and other minority groups that 
have been especially hard hit.''
    And then, the Secretary of the Treasury, in her statement, 
she indicates that, ``Since taking office 2 months ago, we have 
been expediting relief to areas of greatest need, for example, 
small businesses and especially the smallest small businesses, 
which are disproportionately owned by women and people of 
color.''
    I understand that there is still great work to be done, but 
I just don't want to overlook the fact that people are talking 
more now about the needs of minorities and women.
    Secretary Yellen, you indicated in a message that you 
presented not so very long ago, when comparing the 1.8 million 
fewer men in the labor force to the 2.5 million fewer women, 
you called this, ``extremely unfair.'' This is the Secretary of 
the Treasury.
    I am grateful to both of you for understanding that it is 
now time for us to move forward on the issues associated with 
the wealth gap as it relates to minorities in this country, and 
especially issues related to women, who happen to be more than 
50 percent of the population of the country.
    But it is historic to see this movement under your 
leadership, Chairwoman Waters. I commend you, and I am honored 
to serve under your leadership.
    Now to Secretary Yellen, I have a concern, and I am 
concerned about the $10 billion that will go to the State Small 
Business Credit Initiative (SSBCI). I am concerned because when 
this program was instituted on a previous occasion--we have 
reauthorized it in the Rescue Plan, but when it was authorized 
initially, it went to the States through the Agriculture 
Department.
    Then, the Agriculture Department had the duty and 
responsibility and obligation of making sure that it moved down 
to other units of the State. Well, in Texas, that probably is 
not the best way to do business. I have this consternation 
about it, and my hope is that we will be able to get this to 
the end users in a much more expeditious way, such as what you 
have indicated you have been trying to accomplish.
    My question is this, Madam Secretary: Will you send us an 
outline of the timeline for implementation from money in the 
Treasury to capital in the coffers of the end users in the $9 
billion Emergency Capital Investment Program that has come into 
being under the Honorable Maxine Waters' leadership--I had the 
privilege of working on this program--and the $10 billion State 
Small Business Credit Initiative similarly came into existence? 
And I would add also this last one had the help of the 
chairwoman of our Diversity and Inclusion Subcommittee, Mrs. 
Beatty, who helped us to hone this and refine it to the extent 
that we are helping the smallest of small businesses.
    I am just hopeful that we can get such an outline because, 
I have people who question me daily about, when will the money 
be available for us as end users to benefit from it? And I 
believe your heart is in the right place. I believe you are 
working expeditiously. I just want to be able to answer those 
questions when they are posed to me.
    So, again, I thank you. I am grateful for this historic 
moment. And my hope is that this is only an indication of the 
better things to come.
    And Madam Chairwoman, I will yield back 12 seconds to you.
    Chairwoman Waters. Thank you. Thank you very much. I now 
recognize the gentleman from Missouri, Mr. Luetkemeyer, for 5 
minutes.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman.
    And congratulations to you, Secretary Yellen, on your new 
position. It's good to see you again.
    Secretary Yellen. It's good to see you.
    Mr. Luetkemeyer. My opening comment is just for you. I also 
have another duty here in Congress, which is to be the ranking 
member on the House Small Business Committee. And during your 
opening statement, which I am sure was written by your staff, 
they made or you made some comments with regards to this 
Administration being responsible for all of the loans that are 
out there that are being taken by those entities, those small 
businesses under 20 or 10 employees.
    I can quote you from my own press release as the ranking 
member of Small Business that the loans have been at roughly 75 
to 80 percent, 10 employees or less already, and are generally 
about a little over 90 percent of 20 employees or less. And for 
the Administration to actually pause that ability of small 
businesses with over 20 employees to have access to the program 
is actually harmful from the standpoint that, if we don't pass 
the extension of the PPP bill that we passed in the House, 
which the Senate now has--if we don't pass that, those small 
businesses are actually at a disadvantage because the over-20 
were delayed. And if they don't get their loan in the pipeline 
soon, the pipeline is not going to get processed, and they 
won't even get their loan processed.
    My comment would be, please tell your staff to quit 
politicizing your statement, and please stop taking liberties 
with the facts.
    Chairman Powell, we are halfway through the 2-year cycle 
now on Current Expected Credit Losses (CECL) and a capital 
delay, which will end in 2022, and begin the phase-in of 
deferred impacts on the capital. We have now had nearly 4 
quarters of CECL data available and have banking agencies 
reviewing the data.
    Can you tell us what the Fed's review of that data is, and 
if you would consider a more permanent calibration or revision 
to the current approach?
    Mr. Powell. We are continuing to look at CECL, and I 
honestly don't have anything for you on that data. I will take 
a look at it quickly, and get back to you.
    Mr. Luetkemeyer. Okay. That would be great, because I think 
having deferred it is something that you agreed to up-front 
last year in the process. It was something that I think you 
probably agreed to again this time, and I think it is something 
we certainly need to review, for sure, if not get rid of 
altogether, if a delay is something that we all believe is in 
the best interest of everybody affected by it.
    Also, Chairman Powell, at this point, Fed data from third 
quarter 2020 indicates that 51 percent of the commercial real 
estate debt is now held by banks, and the FDIC data indicates 
that community banks have a higher concentration of these loans 
as the lenders. At this point, again, Congress has provided 
relief from the financial institutions with these assets 
through the suspension of TDRs and the extension of the 
foreclosure moratorium.
    I think it is important that we have discussions around 
this on what will happen when this relief ends. Can you give us 
a little heads-up as to what you think will happen, the impact 
on balance sheets, the economic recovery, if we take that 
extension, we take that foreclosure moratorium off?
    Mr. Powell. I will look into that for you.
    Mr. Luetkemeyer. I apologize for my voice. I have really 
bad allergies today.
    Mr. Powell. It is that time of year. No, you are right. We 
are monitoring commercial real estate (CRE) very carefully, and 
you are absolutely right that its concentrations arise 
principally in smaller banks, and we will have to monitor it 
carefully as we allow those moratoriums to elapse. And I don't 
have anything for you on that today, but we are well aware of 
the issue, and we will be sure to move very, very carefully 
when we do address that.
    Mr. Luetkemeyer. As you know, I am very concerned about 
this situation, because, as we saw in 2008 and 2009, when we 
went in and very punitively shut down entire industries, 
especially in the commercial real estate and real estate 
development areas, it had a really, really devastating effect 
on not only local economies, but the economy as a whole. So, I 
hope we are very, very cautious about this.
    You and I have talked about this before with regards to 
forbearance and being able to allow these businesses to get 
back on their feet and see once what the real loss is before we 
go in and sort of, ``scorched earth'' get rid of all these 
folks.
    But I appreciate your interest on that and your support on 
that. I know that you all are doing a good job of working with 
the banks at this point. I would ask that you continue to do 
that. I realize some loans are bad. You have to write them off, 
that is fine.
    But I think if time is given with the nature of the economy 
the way it is, I believe we can get out of a lot of the mess 
that we are in without having to go through the process of 
foreclosure. I thank you for your thoughtfulness.
    And I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you very much. The gentleman from 
Missouri, Mr. Cleaver, is recognized for 5 minutes.
    Mr. Cleaver. Madam Chairwoman, let me again, hopefully for 
the last time, apologize to you and the members of the 
committee, and certainly our witnesses, for not being properly 
attired due to my current medical situation. But I thought it 
might be better for me to do this than to miss the hearing.
    If I can, Madam Secretary, I was here, and probably 
everybody at least on the Democratic side who has spoken so far 
was here, and many of the--and I think probably, yes, all of 
the Republicans as well were on the committee when the tax cuts 
were approved. The Tax Cuts and Jobs Act, I think it was 
called. And it temporarily authorized what was called the 
Opportunity Zones, and I became somewhat excited about it. It 
didn't matter whether it was designed by Republicans, 
Democrats, or the Tampa Bay Buccaneers, I thought it was--well, 
maybe that is going too far.
    But Opportunity Zones, the incentives were designed to 
encourage private investment in the economically-distressed 
areas around the country. And I have become concerned, even 
though I had great enthusiasm for the program, that the larger 
promise of this organization has not been realized. I thought, 
I believed, I hoped that we would have affordable housing, 
community-oriented amenities like grocery stores, drug stores 
like CVS, that would improve the quality of life in these low-
income areas. But my dream remains unrealized.
    Now today, Chairman Green and I sent a letter. Let me say 
although, parenthetically, that Opportunity Zones are under the 
jurisdiction of the House Ways and Means Committee, and I 
accept that, there are some parts of this, especially as it 
relates to affordable housing, where Opportunity Zones could be 
extremely important.
    So, here we are. We have seen some things that happened, 
that I think are extremely unfortunate, and they bode poorly 
for what we could do in the future. And one of those things, 
Madam Secretary, is that we have seen, for example, the 
Brookings Institution talked about in one of their reports that 
some of the States had picked the Opportunity Zones covering 
college campuses located in Census tracts where over 90 percent 
of the residents are students.
    And I am all for students, but I don't believe the program 
was designed, as I recall and read the initial proposal, for 
colleges. It was designed for distressed communities. At any 
rate, I am talking too long, but I want to make sure that you 
understand the concerns we have. And in the remaining time, 
could you talk about what economics says about the benefits if 
we have this program maybe tweaked or redesigned in some way so 
that the incentives actually help people in what we thought 
were going to be zones?
    Secretary Yellen. I think it is critically important to 
increase opportunities to provide affordable housing, 
especially for low-income and historically-marginalized 
families, and Opportunity Zones, appropriately structured, 
could contribute to that. There are a number of other tools 
that we have that can contribute to affordable housing goals. 
The Low-Income Housing Tax Credit, I think is important in 
serving that purpose. The Capital Magnet Fund can also serve to 
facilitate investment in affordable housing construction.
    This is a top priority for the Biden Administration. We are 
certainly open to exploring opportunities at Treasury and 
across the government to address the affordable housing 
shortage. We are operating at Treasury, the CDFI Fund and other 
programs that will invest in CDFIs and Minority Depository 
Institutions (MDIs), and I think they can make a contribution. 
But we have a variety of programs, and I would look forward to 
working with you to see how we can use them to address this 
problem.
    Mr. Cleaver. Thank you. And thank you, Madam Chairwoman.
    Chairwoman Waters. The gentleman's time has expired. Thank 
you. The gentleman from Michigan, Mr. Huizenga, is recognized 
for 5 minutes.
    Mr. Huizenga. Thank you, Madam Chairwoman.
    And I am going to be trying to move through a couple of 
quick things. But Secretary Yellen, one, congratulations on 
your new position, and I look forward to continuing to work 
with you.
    But I have to read you part of an email I received from a 
CPA, a constituent of mine, and this echoes what Mr. Sherman 
had to say. My constituent says, ``Extending the filing date of 
the 2020 tax returns was not an option. It was a necessity 
because of all of the stuff being thrown at us this year. 
Making changes to the 2020 income tax rules in March? Really?
    ``It is going to take software developers 2 weeks at least 
to get this into the software correctly. Can you even imagine 
the amount of incorrect correspondence the IRS system is going 
to create as a result of this, and how much we are going to 
have to deal with straightening this out for them because they 
also can't get their systems changed correctly that quickly? It 
is going to be a mess this summer for sure.
    ``Extending the 2020 deadline by 30 days is minimal. It 
should have been until June 15th, as the American Institute of 
Certified Public Accountants (AICPA) and the Ways and Means 
Committee recommended, but we can deal with that. Having the 
first quarter 2021 estimated payment due on April 15th, after 
extending the tax filing date to May 15th, is the most 
ridiculous thing I have ever heard. How do you think we 
determine what those estimates should be? Through the 
completion of the prior year return.
    ``To have the first-quarter estimate due on April 15th 
without knowing where the prior return ended up is ridiculous. 
They should have just kept the filing date at April 15th.''
    So, one, I want to know if you are aware of this problem, 
and, two, whether you are committed to actually trying to 
straighten that out and move that date to make it workable?
    Secretary Yellen. I believe the logic of moving the one 
date, but not the date for estimated taxes, is based on the 
idea that it is mainly high-income taxpayers who file estimated 
taxes and that they are able to file by April 15th when--
    Mr. Huizenga. Let me just stop you right there. As a former 
REALTOR and independent contractor, coming out of college, I 
was not a high-income earner, but I paid quarterly taxes. I 
paid quarterly estimates.
    And there are all kinds of people like that who are small 
business owners. They are in the middle of trying to keep their 
restaurant open, much, I might add, like Marlena, who is a 
restaurant owner, an immigrant restaurant owner who is in jail 
right now because she violated the Michigan Health Department's 
order to shut her restaurant down because she was trying to 
save her business. But we have a lot of those folks who need to 
understand what their tax liability is before they are going 
out and sometimes having to borrow cash to make that first 
estimated payment, especially those who are in seasonal work 
such as construction, landscaping, those kinds of things.
    I don't want to take any more time on that. I do want to 
have that conversation with you and your staff offline.
    Mr. Powell, materiality, I want to touch on that and the 
Fed's involvement in the Network for Greening the Financial 
System (NGFS). You have a rather interesting quote saying, 
``Regardless of the nature of any future engagement with them, 
we will continue to set supervisory and regulatory expectations 
basically as normal.''
    So, one, that begs the question, why the involvement in 
that? And two, materiality, doesn't it need to be definable as 
well as quantitative? Very quickly.
    Mr. Powell. What the NGFS really is, is regulators, 
supervisors from countries around the world who are trying to 
understand together what are best practices--
    Mr. Huizenga. I know what it is. What I need to know in 
this short amount of time is about the materiality. When nobody 
can define it or come to an agreement on it, how can it be 
measured and be quantitative?
    Mr. Powell. We are not trying to measure or quantify 
something right now. We are trying to understand at a high 
level what is the nature of the risks that will affect banks 
over time from climate change?
    Mr. Huizenga. That might be your goal and objective. I know 
that is not the goal and objective of a number of my colleagues 
who have actually been talking about this needing to be into 
the review currently. And what I am afraid is that we are going 
to get dragged into that.
    In my remaining last little bit, I do want to talk about, 
Secretary Yellen, you are a professor, a lifelong educator. Do 
you agree that we should safely send our kids back to school to 
ensure their educational development? I am very concerned about 
that impact on the future of our economy.
    Secretary Yellen. I have concerns about the impact of 
children not being in school, and it is an important objective 
to reopen the schools safely as soon as we can.
    Mr. Huizenga. Okay. My time has expired. I appreciate the 
time, and I look forward to that other conversation about the 
IRS.
    Chairwoman Waters. Thank you. The gentleman from 
Connecticut, Mr. Himes, is recognized for 5 minutes.
    Mr. Himes. Thank you, Madam Chairwoman, and thank you to 
both of you for appearing.
    A couple of quick things, then I do have one question for 
both of you. Chairman Powell, I saw with great interest your 
comments on cryptocurrency out of the Fed. You said we would 
not proceed without support from Congress and urged great 
transparency.
    I appreciate that. I think my subcommittee would probably 
have jurisdiction over that in some combination with Mr. 
Sherman's subcommittee. I just wanted to tip my hat to that 
sentiment, and I think we should work together. There is quite 
a bit of education, I think, to be done with the United States 
Congress on that very important topic.
    Secretary Yellen, thank you for all of the work that you 
and your people have done. I would be remiss if I didn't urge 
you to be particularly quick on the rollout of the rules for 
the Restaurant Revitalization Fund. That obviously is a sector 
that has been brutally hit in the last year or so. We are 
hoping that those funds become available quickly.
    In my remaining 4 minutes, I have one question for both of 
you that I would like to offer. It is undeniable that 
everywhere we look today, we see the effects of the very 
substantial liquidity in the system. And by the way, it is 
gratifying to see monetary and fiscal policy working in tandem. 
This was not true when I was a freshman in 2009, when the 
fiscal policy was working against the monetary policy for 
recovery.
    It is very gratifying to see that. But again, everywhere we 
look, we see the effects of a flood of liquidity in the system. 
That, of course, is in equity market prices, which have a 
remarkable run. The high-yield market, which is now yielding 
something like 4 percent. Everybody and their brother has a 
Special Purpose Acquisition Company (SPAC). Real estate prices 
are growing around the country.
    So, my question is for both of you. We learned in 2008 that 
trees do not grow to the sky. I wonder if you each would just 
take 90 seconds to tell us what you see as the near- to medium-
term risks associated with the inevitable contraction, although 
we may not know when it comes, of liquidity in the system?
    Let me start with the Treasury Secretary for a response, 
and then go to the Chairman.
    Secretary Yellen. I would say that while asset valuations 
are elevated by historical metrics, there is also belief that 
with vaccinations proceeding at a rapid pace, the economy will 
be able to get back on track.
    I think in an environment where asset prices are high, what 
is important is for regulators to make sure that the financial 
sector is resilient and to make sure that markets work well and 
that financial institutions are appropriately managing their 
risks.
    Mr. Himes. Chairman Powell, that is a pretty good segue 
over to you.
    Mr. Powell. Monetary policy is highly accommodative right 
now. That is appropriate, given how far we are from our 
employment goal and our inflation goal, for that matter. And I 
think the first thing I would point to is just our overall 
monitoring of financial stability.
    We have looked carefully at financial stability on an 
ongoing basis. We have a framework with four pillars. If you 
look at those, the evidence is kind of mixed. You can say that 
some asset prices are a bit high, but the banking system is 
highly-capitalized, and funding risk is relatively modest.
    The remaining category is really leverage among households 
and businesses, which is somewhat elevated, but nothing like it 
was before the financial crisis. So, it is a mixed picture on 
that. The main thing is to have a resilient financial sector 
that can withstand the sorts of disruptions that will come.
    In terms of moving forward, we have said that we would 
start to taper our asset purchases when we have seen 
substantial further progress toward our goals. When that comes, 
we will communicate well in advance of the time of actually 
tapering.
    That is what we do. We have learned over the course of some 
years now that we need to communicate carefully and move 
slowly. Well ahead of time, we will let people know what is 
coming, and that is the best we can do to make sure that the 
transition away from very highly accommodative monetary policy, 
as the economy reaches full employment and price stability 
goals that will transition to a different policy.
    Mr. Himes. Thank you. I yield back.
    Chairwoman Waters. The gentleman's time has expired. The 
gentleman from Kentucky, Mr. Barr, is recognized for 5 minutes.
    Mr. Barr. Thank you, Madam Chairwoman.
    Secretary Yellen, you have created a team within Treasury 
to focus on climate change. You are also the Chair of the 
Financial Stability Oversight Council (FSOC), which is charged 
with identifying systemic risk to the financial system.
    I certainly understand that changes to weather patterns 
could pose risk to individual credits or insurance policy 
holders. But linking hypothetical climate scenarios to risk to 
the entire financial system seems to me highly speculative, and 
on the flip side, I worry that injecting ill-defined climate 
scenarios into financial regulation and supervision creates the 
immediate and very real risk of driving investment and credit 
allocation away from job-producing industries like fossil 
energy, an industry that still provides 80 percent of total 
energy consumed in the United States, and remains the most 
affordable and reliable source of energy to the American 
economy.
    Are you incorporating this real risk into your assessments 
around climate, and how do you plan to account for the 
disruptions in the labor market, the very significant 
disruptions to the labor market from lost energy jobs? And what 
about increasing energy prices and decreasing reliability for 
consumers, is that something FSOC will look at in addition to--
in the context of your time as czar?
    Secretary Yellen. I believe that FSOC can play a role in 
arranging discussions among financial regulators, all of whom 
have responsibilities for assessing risks from climate change 
to the financial institutions that they supervise and regulate, 
to coordinate a systemwide response using the best-available 
tools. I think FSOC can facilitate identification of data and 
information, including high-quality financial disclosures that 
are needed to understand climate risks and make sure that 
climate risks are addressed fully in light of these 
assessments.
    I don't see FSOC playing a role in telling financial 
institutions what kind of lending they can do, but information 
is important.
    Mr. Barr. Thank you. And reclaiming my time, I would just 
encourage Treasury to consider the role that shifting 
consumption away from fossil energy toward renewables, despite 
the market's continued demand for fossil, the impact that could 
have on the economy as well and systemic risk, as opposed to 
just looking at hypothetical climate scenarios.
    Broadband, Madam Secretary. The pandemic has been 
especially hard for rural families who don't have a broadband 
connection in my home State of Kentucky. And I am glad that the 
American Rescue Plan allows for necessary investments in 
broadband, but one of the ongoing problems we have had is that 
funding our broadband infrastructure often goes to areas that 
already have broadband, and the dollars never get into 
underserved areas like in my district.
    I was disappointed that this committee, in the markup of 
the American Rescue Plan (ARP), rejected my amendment to 
dedicate funds to rural areas for broadband. Will you commit 
Treasury to using its authority to see that in the American 
Rescue Plan, broadband funding is spent first and foremost in 
underserved rural areas?
    Secretary Yellen. We need to distribute the funds to 
States, localities, Territories, and the like based on the 
requirements that are in the ARP, and using the funds for 
broadband or water or sewer for the State and local funding is 
certainly a permitted use. But we are going to give flexibility 
to the recipients of these funds as to precisely how they 
deploy them, consistent with the requirements of the Act--
    Mr. Barr. Thank you, and I look forward to working with you 
and Treasury on that. I appreciate that. I think we can work 
together on that.
    Final question: With the multi-trillion dollar deficit 
spending bill just passed, the promise of an additional $3 
trillion in spending by this Administration on top of the $4 
trillion in borrowing because of COVID last year, does the 
Treasury or the Fed or both of you intend to lengthen the 
maturity of government debt before interest rates rise?
    Secretary Yellen. Treasury has been looking at this 
question and has no current plans to do that.
    Chairwoman Waters. The gentleman's time has expired. The 
gentleman from Illinois, Mr. Foster, is recognized for 5 
minutes.
    Mr. Foster. Thank you, Madam Chairwoman.
    Secretary Yellen, Chair Powell, I would like to probe a 
little bit deeper on Central Bank Digital Currencies, and in 
particular the need for a secure digital ID for participants. I 
believe that both of you are on the record as acknowledging 
that an anonymous, untraceable digital dollar is not a viable 
option for our country or the free world because of its ability 
to be abused for money laundering, terrorism financing, 
ransomware, and so on. Is that principally correct?
    Mr. Powell. I don't think I am on the record for that, but 
I will go on the record now for it.
    Mr. Foster. Secretary Yellen?
    Secretary Yellen. Nor am I on the record, but I would agree 
that we need to be very careful about the use of the digital 
currency for illicit finance, and anonymous currency makes that 
much harder to control.
    Mr. Foster. Yes. Well, I concur. I think it is sort of 
logically impossible.
    On the other hand, I believe that the Chinese approach to 
digital currencies that gives the government immediate and 
unconditional access to all transaction information will be 
equally unacceptable to Americans and to most citizens of the 
free world. Therefore, a digital dollar will be crucially 
dependent on having an effective authentication component. That 
is a secure and legally traceable and maximally privacy-
preserving way for participants to authenticate themselves as a 
unique legally traceable individual, a secure digital ID.
    And it must be backed by a trusted court system and a clear 
legal regime to determine the conditions under which the 
participants might be unmasked. And as a digital dollar, if it 
is to be used internationally, we are then going to need a 
digital ID system that operates internationally, at least among 
the free countries of the world.
    I would like to thank you both for beginning engagement 
with authorities in other countries on Central Bank Digital 
Currencies, and I was wondering where you see this discussion 
going as far as a secure digital ID and a means of 
authentication across boundaries, across countries?
    Secretary Yellen. I will let Chair Powell start with this, 
because he has been more involved than I have.
    Mr. Powell. Thank you. So, yes, where we are is we are 
engaged in a process of looking at all of the technical issues 
and design issues, which interact with each other. That is one 
of the most basic ones.
    Reflecting your earlier question, I don't think a system 
that relies entirely on, for example, completely private 
governance or completely secret information about who actually 
owns the digital dollar would be viable. And the lack of 
privacy in the Chinese system is just not something we could do 
here.
    At the same time, I would say there has to be a balance, 
and it does call for using a two-tiered system in some way so 
that there is a wallet outside of the central bank, and 
transfers can take place there and that there are appropriate 
protections. We are only beginning to think carefully about 
these things, and it is going to be a careful, detailed, and 
probably lengthy process of consideration, one that we are 
investing quite a bit in now, and that I expect will last some 
time.
    Mr. Foster. Secretary Yellen, did you have any thoughts on 
this?
    The issue of the secure digital ID is very much in your 
court, having to do with--one of the things that the 
coronavirus laid bare is the lack of simply a list of citizens 
in the U.S., and then our ability to rapidly distribute funds, 
particularly to the underbanked. A high-quality and universal 
digital ID in the U.S. would have made that immeasurably 
easier, as well as everything from vaccine certificates or you 
name it.
    And so, it is an ongoing discussion on many fronts. And 
there are also specific proposals. I believe you had letters 
urging both of you to look into this in more detail. And I was 
just wondering, just simply as a means for citizens to receive 
payments, Fed accounts, each one of us already has an account 
with the Federal Government, the IRS at least, and I was 
wondering how you saw this part of the conversation going?
    Secretary Yellen. I think it is something that is worth 
exploring. I have not done so, but we would be glad to have 
further conversations with you about how something like this 
could work. It is certainly a problem, as you have mentioned.
    Mr. Foster. Thank you.
    Chairwoman Waters. The gentleman's time has expired. The 
gentleman from Texas, Mr. Williams, is recognized for 5 
minutes.
    Mr. Williams of Texas. Thank you, Madam Chairwoman.
    And thank you, Madam Secretary and Chairman Powell, for 
being with us.
    The Biden Administration's tax plans are becoming clearer 
each day, and from what we have learned so far, the President 
was not really telling the truth when he told voters that 
anyone earning less than $400,000 would not have a penny raised 
in taxes. Now, this number has been reduced to anyone making 
$200,000 a year, and a significantly greater number of families 
can expect the government to take more of their hard-earned 
paychecks so that Democrats can fund their progressive 
priorities.
    In addition to individual tax rates going up, the corporate 
tax rates are also expected to be raised, and we will no longer 
have one of the most competitive tax rates in the world. This 
will stifle business investments, prevent employers from hiring 
more people, and reduce capital-struggling businesses that will 
need to make the necessary changes to accommodate the new 
normal after COVID-19.
    So, Chairman Powell, can you talk about the correlation 
between business investment and productivity gains, and how 
increasing productivity benefits workers and the overall 
economy?
    Mr. Powell. Sure. The way living standards rise over time 
is through increasing productivity, more output per hour. 
Without that, incomes can't sustainably rise, and that is 
significantly connected to investment, investment in human 
capital and also in advancing technology.
    Mr. Williams of Texas. Okay. Thank you, Mr. Chairman.
    At the beginning of 2020, Congress updated the Bank Secrecy 
Act and made some of the largest changes to our anti-money 
laundering laws in decades. When this legislation was signed 
into law, there were some concerns coming from the business 
community about the impact this will have on small businesses 
in the form of additional regulatory costs. As a small business 
person, I can tell you that is a burden that we do not look 
forward to.
    And as you start putting out guidance and implementing the 
law, I hope you will be mindful of this and do all you can to 
ensure that businesses will not be stuck with significant new 
expense.
    So, Secretary Yellen, can you give us a status update on 
Treasury and FinCEN's work in implementing the Anti-Money 
Laundering Act of 2020?
    Secretary Yellen. Yes. Timely and effective implementation 
of the Anti-Money Laundering Act of 2020 is the top priority at 
FinCEN. Our efforts are well underway, and several of the 
provisions of the Act that involve FinCEN looking at 
innovation, regulatory reform, and the like, we are actively 
engaged in. This is something that is a high priority, and we 
are making progress on it.
    Mr. Williams of Texas. Okay, thank you.
    Chairman Powell, in the past, we have talked about the 
workforce participation rate and how we need to get people off 
the sidelines and contributing to our economy. In other words, 
just put them to work.
    In your testimony, you note that this figure is still 
notably lower than it was before the pandemic, and yet the 
COVID-19 bill recently extended the enhanced unemployment 
benefits until September. Now, I have consistently expressed my 
concerns about how this policy will be detrimental to our 
economic recovery and make it more lucrative to, frankly, live 
off of these overly-generous government programs than to go out 
and find a job.
    So, Chairman Powell, given the enhanced unemployment 
benefits are now law, how should we be incentivizing people to 
get off the sidelines and back in the workforce and make a good 
living for their families?
    Mr. Powell. I think the most important thing is for people 
to get vaccinated, so that we can get the economy fully 
reopened and those jobs can come back, and people can feel safe 
doing them.
    Mr. Williams of Texas. Do you have an answer to that, 
Secretary Yellen?
    Secretary Yellen. I agree with that. Many people who are 
not working are not doing so because of safety considerations 
or because they have children out of school. And the studies 
that have been done about whether or not the additional 
payments discourage work show pretty clearly that they don't 
serve to do that. In addition, they will be expiring in the 
fall.
    Mr. Williams of Texas. In my remaining time, I just want--
we talked about increasing taxes earlier. I would just say, as 
a small business owner who employs hundreds of people in Texas, 
it is pretty simple. If you cut taxes, you increase jobs. If 
you raise taxes, you cost jobs any way you look at it. I hope 
that everybody will understand that raising taxes to any 
business is not good for our economy.
    With that, I will yield back my time, Madam Chairwoman.
    Chairwoman Waters. Thank you very much. I now call on Mr. 
Vargas from California for 5 minutes.
    Mr. Vargas. Thank you very much, Madam Chairwoman. I 
appreciate very much this hearing.
    I also congratulate, in the strongest way, Secretary 
Yellen. It is quite an honor to have a woman now running 
Treasury. That is very, very exciting.
    [Inaudible] about deficit spending when we Democrats are in 
power. They don't seem to remember that when they are, 
especially their $1.9 trillion giveaway to the wealthiest 
Americans, tax giveaway. It is probably even more now because 
the wealthiest have made so much money during this pandemic.
    But one of the things that I have found so interesting 
about this particular hearing is that we have two incredibly 
intelligent people presenting today, and one is a Democrat and 
one is a Republican. One was appointed by a Democrat, and one 
was appointed by a Republican. And yet, they seem to be 
principled and scientific, speaking about the facts and not 
crazy things. This is the way it used to be.
    And so, I appreciate it very, very much and, again, I can't 
tell you how much I have enjoyed listening to this intelligent 
conversation. I am sure that the Secretary and the Chairman 
have differences of opinion, as they should. But it would be 
done on a factual basis, and it would be done, I think, 
intelligently and scientifically.
    In that spirit, I do want to ask about climate change. It 
seems that both of you have the notion that climate change 
could be a big deal and is in your study. So, what are the 
long-term investments that we need to be looking at with 
respect to climate change in our economy? And either one of you 
can go first.
    Secretary Yellen. I would start off by saying that climate 
change poses very severe risks to the well-being of humanity, 
and it is a global problem that demands a global solution. 
While we need to address climate change at home, we also need 
to work globally to help other countries, particularly poorer 
countries, have the resources to address it as well.
    It is a top priority of the Biden Administration. President 
Biden has released a detailed plan to combat climate change. We 
have rejoined the Paris agreement. We intend to put forward a 
proposal to invest in sustainable infrastructure and to create 
new green jobs in the process.
    We have talked earlier in this hearing about evaluating the 
risks to businesses and to financial institutions from climate 
change, which the financial regulators are doing, and I hope to 
facilitate through FSOC the sharing of information on best 
practices. We need to focus on information and disclosure of 
information about the risks to companies that investors need to 
channel their capital in the right directions.
    Mr. Vargas. Mr. Chairman, what about the risks to 
businesses and financial institutions?
    Mr. Powell. We see this through a different lens, 
appropriately, from the Treasury Department, and that really is 
the lens of our existing mandate. We supervise banks and some 
other institutions to ensure that they understand and are 
managing the risks that they are running in their business. And 
we don't have a new mandate. That is what we do.
    And climate change is an emerging risk. We are looking at 
it carefully. We actually are just in the very early stages of 
considering stress scenarios, and that is what others are 
doing, too. It is an emerging idea. It is not actually 
something that people are conducting now, but we are doing that 
and many other things to--again, to get a basic understanding 
of how the financial system can be resilient against what may 
be very significant emerging risks over time.
    Mr. Vargas. Thank you. Yesterday, in the Foreign Affairs 
Committee, we talked to David Beasley, from the World Food 
Program. Climate change was such a big deal there to famine and 
to other problems internationally. So, again, I am very 
thankful that you are working together and that you are 
scientific.
    Thank you.
    Chairwoman Waters. Thank you very much. Mr. Hill, the 
gentleman from Arkansas, is recognized for 5 minutes.
    Mr. Hill. Thank you, Madam Chairwoman.
    And let me welcome my good friend, Jay Powell, back to the 
committee for this oversight hearing.
    And what a pleasure it is to say, ``Madam Secretary,'' and 
to welcome Janet Yellen back to the committee in your new role 
as our Treasury Secretary. It is a pleasure to have you both 
here.
    Secretary Yellen. Thank you.
    Mr. Hill. Secretary Yellen, China, Russia, Iran, Syria, 
Venezuela, and Myanmar are all subject to Treasury's Office of 
Foreign Assets Control (OFAC) sanctions program. Secretary of 
State Blinken said last week that China is committing genocide, 
and President Biden recently called Vladimir Putin a killer. 
And with Chairwoman Waters' strong support, Treasury is 
considering sending billions of dollars to these dictatorships 
through the International Monetary Fund's (IMF's) special 
drawing rights allocation.
    Wouldn't you agree that no-strings-attached liquidity for a 
genocidal regime like China runs counter to our national 
interests?
    Secretary Yellen. I believe our national interest involves 
augmenting the reserves of countries that need it, so that at 
this very difficult time, we don't pressure countries to take 
contractionary, deflationary actions that would make recovery 
more difficult. And it is especially important to channel 
resources to the world's poorest countries that are having a 
great deal of--
    Mr. Hill. Madam Secretary, I agree completely. And of 
course, David Malpass has made available $160 billion of 
concessional loans through the World Bank, and the IMF, 
billions of dollars to those neediest countries through its 
facilities for some 80 countries. So, I think we share that 
goal.
    But could you at least certify for us today that China 
won't receive billions of dollars in this no-strings-attached 
liquidity through the SDR allocation?
    Secretary Yellen. The funds are allocated in accordance 
with the quotas that each country has at the IMF in an 
unconditional way. So, China, if this allocation goes through, 
will receive resources.
    China is expected to use some of these resources, I 
believe, to, along with other countries, recycle their Special 
Drawing Rights (SDRs) to some of the poorest countries through 
the Poverty Reduction and Growth Trust and to provide relief to 
countries that have outstanding borrowing from China. I think 
that China is likely to use SDR resources in ways that will be 
beneficial to countries around the world.
    Mr. Hill. Madam Secretary, thank you for that. I hope that 
is the case. I will believe it perhaps when I see it. I hope 
that is an important part of this discussion of limiting their 
access.
    Would you, in turn, also ensure that Third World countries 
that have been penalized by nontransparent predatory lending 
from the Belt and Road Initiative from China's largest creditor 
will not be paid with SDR allocations from those poor 
countries? Can you certify that for us today?
    Secretary Yellen. We do want to make sure that SDR 
allocations are used to relieve poverty and address real needs, 
and we will work with them and with China to ensure that they 
don't go to repaying loans from the Belt and Road Initiative.
    Mr. Hill. And turning to Russia, of course, as I noted, 
President Biden acknowledged last week that Vladimir Putin is a 
killer. Killers don't deserve a blank check from the IMF, do 
they?
    Secretary Yellen. As I said, an SDR allocation goes to 
members in accordance with their quotas in the IMF.
    Mr. Hill. Well, I have argued, and I hope you will work 
with us--you are skirting Congress by limiting the SDR 
allocation to $650 billion that you discussed with your G-7 
colleagues. But you are not making the efforts I think are 
important for America's national security to limit this hard 
currency access going to some of the worst regimes in the 
world.
    Will you commit to work with Congress to limit this SDR 
allocation access to Iran, Syria, Venezuela, Russia, and China?
    Secretary Yellen. We are working with the IMF to craft 
rules that will promote transparency and make it difficult for 
countries. They need to find willing partners to exchange SDRs, 
and that requirement will limit uses for some of the countries 
that you mentioned.
    Mr. Hill. Thank you, Madam Chairwoman, and I yield back.
    Chairwoman Waters. The gentleman's time has expired. Mr. 
Gottheimer, the gentleman from New Jersey, is recognized for 5 
minutes.
    Mr. Gottheimer. Thank you, Madam Chairwoman.
    And thank you, Chairman Powell and Secretary Yellen, for 
being here today.
    Secretary Yellen, if I can start with you, the State and 
Local Tax (SALT) deduction cap jammed through Congress in the 
2017 tax hike bill raised taxes for a majority of the families 
in my district. For all four counties and the scores of middle-
class families I represent, on average, SALT puts them above 
the $10,000 cap.
    For example, in Bergen County, the average taxpayer claimed 
$24,783 before the cap went into place, and the average 
property tax alone was $12,398 last year. These are my 
communities' teachers and first responders and small business 
owners, young people trying to start a family, all groups who 
were struggling, obviously, during the pandemic.
    It is high time we fought back against these moocher States 
that put this into place. My district has been taken advantage 
of by these folks enough. Our taxes need to be cut, not raised, 
as we recover from COVID-19, and removing the SALT cap has 
broad bipartisan support.
    Will the Administration support eliminating the SALT cap 
and fully reinstating the deduction, ending this misguided 
policy of double taxation on my constituents?
    Secretary Yellen. I do think that the SALT cap is a feature 
of the Tax Cuts and Jobs Act (TCJA) that resulted in very 
disparate treatment. There are a lot of options that have been 
presented, and I would work with you to try to ensure that the 
inequities that this caused are remedied in a fair and 
responsible way. As you mentioned, there is a bipartisan 
proposal to repeal the cap.
    President Biden discussed a proposal that would cap 
itemized deductions at 28 percent. The caps could be increased. 
I think we need to study just what impact it has had, and I 
look forward to working with you to find a fair way to address 
it.
    Mr. Gottheimer. Thank you, Madam Secretary, and I really 
look forward to working with you, too, on that.
    Just one other item. Given the number of rural locations 
throughout the country, including in my district, that still 
don't have true broadband connectivity, I believe that Treasury 
should make sure any American Rescue Plan (ARP) Act broadband 
infrastructure dollars are targeted to truly underserved areas, 
to avoid overbuilding.
    For example, according to a recent survey by the Census, 
only 69 percent of residents in White Township, in my district, 
have broadband connectivity. Even in northern New Jersey, there 
are lots of places that don't have connectivity or have very 
limited connectivity. I was wondering, based on the legislation 
that was just signed into law, will you commit Treasury to 
using the authority Congress gave it to see that broadband 
funding is spent first and foremost on underserved areas and to 
avoid overbuilding?
    Secretary Yellen. I am not sure that we have the ability 
under the law to impose those kinds of restrictions, but I will 
look at it. And I would also mention that the ARP contains a 
Coronavirus Capital Projects Fund. It is $10 billion that can 
also be used to fund broadband and infrastructure. So, there is 
quite a bit of money in the ARP for infrastructure, and I will 
look at what can be done.
    Mr. Gottheimer. I was thrilled about that, obviously. It 
was something I fought hard for, the $10 billion fund for 
broadband. And I think the way it is written, the Treasury has 
latitude here, and I would love to talk to you about that 
further to make sure that it goes to places that don't have 
broadband connectivity now so we don't overbuild, which has 
been a mistake in the past, as you know, and try to avoid that.
    Madam Secretary, The New York Times this week published an 
article stating that more than $600 billion of income goes 
unreported yearly to the IRS. This gap in reporting will reduce 
Federal revenue by $1.4 trillion over the next decade. It is a 
great opportunity to make sure we go after tax cheats or people 
who don't pay what they should, to avoid raising taxes 
otherwise.
    Are you prioritizing that? Are you looking into the revenue 
raisers that don't require tax rates to increase, such as 
increasing the audit capabilities of the IRS, to help close the 
tax gap?
    Secretary Yellen. Absolutely. I think this is something 
that would be both fair and not involve any increase in tax 
rates or burdens. It would make sure that those who are 
supposed to pay, do.
    It does require more resources for the IRS. I would like to 
work with Congress to see if we can provide that funding 
because I think this would be a very important initiative. I am 
fully supportive of it.
    Mr. Gottheimer. Excellent, and I think we get a 5- or 6-to-
1 return on that.
    Secretary Yellen. Absolutely.
    Mr. Gottheimer. Thank you so much for your time.
    And I yield back. Thank you.
    Secretary Yellen. Thanks.
    Chairwoman Waters. Thank you very much. The gentleman from 
Georgia, Mr. Loudermilk, is recognized for 5 minutes.
    Mr. Loudermilk. Thank you, Madam Chairwoman, and I 
appreciate the panelists being with us today.
    The Majority and the Administration recently enacted a 
massive $2 trillion stimulus bill, which they said was 
necessary because we are in an economic crisis. But now, all of 
a sudden, the Administration thinks the economy is strong 
enough to withstand a major tax increase, the first in 30 
years, in the middle of a pandemic.
    The notion that the economy is in crisis, and the notion 
that the economy is strong, cannot both be true at the same 
time. So, Secretary Yellen, could you tell us, which is it? Is 
it strong, or is it in crisis?
    Secretary Yellen. Right now, it is in crisis due to the 
pandemic, and the Rescue Package should provide the funding 
that is needed to address the pandemic and to relieve the 
suffering that it has caused, getting people to the other side 
of it. It has been deficit funded. There haven't been tax 
increases to finance it.
    But once the economy is strong again, and we are beyond the 
pandemic, President Biden is likely to propose that we engage 
in long-term plans to address longstanding investment 
shortfalls in our economy, in infrastructure and investments to 
address climate risk, investments in people, investments in 
R&D, in manufacturing, and these will make our economy more 
productive, raise wages, and create good jobs.
    It is necessary to pay for them. This would be spending 
over a 10-year horizon and would require some additional 
funding. He has been clear about the tax proposals that he 
would consider. One of those would be an increase in the 
corporate income tax rate back to 28 percent, coupled with 
reform of the Global Intangible Low-Tax Income (GILTI) to 
reduce the incentives of American companies to move their 
activities abroad to offshore activities. And we are actively 
engaged in Organisation for Economic Co-operation and 
Development (OECD) negotiations that would make it possible to 
do that without negatively impacting the competitive positions 
of American businesses.
    We have had a global race to the bottom in corporate 
taxation, and we hope to put an end to that and, in that 
context, to collect more than the 1 percent of GDP corporate 
tax revenue that we now collect, which is very low, and among 
the lowest of developed countries.
    Mr. Loudermilk. Madam Secretary, a lot of explanation 
there, but it sounds like all of that is premised on the idea 
that the economy has been in crisis. And I and several others 
beg to differ on that, even during the pandemic. But economists 
and even Chairman Powell were projecting up to 6 percent growth 
in 2021 before the bill was even signed into law.
    The economists also believe the package is 6.5 times larger 
than it needs to be. And I agree with the former Democratic 
Treasury Secretary Larry Summers, who said the reconciliation 
package is the most irresponsible economic policy in 40 years. 
So, I don't think you can say it is in crisis, and that our 
economy is strong. It is kind of speaking out of both sides of 
our mouths here.
    Secretary Yellen?
    Secretary Yellen. We have lost 9.5 million jobs. We have an 
unemployment rate that, if you add in people who have dropped 
out of the labor force because of the pandemic, is running at 
probably over 9 percent. So, we have a huge problem of 
joblessness in our economy.
    Mr. Loudermilk. Well, I understand that, but reclaiming my 
time here, there are many States that are actually seeing more 
revenue, tax revenue this year than they did--
    Chairwoman Waters. Hello, Mr. Loudermilk, are you still on?
    [no response]
    Chairwoman Waters. I don't know if there is a technical 
glitch, or if he is muted.
    [pause]
    Chairwoman Waters. Mr. Loudermilk, can you hear me? I 
suppose not.
    To our technician, can you get Mr. Loudermilk back on?
    [pause]
    Chairwoman Waters. I see that his mouth is moving, but we 
can't hear him. Is he unmuted?
    [pause]
    Chairwoman Waters. Unfortunately, there appears to be a 
problem with the Internet, and we have an agreement for a hard 
stop at this time. And so, Mr. Loudermilk will probably be one 
of our first Members recognized at the next meeting of our 
distinguished guests, when they come.
    With that, I would like to thank our distinguished 
witnesses for their testimony today.
    The Chair notes that some Members may have additional 
questions for these witnesses, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    And with that, this hearing is adjourned.
    [Whereupon, at 2:16 p.m., the hearing was adjourned.]

                            A P P E N D I X



                             March 23, 2021
                             
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