Federal Reserve Chairman Jerome Powell warned Americans on Friday that more pain was on the way as the Fed tried to float President Biden’s sinking economy. And on CNN’s At This Hour, White House correspondent John Harwood flashed a sadistic streak, boosting the administration’s argument that all the pain and anxiety Americans were being subjected to was really for their own benefit down the line.
“[T]he Fed has two different mandates, one is to maximize employment, the other is to keep inflation at a reasonable level,” Harwood said, noting that the Fed had been mostly focused on “maximizing employment” out of fear of a “slow recovery from the pandemic.”
He added that Powell’s speech “was signaling that he is not going to be the Fed chair who eases up too quickly. He is determined – now that he has pivoted toward addressing inflation, he's going to get the job done.”
Harwood then tried to suggest the coming increase in economic pain was actually to help us in the long run:
And I think it's important to reflect as the soundbite that Rahel played indicated when he says that there's going to be pain, and we say there's going to be pain, that is in the service of what Jerome Powell believes will be an overall benefit for the economy because inflation is a big problem and solving it will require slowing the economy, some rise in unemployment. On net, he thinks the American economy and the American people are going to come out ahead.
Economic and political commentator Catherine Rampell tried to take the edge off by suggesting Powell was just trying to “convince markets that the Fed is super serious about inflation.” “And I think the subtext here is a little bit, well, if they talk tough, if they talk super hawkish then maybe they don't have to act quite as hawkish down the line,” she explained.
They eventually pivoted to talking about Biden’s student loan bailout plain and Harwood boasted – on behalf of the White House – that they were ready and confident in taking on the critics:
But at this point in the political season having gotten their legislative agenda through the Congress, having seen these inflation numbers get better at least for a while, I think Joe Biden is happy to say come fight me on giving student debt relief, wiping out the student debt of 20 million people.
(…)
I think the administration – Joe Biden has a new bit of a chip on his shoulder and I think he's happy to wage that fight and point to other things that may be unfair in our tax code and our economy and satisfy himself that voters are going to come down on his side on this issue.
Rampell, though, was one of the critics. “What I mean is Democrats seemed to have decided that the only way to help the needy, the only way to help the poor and the middle-class is also to give some money to the rich,” she sniped. “In this case, the argument from the progressive left is, well, the only way we can help people who are struggling with student debt is to also give forgiveness to households making $250,000 a year which is what this plan does.”
This spin claiming your pain is good was made possible because of lucrative sponsorships from 4imprint and Audi. Their contact information is linked.
The transcript is below, click "expand" to read:
CNN’s At This Hour
August 26, 2022
11:19:48 a.m. Eastern(…)
KATE BOLDUAN: John, Rahel laid out really well the contours of [Federal Reserve Chairman Jerome] Powell's speech. What stuck out to you and what is the White House listening to and taking from this?
JOHN HARWOOD: Kate, you know, the Fed has two different mandates, one is to maximize employment, the other is to keep inflation at a reasonable level. For a very long time Jerome Powell, like the Biden administration, leaned heavily toward maximizing employment as a – in their monetary policy and in the administration's fiscal policy because they were concerned about a slow recovery from the pandemic.
Having made that mistake and having heard very grave warnings from lots of economists that we could have a big multi-year problem with inflation, Jerome Powell was signaling that he is not going to be the Fed chair who eases up too quickly. He is determined – now that he has pivoted toward addressing inflation, he's going to get the job done.
And I think it's important to reflect as the sound bite that Rahel played indicated, when he says that there's going to be pain, and we say there's going to be pain, that is in the service of what Jerome Powell believes will be an overall benefit for the economy because inflation is a big problem and solving it will require slowing the economy, some rise in unemployment. On net, he thinks the American economy and the American people are going to come out ahead.
BOLDUAN: Catherine, when it comes to the Fed chairman speaking there's always what he said and also what he doesn't say. What did you take?
CATHERINE RAMPELL: I think what he was trying to do was convince markets that the Fed is super serious about inflation; the recent encouraging numbers on inflation are not sufficient for them to take their foot off of the brake. And I think the subtext here is a little bit, well, if they talk tough, if they talk super hawkish then maybe they don't have to act quite as hawkish down the line. Meaning that if they convince markets that they are quite focused on inflation, that they are willing to take the punchbowl away, every other metaphor, then that will keep inflation expectations under control and the Fed doesn't have to raise rates quite as much as it might otherwise.
BOLDUAN: Is that why he noted inflation feeds upon itself when he was talking about public sentiment, too?
RAMPELL: Right. Expectations are really important. I mean, there is a big debate in economics about exactly what feeds into them and how much they actually cause price increases but the idea is that if people believe prices are going to go up that becomes a self-fulfilling prophecy. Right? That they raise their own prices, they demand much bigger raises, for example, and so that in and of itself perpetuates more inflation. So you want to nip that in the bud and convince the public, convince markets, convince consumers, convince businesses that, no, don't worry, we have it under control.
(…)
11:24:46 a.m. Eastern
BOLDUAN: On the student -- on the student debt relief plan and he was talking about it last night, John, now that they're finally answering questions about the price tag of this. What does that do to the economic and political conversation that kind of surrounds all of this?
HARWOOD: I think from a White House point of view they're very happy with this conversation. Look, this is a policy that economists generally speaking, Democrats and Republicans, do not like. They think it's an inefficient way of distributing money to people who might deserve it and benefit from it, while giving money to other people who are more affluent who shouldn't get that money.
But at this point in the political season having gotten their legislative agenda through the Congress, having seen these inflation numbers get better at least for a while, I think Joe Biden is happy to say come fight me on giving student debt relief, wiping out the student debt of 20 million people. You had a new report from Pen Wharton today saying that 75 percent of the benefit would go to people making under $88,000 a year.
I think the administration – Joe Biden has a new bit of a chip on his shoulder and I think he's happy to wage that fight and point to other things that may be unfair in our tax code and our economy and satisfy himself that voters are going to come down on his side on this issue.
BOLDUAN: Catherine, your column on this is headlined: “Biden's student debt plan is a Democratic version of ‘trickle-down’ economics.” I read it with quite a bit of interest. What do you mean?
RAMPELL: What I mean is Democrats seemed to have decided that the only way to help the needy, the only way to help the poor and the middle-class is also to give some money to the rich, which is a sort of flip side of some of the arguments that you've heard from Republicans over the years, that the only way to help the poor is to give tax cuts to the rich. In this case the argument from the progressive left is, well, the only way we can help people who are struggling with student debt is to also give forgiveness to households making $250,000 a year which is what this plan does.
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