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    Biden’s proposed federal tax cut on gas could cost dearly in the future

    Biden’s proposed federal tax cut on gas could cost dearly in the futureExperts warn cutting the 18 cents will take a toll on highway upkeep and cause prices to rise further when the holiday ends America’s hard-pressed drivers may be about to receive a holiday. On Wednesday Joe Biden called on Congress to suspend the federal tax on gas and diesel until September as the country struggles with soaraway costs at the pump. But experts warned the tax holiday is unlikely to have a major impact on prices and will probably further harm the US’s already battered roads and bridges. If the tax cut even gets passed.Biden’s ‘cursed presidency’: gas prices are latest headache as midterms loomRead moreBlaming Russia’s invasion of Ukraine for the surge in gas prices Biden proposed cutting the 18-cents-a-gallon federal taxes on fuel until September and called on states to cut their gas taxes too. “Together, these actions could help drop the price at the pump by up to $1 a gallon or more. It doesn’t reduce all the pain, but it will be a big help,” said Biden.The tax cut’s first obstacle may be its last. The Senate Republican leader, Mitch McConnell, called the plan an “ineffective stunt” and other critics in his own party may join Republicans in blocking any cut.But with prices still soaring and midterm elections looming the administration is increasingly looking for ways to spare the public from prices at the pump, currently averaging at just under $5 a gallon.The non-partisan Tax Foundation called the plan a “uniquely ill-suited policy for addressing rising prices”. Pointing out that the money from the tax is the primary funding source for highway construction and its suspension could cost $10bn in funding.“Anything that could help the price at the pump is good, but it’ll come at a significant cost to the federal government that supposedly uses that money for the highway fund to maintain highways,” said Mark Finley, fellow in energy and global oil at the center for energy studies at Rice University.US energy economists also warn that dropping taxes on gasoline – a similar program has been suggested in the UK and other countries – does not address the fundamental issues of high demand.In a February report, the committee for a responsible federal budget found a federal gas tax holiday could “further increase demand for gasoline and other goods and services at a time when the economy has little capacity to absorb it”.“Gas prices are high because supply and demand are tight in the US and around the world both for oil and refined products. The prices are a signal that producers should produce more and consumers should consume less. You don’t fix the problem and you may exacerbate it, if you try to hide those signals,” said Finley.Moreover, prices may surge when the tax is lifted, according to a study released from the Wharton School at the University of Pennsylvania. Earlier this year, Maryland introduced a month-long gas tax holiday. The study found that prices rose when it expired and the tax may have cost the state $100m.Other states have tried similar measures. New York suspended its 16-cents-a-gallon tax this month for the rest of the year. Others, including Georgia, Florida and Connecticut, are cutting the tax but for shorter periods. California may send $400 to every registered vehicle owner.The debate over energy prices threatens to become one of the most contentious of the election season. This week, Exxon Mobil said global oil markets may remain tight for another three to five years, largely because of a lack of investment since the pandemic began. Biden has responded to rising prices at the pump – and a decline in his approval rating – by lobbying Opec+ countries, which include Russia, to accelerate production increases.Biden will travel to Saudi Arabia next month to ask the kingdom to turn on the spigots. But studies indicate that the Saudis are themselves at the limits of current capacity. The venture comes with a political cost, undercutting the administration’s commitment to renewable energy and an election pledge to make Saudi Arabia a “pariah” state after the murder of the Washington Post journalist Jamal Khashoggi.Other measures that the administration has undertaken to reduce energy costs, including releasing millions of barrels of crude oil from the strategic petroleum reserve and greater ethanol blending, have not turned the tide on rising prices. According to Ed Hirs at the University of Houston’s department of economics, Biden’s actions, including a stern letter to refiners to produce more gasoline and diesel, will not keep the average price at the pump from reaching $6 by September.The debate over energy has in a sense been misframed, said Hirs. “We don’t see lines at the pump, there is no shortage of oil, all we see is a higher price and that’s in essence because Opec wants a higher price,” Hirs says.The message to the US consumer is equally blunt. After 2008, when oil hit $147 a barrel, US automakers had to accept government bailouts as the consumers jumped away from gas-guzzling SUVs and pick-up trucks.“If the war in Ukraine continues we could easily see the same thing by this time next year,” Hirs predicted. “We have to think of this in a different way. A lot of folks in the west think we’re entitled to gasoline and diesel, in the same way we’re entitled to iPhones. But we haven’t operated the economy like that.”Put plainly, there’s little the administration can do. “We’ve reached a point where supplies of gasoline, diesel and crude oil are below our five-year averages, so it appears we’ve been exporting as much as we can,” said Hirs. “As long as the conflict, really between the US and Russia, persists, the EU nations will be additional buyers. So the fellow in London looking to fill his car, and the woman in France, are competing with someone on I-95.”TopicsOilUS politicsBiden administrationanalysisReuse this content More

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    The Crypto Crash: all Ponzi schemes topple eventually

    The Crypto Crash: all Ponzi schemes topple eventually Robert ReichWe’re back to the wild west finances of the 1920s as the crypto industry pours huge money into political campaigns One week ago, as cryptocurrency prices plummeted, Celsius Network – an experimental cryptocurrency bank with more than one million customers that has emerged as a leader in the murky world of decentralized finance, or DeFi – announced it was freezing withdrawals “due to extreme market conditions.”Earlier this past week, Bitcoin dropped 15 percent over 24 hours to its lowest value since December 2020. Last month, TerraUSD, a stablecoin – a system that was supposed to perform a lot like a conventional bank account but was backed only by a cryptocurrency called Luna – collapsed, losing 97 percent of its value in just 24 hours, apparently destroying some investors’ life savings.Eighty-nine years ago, Franklin D Roosevelt signed into law the Banking Act of 1933 – also known as the Glass-Steagall Act. It separated commercial banking from investment banking – Main Street from Wall Street – to protect people who entrusted their savings to commercial banks from having their money gambled away.Glass-Steagall’s larger purpose was to put an end to the giant Ponzi scheme that had overtaken the American economy in the 1920s and led to the Great Crash of 1929.Americans had been getting rich by speculating on shares of stock and various sorts of exotica (roughly analogous to crypto). These risky assets’ values rose solely because a growing number of investors put money into them.But at some point, Ponzi schemes topple of their own weight. When the toppling occurred in 1929, it plunged the nation and the world into a Great Depression. The Glass-Steagall Act was a means of restoring stability.But by the 1980s, America forgot the financial trauma of 1929. As the stock market soared, speculators noticed they could make lots more money if they could gamble with other people’s money – as speculators did in the 1920s. They pushed Congress to deregulate Wall Street, arguing that the United States financial sector would otherwise lose its competitive standing relative to other financial centers around the world.Finally, in 1999, Bill Clinton and Congress agreed to ditch what remained of Glass-Steagall.As a result, the American economy once again became a betting parlor. Inevitably, Wall Street suffered another near-death experience from excessive gambling. Its Ponzi schemes began toppling in 2008, just as they had in 1929.The difference was this time the US government bailed out the biggest banks and financial institutions. The wreckage was contained. Still, millions of Americans lost their jobs, their savings, and their homes (and not a single banking executive went to jail).Which brings us to the crypto crash.The current chair of the Securities and Exchange Commission, Gary Gensler, has described cryptocurrency investments as “rife with fraud, scams, and abuse.” In the murky world of crypto DeFi, it’s hard to know who provides money for loans, where the money flows, or how easy it is to trigger currency meltdowns.There are no standards for risk management or capital reserves. There are no transparency requirements. Investors often don’t know how their money is being handled. Deposits are not insured. We’re back to the wild west finances of the 1920s.Before the crypto crash, the value of cryptocurrencies had kept rising by attracting an ever-growing number of investors and some big Wall Street money, along with celebrity endorsements. But, again, all Ponzi schemes topple eventually. And it looks like crypto is now toppling.Why isn’t this market regulated? Mainly because of intensive lobbying by the crypto industry, whose kingpins want the Ponzi scheme to continue.Trillion-dollar crypto collapse sparks flurry of US lawsuits – who’s to blame?Read moreThe industry is pouring huge money into political campaigns.And it has hired scores of former government officials and regulators to lobby on its behalf – including three former chairs of the Securities and Exchange Commission, three former chairs of the Commodity Futures Trading Commission, three former US senators, one former White House chief of staff, and the former chair of the Federal Deposit Insurance Corporation.Former Treasury Secretary Lawrence Summers advises crypto investment firm Digital Currency Group Inc. and sits on the board of Block Inc., a financial-technology firm that is investing in cryptocurrency-payments systems.If we should have learned anything from the crashes of 1929 and 2008, it’s that regulation of financial markets is essential. Otherwise, they turn into Ponzi schemes that eventually leave small investors with nothing and destabilize the entire economy.It’s time for the Biden administration and Congress to regulate crypto.
    Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
    TopicsCryptocurrenciesOpinionE-commerceInternetUS politicsBiden administrationcommentReuse this content More

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    Federal Reserve announces biggest interest rate hike since 1994

    Federal Reserve announces biggest interest rate hike since 1994Fed confirms 0.75 percentage-point increase as Americans across country hit hard by rising prices and shortages of key items With soaring inflation and the shadow of recession hanging over the United States, the Federal Reserve announced a 0.75 percentage-point increase in interest rates on Wednesday – the largest hike since 1994.Until this week the Fed had been expected to announce a smaller increase. At a press conference, the Fed chair, Jerome Powell, said the central bank decided that a larger hike was needed after recent economic news, including last week’s announcement that inflation had risen to a 40-year high.He made clear that a similarly outsized rate rise should be expected at its next meeting in July unless price rises softened. “We at the Fed understand the hardship inflation is causing,” he said. “Inflation can’t go down until it flattens out. That’s what we’re looking to see.”The hike will increase the Fed’s benchmark federal-funds rate to a range between 1.5% and 1.75% and officials said they expected rates to rise to at least 3% this year.Powell acknowledged that the Fed’s attempt to cool spending is likely to lead to job losses. The Fed expects unemployment to rise to 4.1% from the current rate of 3.6% as it attempts to bring inflation back down to its target rate of 2%.“We never seek to put people out of work,” Powell said. But, he added: “You really cannot have the kind of labor market we want without price stability.”The rate rise came after more bad news on inflation late last week sent US stock markets into a tailspin, presenting the Fed and the Biden administration with an escalating crisis amid fears that runaway inflation has now spread through the economy.Over a third of US population urged to stay indoors amid record-breaking heatRead moreThe Fed cut rates to near zero at the start of the coronavirus pandemic, as the US and global economies effectively shut down. It increased rates for the first time since 2018 in March this year, but the increase did nothing to tamp down rising prices.Powell initially described rising prices as “transitory”, but has changed his view and says the Fed intends to aggressively increase rates in order to bring prices back under control. There are already signs that consumers are cutting back in the face of rising inflation. Retail spending fell for the first time this year in May, the commerce department said on Wednesday. Home sales have fallen for three consecutive months and consumer confidence hit a record low between May and June.Last week the labor department announced consumer prices were 8.6% higher in May than they were a year ago. The increase was broad-based, with food and fuel prices rising alongside rent, airfares and car prices.Across the country, consumers are being confronted by rising prices and shortages. Nationally, gas now costs an average of $5 per gallon, close to $2 higher than a year ago. In California, a gallon of gas now costs more than $6, up from just over $4 a year ago.Supply chain disruptions and other issues have led to shortages of basic necessities including tampons and baby formula.On Wednesday, Joe Biden summoned top oil executives to the White House to discuss ways they can “work with my administration to bring forward concrete, near-term solutions that address the crisis”.Biden’s handling of the inflation issue has battered his poll numbers. With crucial midterm elections, and control of Congress, coming up in November, Biden’s approval rating is 33%, according to Quinnipiac University’s national poll, equal to the lowest rating for his administration.Many parts of the economy remain strong and the Fed is aiming for a “soft landing” – hoping it can tame inflation by raising rates without sharply increasing the unemployment rate – but Powell acknowledged some risks, including the war in Ukraine, were beyond the influence of the Fed.Nearly 70% of the academic economists polled by the Financial Times and the University of Chicago’s Booth School of Business now believe the US economy will tip into a recession next year.TopicsFederal ReserveUS interest ratesUS economyInflationUS politicsBiden administrationEconomicsnewsReuse this content More

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    Garland says he is watching January 6 hearings amid pressure to investigate Trump

    Garland says he is watching January 6 hearings amid pressure to investigate TrumpUS attorney general says official guidelines do not prevent him from investigating ex-president The US attorney general said on Monday that he was watching the House January 6 select committee’s hearings, as he faces mounting pressure from congressional Democrats to open a criminal investigation into Donald Trump over his role in the Capitol attack.Merrick Garland also said at a press conference at the justice department’s headquarters in Washington that internal office of legal counsel guidelines did not prevent him from opening an investigation into the former president.“I am watching and I will be watching all the hearings, although I may not be able to watch all of it live,” Garland said shortly after the select committee concluded its second hearing. “I can assure you the January 6 prosecutors are watching all of the hearings, as well.”The attorney general declined to address potential investigations into Trump or other individuals mentioned by the select committee at the hearings, saying that could undermine prosecutors’ work and would be unfair to people under scrutiny who might never be charged.Capitol attack panel members urge DoJ to consider criminal charges for TrumpRead moreBut Garland reiterated earlier promises that the justice department is exploring potential criminal conduct regardless of those people’s level, their positions in the government and proximity to Trump, or whether they were at the Capitol on 6 January 2021.The justice department appears in recent weeks to have expanded its criminal investigation to examine top figures connected to Trump’s efforts to overturn the results of the 2020 election, including government officials and Republican lawyers and operatives.One grand jury in Washington is investigating the rallies that preceded the Capitol attack and whether any executive or legislative branch officials were involved in trying to obstruct Joe Biden’s election certification, according to a subpoena seen by the Guardian.The justice department also appears to be investigating political operatives close to Trump, according to another grand jury subpoena seen by the Guardian, as well as some Trump lawyers involved in a scheme to send fake Trump electors to Congress.Lisa Monaco, the deputy attorney general, confirmed in January that prosecutors were looking into any criminality in that plan, under which Trump’s lawyers hoped the former vice-president Mike Pence would refuse to certify those states and return Trump to office.The attorney general added some additional insight into the justice department’s decision-making with respect to opening an investigation into Trump, saying that internal guidelines did not prevent him from taking such action if warranted.“There’s nothing within the office of legal counsel that prevents us from doing an investigation,” Garland said. “There’s nothing that’s coming in the way of our investigation … We’re just going to follow the facts wherever they lead.”Garland’s remarks about the office inside the justice department, which issues opinions for the agency that are broadly seen as binding, did not address whether the guidelines preclude charging, not just investigating, a former president.But his careful response reflected the delicate and complicated legal considerations looming over the justice department should it consider whether to investigate and charge Trump over his efforts to reverse his 2020 election defeat to Biden.In court filings and at its hearings, the select committee has been making the case that it believes Trump committed at least two felonies – obstructing a congressional proceeding and defrauding the United States – given evidence it has collected in its 11-month inquiry.The question of whether to pursue a case against Trump has started to prompt serious discussions among senior justice department officials, according to a source familiar with the matter, though there has been no indication that Trump is currently a target of an investigation.Meanwhile, congressman Bennie Thompson, the chairman of the January 6 committee, said on Monday that he did not expect to make a criminal referral against Donald Trump or anyone else over the Capitol attack to the justice department at the conclusion of its investigation.The chairman appeared to indicate the panel would put the evidence of potential crimes by the former president into a final report – currently expected to come in September – and that Garland’s justice department would then have to decide whether to pursue a case.“No,” Thompson said when asked explicitly on Capitol Hill whether the select committee would make a referral against Trump, “that’s not our job. Our job is to look at the facts and circumstances around January 6, what caused it, and make recommendations after the hearings.”The disclosure from Thompson reflects a sense among some of the members on the panel that a criminal referral would make a resulting investigation by the justice department appear political and could undermine a potential case, according to sources close to the inquiry.If the evidence is sufficient for the justice department to consider investigating or charging Trump, the sources said, then the justice department should be able to move ahead with a case regardless of whether the select committee makes a criminal referral.The internal deliberations also come as the select committee has publicly said Trump repeatedly broke the law as he sought to overturn the 2020 election results, but criminal referrals are not binding and the final decision to prosecute rests with the justice department.TopicsJan 6 hearingsMerrick GarlandBiden administrationUS Capitol attackUS CongressUS politicsnewsReuse this content More

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    Feel the benefit: union workers receive far better pay and rights, Congress finds

    Feel the benefit: union workers receive far better pay and rights, Congress findsStudy shows unionized workers earn 10.2% more than non-union peers, amid wave of organizing at some of largest US employers Workers represented by labor unions earn 10.2% higher wages than their non-union peers, have better benefits and collectively raise wages industry-wide, according to a report released by the House and Senate committees on Friday and first shared with the Guardian.Joe Biden has pledged to be the most pro-union president in generations, and the report outlining the economic benefits of union membership was released as his administration pushes for legislative and executive-action efforts to support workers’ rights to organize.According to the report, by the joint economic committee of Congress and the House education and labor committee, unionized workers are also 18.3% more likely to receive employer-sponsored health insurance, and employers pay 77.4% more per hour worked toward the cost of health insurance for unionized workers compared with non-unionized workers.Labor unions have also contributed to narrowing racial and gender pay disparities; unionization correlates to pay premiums of 17.3% for Black workers, 23.1% for Latino workers and 14.7% for Asian workers, compared with 10.1% for white workers. Overall, female union workers receive 4.7% higher hourly wages than their non-union peers and in female dominated service industries, union workers are paid 52.1% more than non-union workers.“Unions are the foundation of America’s middle class,” said congressman Don Beyer, chair of the Joint Economic Committee. “For too long, the wealthy have captured an increasing share of the economic pie. As this report makes clear, unions help address economic inequality and ensure workers actually see the benefits when the economy grows.”The Biden administration’s drive to increase union membership comes amid a wave of organizing among workers at some of America’s largest employers, including Amazon and Starbucks.But despite the recent uptick in organizing, union membership has declined markedly in recent decades, from 34.8% of all US wage and salary workers in 1954 to 10.3% in 2021. According to several studies the decline has contributed significantly to increasing wage inequality and stagnation.Corporate practices and legal changes have also eroded workers’ bargaining power, particularly from the 1970s, as employers increasingly attempted to break union organizing efforts and were issued only weak penalties for violating labor laws.The report cites the recent resurgence of the US labor movement, and strong public support for labor unions, as a call to action to improve wages and working conditions and support worker organizing.“As chair of the education and labor committee, I am committed to addressing the decades of anti-worker attacks that have eroded workers’ collective bargaining rights,” said education and labor committee chair congressman Bobby Scott.“With the release of this report, I once again call on the Senate to pass the Protecting the Right to Organize Act, which would take historic steps to strengthen workers’ right to organize, rebuild our middle class, and improve the lives of workers and their families.”TopicsUS unionsBiden administrationUS politicsnewsReuse this content More

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    No easy ride for Biden as Kimmel tells him to ‘start yelling at people’

    No easy ride for Biden as Kimmel tells him to ‘start yelling at people’Serious questions on gun violence mean there are few laughs as US president meets late-night TV host “Our very special guest tonight is to aviator sunglasses what Tom Cruise is to aviator sunglasses,” quipped the late-night TV host Jimmy Kimmel. “I’m proud to say I voted for him dozens of times. He is the reason we all got a cavity search tonight.”This was how Kimmel introduced Joe Biden for his first in-person interview with a late-night host since taking office as US president.But any hopes that Biden, whose poll ratings are plunging, might have had that the comedian would invite him to show a lighter side to his personality were soon dashed. It was a night when there were not many laughs.Once the president had sat down, Kimmel asked: “Do you mind if I ask you some serious questions?” He then dived straight in to demand why, after a flurry of mass shootings across America, nothing had been done since Biden entered the White House.“Well, I think a lot of it’s intimidation by the NRA [National Rifle Association],” the president replied. “Look, this is not your father’s Republican party. This is a Maga party,” – a reference to the former president Donald Trump’s “Make America great again” slogan, which Biden is increasingly using an insult.“It’s a very different Republican party and so you find people who are worried, I believe, that if they vote for a rational gun policy they’re going to be primaried and they’re going to lose in a hard-right Republican primary.”Biden said he had always had a “straight relationship” with Mitch McConnell, the Republican minority leader in the Senate. “You know, he’s a guy that when he says something, he means it. I disagree with a lot of what he says, but he means it.”But Kimmel, seemingly determined to blunt rightwing criticism that he would give the president an easy ride, showed greater willingness to interrupt Biden than many political interviewers. He objected that McConnell had contradicted himself on confirming supreme court justices in a president’s final year.Sign up to First Edition, our free daily newsletter – every weekday morning at 7am BSTBiden added: “Look, he’s the leader of a party that’s moved very hard right and so, in order to get anything done, he has a different problem than he did early on before Trump became president.”Kimmel observed that although the Republican party had moved to the hard right, the American people had not because an overwhelming majority supported expanded background checks on gun buyers. His voice quivering with emotion, the host suggested that every senator should sit with the grieving families of 19 schoolchildren killed last month in Uvalde, Texas.He interrupted Biden again to ask impatiently: “Can’t you issue an executive order? Trump passed those out like Halloween candy.”The president noted he had issued some executive orders but said to applause: “I don’t want to emulate Trump’s abuse of the constitution and constitutional authority.”He said he knew some people felt like “Republicans don’t play it square, why do you play it square? Well, guess what? If we do the same thing they do, our democracy will literally be in jeopardy. Not a joke.”Kimmel replied: “It’s like you’re playing Monopoly with somebody who won’t pass go or won’t follow any of the rules, and how do you ever make any progress if they’re not following the rules?”Biden smiled and joked, “You’ve got to send them to jail”, a reference to a punishment in the board game.Biden is facing concerns about high fuel prices, baby formula shortages, and a lack of progress on several legislative fronts such as gun safety and voting rights. A Morning Consult poll published on Wednesday found that 58% of those surveyed disapproved of Biden’s performance as president, while 39% of respondents approved.Biden has also been criticised for giving fewer media interviews than his predecessors: Wednesday’s was his first since 10 February. While Trump gave late-night TV a wide berth as president, Barack Obama was a regular presence on the shows during his time in office. Biden did a virtual interview with Jimmy Fallon last December.Kimmel’s show on the ABC network was recorded in Los Angeles, where Biden is visiting for this week’s Summit of the Americas, bringing together countries from across the hemisphere. The first lady, Jill Biden, was in the audience along with Biden’s granddaughter Naomi and her fiance.At one point Kimmel, who in past years has spoken out passionately about healthcare and gun violence, pondered political gridlock and the spread of false information and advised: “I think you need to start yelling at people.”Biden demurred, saying the US was still suffering from the effects of the coronavirus pandemic, but insisted he had “never been more optimistic in my life”.Kimmel again cut in: “Why are you so optimistic? It makes no sense.”Biden said he was pinning his hopes on young people, the “best educated, least prejudiced, most giving generation in American history. This generation is going to change everything. We just have to make sure we don’t give up.”Later Kimmel sympathised with Biden’s endlessly multiplying crises, including an imminent supreme court decision on abortion rights. “What a terrible job you have,” he said. “I’m glad you’re doing it. But, boy oh boy, does this seem like a bad gig.”TopicsJoe BidenThe US politics sketchBiden administrationUS gun controlJimmy KimmelUS politicsfeaturesReuse this content More

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    Janet Yellen tells Congress US faces ‘unacceptable levels of inflation’

    Janet Yellen tells Congress US faces ‘unacceptable levels of inflation’Treasury secretary admits she regrets describing inflation as ‘transitory’ and says it is ‘top economic problem at this point’ Janet Yellen told Congress that the US is facing “unacceptable levels of inflation” on Tuesday as the treasury secretary defended herself from criticism of her previous comments that rising prices were “transitory”.Although the hearing with the Senate finance committee was centered on Joe Biden’s budget for 2023, Yellen was forced to answer questions on inflation, including some on how she once said that inflation would be “transitory”, or temporary.In response to a question about how she had initially framed inflation, Yellen said: “When I said that inflation would be transitory, what I was not anticipating was a scenario in which we would end up contending with multiple variants of Covid that would be scrambling our economy and global supply chains.“I was not envisioning impacts on food and energy prices we’ve seen from Russia’s invasion of Ukraine.”Yellen said she and the Federal Reserve chair, Jerome Powell, “could have used a better term than transitory”.She said: “There’s no question that we have huge inflation pressures, that inflation is really our top economic problem at this point and that it’s critical that we address it. I do expect inflation to remain high, although I very much hope that it will be coming down now.”Last week, Yellen drew headlines for making similar comments to CNN, during an interview in which she had been “wrong then about the path inflation would take”.At the hearing on Tuesday, Yellen said: “We currently face macroeconomic challenges, including unacceptable levels of inflation, as well as the headwinds associated with the disruptions caused by the pandemic’s effect on supply chain and the effects of supply-side disturbances to oil and food market.”‘We’re still struggling’: low unemployment can’t hide impact of low wages and rising inflationRead moreThe Biden administration has been delicately walking the inflation tightrope over the last few months as they try to push an aggressive response while also emphasizing other indicators that prove the economy is still improving, particularly in the jobs market.Biden celebrated the figures shown in May’s jobs report, released last Friday, which showed that 390,000 new jobs were created that month.“Because of the enormous progress we’ve made on the economy, Americans can tackle inflation from a position of strength,” Biden said in remarks following the release of the jobs report.Republicans in Tuesday’s hearing repeatedly pointed to the passing of the $1.9bn American Rescue Plan, which was passed in March last year and delivered further coronavirus aid, as a key driver of inflation.In response, Yellen noted that Biden “inherited an economy with very high unemployment”.“We had to address the possibility that this could be the downturn that could match the Great Recession,” she said. “In the policy, there were various risks taken into account. Of course, inflation was one of them. But the overwhelming risk was that America would be marred by a deep and long recession.”Yellen pointed to the expansion of child tax credit, which gave extra assistance to families, in the stimulus package that “resulted in a dramatic reduction in childhood poverty and financial insecurity for American families and contributed little to nothing to inflation”.She also said the US is “not the only country that’s experiencing inflation – you can see that in virtually every developed country around the world”.TopicsInflationJanet YellenEconomicsUS politicsBiden administrationnewsReuse this content More

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    Biden commerce secretary shifts blame for inflation onto Russia’s war in Ukraine

    Biden commerce secretary shifts blame for inflation onto Russia’s war in UkraineGina Raimondo’s comments seen as part of a White House push to deflect blame for nation’s economic troubles away from Biden Joe Biden’s commerce secretary Gina Raimondo attempted on Sunday to shift blame for the US inflation crisis back onto Russia’s war in Ukraine, days after another cabinet member admitted the presidential administration had made failures in predicting its impact on the economy.Janet Yellen, the treasury secretary, conceded last week she made an error in 2021 when she said inflation, which has only recently dropped from a near 40-year high, posed merely a “small risk”.“I think I was wrong then about the path that inflation would take,” Yellen told CNN last Tuesday.In her appearance on the same network’s State of the Union on Sunday, Raimondo pointed to “unexpected” developments that had derailed the global economy, and insisted: “We will get inflation under control.”She said: “I don’t think anyone predicted (Russian president Vladimir) Putin’s war in Ukraine, or various other things that have happened that have been unexpected. It’s worth noting that gas prices are up $1.40 a gallon since Putin moved troops into Ukraine.”Her comments will be seen as part of a concerted White House push to deflect blame for the nation’s economic troubles away from Biden, who has faced accusations of ignoring experts’ warnings over inflation and, more recently, the baby formula shortage.Calling inflation his “top domestic priority”, the president and his acolytes have embarked on a messaging campaign in recent weeks directed at voters in November’s midterm elections, and playing up his economic successes such as the bipartisan infrastructure act.It comes as gas prices reach almost record daily highs, up to $4.84 a gallon according to the AAA, the cost of groceries and services continue to soar, and new parents scramble to find baby formula.Raimondo herself appeared to torpedo the effort later in the interview by admitting she only learned of issues with formula in April, the same time as Biden. But production at the nation’s biggest manufacturing plant, owned by Abbott in Michigan, was closed down after bacteria was found during inspections as early as January, and problems were evident at the site late last year.“I’m not involved in the administration’s response here, but I think they’re doing a very good job and as soon as they learned that this could be a severe shortage they got on top of it,” she said.The Michigan facility resumed production this weekend after a lengthy shutdown, although it will likely be several weeks before formula appears on shelves.In another sign of growing disconnect in Democratic circles over the economy, California congressman Adam Schiff spoke out strongly on Sunday against Biden’s planned summer trip to Saudi Arabia, one of the world’s leading oil producing nations.“We should make every effort to lower oil prices, but going hat-in-hand to someone who’s murdered an American resident would not be on my list,” Schiff said on CBS’ Face the Nation, referring to the implication of Saudi Arabian Crown Prince Mohammed bin Salman in the 2018 killing of Washington Post columnist Jamal Khashoggi in Turkey.“I wouldn’t go,” Schiff continued. “I wouldn’t shake his hand. I would want to see Saudi Arabia lower oil prices, or increase their production [and] I’d want to see them make changes in their human rights record. I want to see them hold people accountable that were involved in that (Khashoggi) murder … before I would extend that kind of dignity.”TopicsUS newsUS economyInflationUS politicsJoe BidenBiden administrationnewsReuse this content More