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Floor Speech
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Mr. COTTON. Mr. President, Jerome Powell was a better choice for Federal Reserve Chair than Lael Brainard, but that alone is not a good enough reason to confirm Chairman Powell for a second term. Chairman Powell has presided over a series of failures at the Fed, while the Fed's actions during his tenure have harmed working-class Americans and worsened inequality. The Senate should not support his renomination.
The core mission of the Federal Reserve from the very beginning has been to foster stable prices and ensure a sound currency. No one--no one--can seriously argue that the Fed has accomplished this mission under Mr. Powell's leadership. After years of reckless policy and months of obfuscation, inflation now exceeds 6 percent, the highest rate of inflation in 30 years--the highest rate of inflation in 30 years.
An inflationary economy rewards will-be speculators and the holders of large assets and debts like, for instance, the Federal Government or giant corporations, but it ruins responsible citizens who are just trying to save for their retirements or maybe their kids' colleges.
In the worst-case scenario, the value of money can collapse, endangering society itself. In less catastrophic but still serious conditions, Americans who have played by the rules for many years, responsibly working and saving, see the value of their money slowly erode over time.
Nearly half of all Americans have no exposure whatsoever to the stock market, not a single stock or mutual fund or pension--no exposure to the stock market. Their money is usually held in low-interest checking accounts, savings accounts, certificates of deposit, and cash. The Fed's extreme low-interest-rate policy means their thrift and prudence earns them nothing. In fact, it sets them back every day with this inflationary spiral. Money outside the stock market loses value every day when inflation is at 30-year highs and interest rates are near record lows.
Likewise, 6 percent inflation has totally wiped out any nominal wage gains for workers. In fact, inflation-adjusted weekly earnings are down 1.6 percent compared with a year ago. Real inflation-adjusted wages are down from last year when employers across the country report shortages of workers. That is because inflation is eating away at all those wage gains. And there is no guarantee that inflation at 6 percent is the ceiling.
Still, the Fed has refused to change course even as prices rose on everything from groceries to gasoline. Chairman Powell insisted for months that the pain was only ``temporary'' or ``transitory.'' According to so-called ``experts,'' inflation would simply vanish once Pete Buttigieg sorted out the supply chains and we got the Delta variant under control. But after months of skyrocketing prices, Chairman's Powell's confidence looks not only misplaced and misinformed but reckless.
This week, Mr. Powell admitted that he would retire--retire--the word ``transitory,'' the very word he helped popularized. If only American families could so easily retire the devastating effects of inflation on their monthly budgets.
Mr. Powell has directly contributed to this inflation. He has maintained the Fed's so-called emergency monetary policies a decade after the emergency of the financial crisis had ended. That means the Fed had already exhausted the normal tools of monetary policy when the pandemic hit last spring. It had to prop up the economy through unprecedented levels of government intervention. These policies, while perhaps justified for a very brief period of uncertainty in the spring of 2020--very brief--policies which included huge purchases of government bonds, mortgage debt, and corporate debt--but they were not justified after that, just as they weren't justified before it, even as the Fed was continuing unparalleled levels of quantitative easing.
As a result, the Fed's balance sheet has ballooned to $9 trillion, and it continues to grow by more than $100 billion a month. Nine trillion dollars. Let me put that in perspective. The Fed's balance sheet after the financial crisis barely surpassed $2 trillion.
The chief result of these policies during the pandemic has been to boost asset prices, especially the stock market valuations of giant corporations. But the price of these gains has been inflation, which especially harms working-class Americans. After releasing a torrent of cash into the economy, it is no surprise that prices are rising in this flood of cheap money.
This week, Chairman Powell testified that he might--he might--unwind these policies a little faster than previously planned, but even if the Fed follows through--and I will believe it when I see it after the last many years of radical emergency monetary policy--it will still be too little, too late.
The simple fact is, the Fed, under Chairman Powell's leadership, has forced millions of American families to choose whether to pay the mortgage or feed their families or fill up their gas tanks, heat their homes, or maybe buy a couple of extra Christmas presents. That is failure.
While inflation is the Fed's worst failure under Chairman Powell, it is not their only failure. At a time when they cannot achieve their core mission of price stability, they are adopting ancillary missions like ``woke'' activism at the Fed. The Fed has joined an international effort devoted to ``greening'' the financial system, whatever that means. Fed branches around the country are even spreading critical race theory, claiming that terms like ``Founding Fathers'' and ``blacklist'' are ``biased'' and sharing radical materials that claim that--this is a direct quote from some of the materials that Fed branches have shared-- ``race-neutral policies uphold racism.'' Think about that. The Fed's core mission is to maintain price stability. While they fail on that mission, they are teaching their employees that race-neutral policies are racist.
We might chuckle and shake our heads and have a good laugh when this kind of nonsense happened at Bard College or some other college campus, but now it is happening at the Nation's central bank, which plays a role in determining whether we end up rich or poor. This mission creep is alarming, especially when the Fed is failing to fulfill its core mission.
I know many people have made excuses for the Fed, and they defended Mr. Powell's tenure. They said inflation was not his fault or primarily the Fed's fault. But it is true the Democrats have been spending trillions of dollars this year we don't have. But, as Bill Parcells said about NFL teams, you are what your record says you are. The Fed's record is 6 percent inflation, the worst inflation in 30 years.
Most Americans live in a world of accountability and consequences, the lack of which is one of the things they hate most about Washington. Failure in Washington is too often rewarded. The Fed has manifestly failed during Chairman Powell's tenure, further skewing our economy in favor of the wealthy while the working class suffers. There have to be consequences for this kind of failure. Jerome Powell is not the right choice to continue to lead the Federal Reserve.
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