By Clara McCourt
Sen. Elizabeth Warren fired back at Federal Reserve Chairman Jerome Powell Sunday for suggesting an increase in interest rates, saying that “the Fed is going to tip this economy into recession.”
Warren stated that Powell’s plan doesn’t directly address current causes of inflation, using the COVID-19 pandemic, supply chain issues, and the war in Ukraine as examples, as well as “giant corporations that are engaging in price gouging.”
“There is nothing in raising the interest rates, nothing in Jerome Powell’s tool bag, that deals directly with those, and he has admitted as much in congressional hearings when I’ve asked him about it,” the senator told CNN’s Dana Bash on “State of the Union.” “I’m very worried that the Fed is going to tip this economy into recession.”
"I'm very worried that the fed is going to tip this economy into recession."@SenWarren (D-MA) reacts after the Chair of the Federal Reserve Jerome Powell signaled forceful and rapid action on inflation.@CNNSotu #CNNSOTU pic.twitter.com/U26EyB44Xc
This follows Powell’s comment Friday that the fight against inflation through “higher interest rates, slower growth, and softer labor market conditions” will bring “some pain” for U.S. households. Warren slammed Powell’s phrasing of the issue.
“What he calls ‘some pain’ means putting people out of work, shutting down small businesses, because the interest rates go up,” Warren said.
Powell hinted at a possible recession in his keynote address at the Federal Reserve’s annual Jackson Hole Economic Symposium Friday, saying that the Fed plans on using its “tools forcefully to bring demand and supply into better balance.”
Warren, who publicly called for Powell’s replacement as Federal Reserve Chairman last year, dismissed the Fed’s statements as destructive to the working class.
“Do you know what’s worse than high prices and a strong economy?” she said. “It’s high prices and millions of people out of work.”
In the same vein, Warren praised President Biden’s recent decision to forgive student loan debt up to $20,000, saying that “working class families have gotten some real relief.”
“This is about America investing in people who work hard, who play by the rules,” the senator said.
Bash challenged Warren’s statements, playing her a reaction from small business owner Brian Launchbury who feels that Biden’s decision is unfair to those with other economic struggles.
“It’s a little upsetting that we get pain and struggle, and do everything, and then other people just gave up and quit,” Launchbury said. “I wasn’t raised to quit.”
"I recognize that right now hard-working families, middle class families, working class families, have gotten some real relief."@SenWarren (D-MA) discusses President Biden's decision to cancel up to $20,000 in federal student loan debt for some borrowers.@CNNSotu #CNNSOTU pic.twitter.com/NW0V1kCi8k
Warren, who built much of her presidential campaign around the issue of student loan forgiveness, responded by criticizing the current state of the public education system. She stated it is harder for young adults who struggle financially to get opportunities that “open doors” through higher education.
“We’re saying to these young people, you’ve got to get an education. But we are going to wrap the chains of debt around you, and for many, you’re going to be paying for it for decades into the future,” she said.
After Bash pointed out that Biden’s student loan forgiveness plan does not solve the issue of exorbitant college tuition, Warren referenced the Democrat-led College Transparency Act, which would require schools to submit financial information to the Department of Education. The act passed in the House earlier this year.
For now, though, the senator said she’s “so happy” with Biden’s actions.
“The President has done what he can do with the tool in front of him,” Warren said.
Stay up to date on all the latest news from Boston.com
Be civil. Be kind.
©2022 Boston Globe Media Partners, LLC
Stay up to date with everything Boston. Receive the latest news and breaking updates, straight from our newsroom to your inbox.