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How Trump’s Attacks on the Fed Have Made Its Job Harder How Trump’s Attacks on the Fed Have Made Its Job Harder
(8 days later)
WASHINGTON — President Trump has spent two years publicly attacking the Federal Reserve and undercutting its chair, Jerome H. Powell. That animosity is making it difficult for Washington to project a united front as it stares down the most significant economic threat since the Great Recession.WASHINGTON — President Trump has spent two years publicly attacking the Federal Reserve and undercutting its chair, Jerome H. Powell. That animosity is making it difficult for Washington to project a united front as it stares down the most significant economic threat since the Great Recession.
The Fed has moved at breakneck speed to try to alleviate economic harm from the coronavirus pandemic, which is closing businesses, knocking workers off payrolls and almost surely plunging the economy into a downturn. Within weeks, the central bank has slashed rates to near-zero and enacted many of the programs developed during the 2008 financial crisis.The Fed has moved at breakneck speed to try to alleviate economic harm from the coronavirus pandemic, which is closing businesses, knocking workers off payrolls and almost surely plunging the economy into a downturn. Within weeks, the central bank has slashed rates to near-zero and enacted many of the programs developed during the 2008 financial crisis.
Despite the swift action, investors remain rattled.Despite the swift action, investors remain rattled.
That pervasive sense of insecurity comes in part as Americans struggle to decipher what kind of coordinated economic response Washington is staging. During the 2008 financial meltdown, Ben S. Bernanke, the Fed chair at the time, seemed to be moving in lock step with the Treasury Secretary and the White House. But that sort of comity has not been emanating from Washington during the current crisis.That pervasive sense of insecurity comes in part as Americans struggle to decipher what kind of coordinated economic response Washington is staging. During the 2008 financial meltdown, Ben S. Bernanke, the Fed chair at the time, seemed to be moving in lock step with the Treasury Secretary and the White House. But that sort of comity has not been emanating from Washington during the current crisis.
Instead, Mr. Trump increased his criticism, even threatening to demote Mr. Powell as the crisis coursed through financial markets.Instead, Mr. Trump increased his criticism, even threatening to demote Mr. Powell as the crisis coursed through financial markets.
“One way to read the markets is, the markets don’t have confidence in governments to respond to this,” said David Wessel, the director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution in Washington. “President Trump’s repeated attempts to attack Jay Powell can’t help but have made that worse.”“One way to read the markets is, the markets don’t have confidence in governments to respond to this,” said David Wessel, the director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution in Washington. “President Trump’s repeated attempts to attack Jay Powell can’t help but have made that worse.”
Treasury Secretary Steven Mnuchin and Mr. Powell have a good relationship and talk daily. But the two have yet to appear together during the crisis, and Mr. Powell has not been at any of the White House events where Mr. Trump discussed the economic response to the virus. Mr. Powell has also been absent from the airwaves except for a call-in news conference on Sunday.Treasury Secretary Steven Mnuchin and Mr. Powell have a good relationship and talk daily. But the two have yet to appear together during the crisis, and Mr. Powell has not been at any of the White House events where Mr. Trump discussed the economic response to the virus. Mr. Powell has also been absent from the airwaves except for a call-in news conference on Sunday.
That is strikingly different from 2008, when Mr. Bernanke and Treasury Secretary Henry M. Paulson Jr. coordinated closely with President George W. Bush to pass the Troubled Asset Relief Program. The trio were pictured together after key meetings, and a New York Times headline from early 2008 reads “Bush and Bernanke back economic stimulus.” Later, Mr. Bernanke worked with President Barack Obama and his Treasury Secretary, Timothy F. Geithner, to deal with fallout from the crisis.That is strikingly different from 2008, when Mr. Bernanke and Treasury Secretary Henry M. Paulson Jr. coordinated closely with President George W. Bush to pass the Troubled Asset Relief Program. The trio were pictured together after key meetings, and a New York Times headline from early 2008 reads “Bush and Bernanke back economic stimulus.” Later, Mr. Bernanke worked with President Barack Obama and his Treasury Secretary, Timothy F. Geithner, to deal with fallout from the crisis.
“Whatever differences they may have had in the past should be put behind them to deal with the war on corona,” said Hal S. Scott, the director of the Committee on Capital Markets Regulation. Mr. Scott said it was critical that Treasury and the Fed coordinate closely, adding that it was time for Mr. Powell to be more visible.“Whatever differences they may have had in the past should be put behind them to deal with the war on corona,” said Hal S. Scott, the director of the Committee on Capital Markets Regulation. Mr. Scott said it was critical that Treasury and the Fed coordinate closely, adding that it was time for Mr. Powell to be more visible.
“Jay Powell should appear before the American people and the world and report all the good things he has done and that he is prepared to do, whatever it takes in the future,” he said.“Jay Powell should appear before the American people and the world and report all the good things he has done and that he is prepared to do, whatever it takes in the future,” he said.
Many economic policymaking veterans from past administrations have privately criticized Mr. Mnuchin and other Trump advisers for mismanaging the crisis. Several of Mr. Trump’s top aides publicly played down the threat that the virus posed to the economy, even as it began to spread rapidly in China, Italy and parts of the United States.Many economic policymaking veterans from past administrations have privately criticized Mr. Mnuchin and other Trump advisers for mismanaging the crisis. Several of Mr. Trump’s top aides publicly played down the threat that the virus posed to the economy, even as it began to spread rapidly in China, Italy and parts of the United States.
Until recently, when the administration pivoted to proposing large doses of fiscal stimulus to fight a contraction in economic activity, many administration officials — and, repeatedly, Mr. Trump — placed the onus for action on Mr. Powell and the Fed.Until recently, when the administration pivoted to proposing large doses of fiscal stimulus to fight a contraction in economic activity, many administration officials — and, repeatedly, Mr. Trump — placed the onus for action on Mr. Powell and the Fed.
Mr. Trump suggested as recently as Saturday that he was still considering demoting Mr. Powell, and on March 10 he called the institution “pathetic, slow moving.” Days later, he wrote on Twitter that “The Federal Reserve must FINALLY lower the Fed Rate to something comparable to their competitor Central Banks.”Mr. Trump suggested as recently as Saturday that he was still considering demoting Mr. Powell, and on March 10 he called the institution “pathetic, slow moving.” Days later, he wrote on Twitter that “The Federal Reserve must FINALLY lower the Fed Rate to something comparable to their competitor Central Banks.”
After the Fed cut rates to near-zero on Sunday, Mr. Trump grudgingly congratulated the central bank.After the Fed cut rates to near-zero on Sunday, Mr. Trump grudgingly congratulated the central bank.
“That brings us in line with what other countries are,” he said. “They actually have negative rates, but look, we got it down to potentially zero. That’s a big step, and I’m very happy they did it, and you will not hear anything bad about me unless it’s a month or two from now.”“That brings us in line with what other countries are,” he said. “They actually have negative rates, but look, we got it down to potentially zero. That’s a big step, and I’m very happy they did it, and you will not hear anything bad about me unless it’s a month or two from now.”
The current White House rarely communicates with Mr. Powell. Larry Kudlow, the director of the National Economic Council, has a monthly lunch with the Fed chair, but he and Mr. Mnuchin have only tepidly defended Mr. Powell in the face of presidential criticism.The current White House rarely communicates with Mr. Powell. Larry Kudlow, the director of the National Economic Council, has a monthly lunch with the Fed chair, but he and Mr. Mnuchin have only tepidly defended Mr. Powell in the face of presidential criticism.
The crisis response has been further complicated by a lack of top staffers at Treasury, along with a dearth of expertise managing such crises. Currently, the department does not have officials overseeing two top divisions, domestic finance and sanctions.The crisis response has been further complicated by a lack of top staffers at Treasury, along with a dearth of expertise managing such crises. Currently, the department does not have officials overseeing two top divisions, domestic finance and sanctions.
Treasury’s acting assistant secretary for international finance, Geoffrey Okamoto, is departing to be the first deputy managing director of the International Monetary Fund. And Brian McGuire, the assistant secretary for legislative affairs, is expected to leave this spring.Treasury’s acting assistant secretary for international finance, Geoffrey Okamoto, is departing to be the first deputy managing director of the International Monetary Fund. And Brian McGuire, the assistant secretary for legislative affairs, is expected to leave this spring.
A senior Treasury official noted that Mr. Mnuchin had been speaking with Mr. Powell by phone multiple times a day and into the evenings in recent weeks. His deputy, Justin Muzinich, has also been in regular communication with counterparts at the Federal Reserve Bank of New York.A senior Treasury official noted that Mr. Mnuchin had been speaking with Mr. Powell by phone multiple times a day and into the evenings in recent weeks. His deputy, Justin Muzinich, has also been in regular communication with counterparts at the Federal Reserve Bank of New York.
Treasury has developed an internal task force to assess the economic fallout of the virus. Mr. Muzinich, who had been overseeing the terrorist and financial intelligence unit, has shifted much of his focus domestic finance. Treasury’s markets room now has nine full-time staff members providing updates to the secretary and, according to the official, the department is open to bringing in additional reinforcements as needed.Treasury has developed an internal task force to assess the economic fallout of the virus. Mr. Muzinich, who had been overseeing the terrorist and financial intelligence unit, has shifted much of his focus domestic finance. Treasury’s markets room now has nine full-time staff members providing updates to the secretary and, according to the official, the department is open to bringing in additional reinforcements as needed.
But the light staffing has made it hard for any one official to communicate to the American public that the nation’s economic leaders stand ready to do what it takes to calm markets and safeguard prosperity.But the light staffing has made it hard for any one official to communicate to the American public that the nation’s economic leaders stand ready to do what it takes to calm markets and safeguard prosperity.
Updated July 7, 2020
The coronavirus can stay aloft for hours in tiny droplets in stagnant air, infecting people as they inhale, mounting scientific evidence suggests. This risk is highest in crowded indoor spaces with poor ventilation, and may help explain super-spreading events reported in meatpacking plants, churches and restaurants. It’s unclear how often the virus is spread via these tiny droplets, or aerosols, compared with larger droplets that are expelled when a sick person coughs or sneezes, or transmitted through contact with contaminated surfaces, said Linsey Marr, an aerosol expert at Virginia Tech. Aerosols are released even when a person without symptoms exhales, talks or sings, according to Dr. Marr and more than 200 other experts, who have outlined the evidence in an open letter to the World Health Organization.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles.
A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.
The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said the administration was failing to bolster markets. “Everywhere you would look for reassurance, for leadership, for policy action, for reliable information, all are absent,” he said.Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said the administration was failing to bolster markets. “Everywhere you would look for reassurance, for leadership, for policy action, for reliable information, all are absent,” he said.
Those perceptions have obscured what has been a fast-paced response from the central bank.Those perceptions have obscured what has been a fast-paced response from the central bank.
The Fed is often a first responder when something goes wrong in the economy. It is able to change interest rates and buy bonds much faster than elected officials can pass legislation and mail out checks.The Fed is often a first responder when something goes wrong in the economy. It is able to change interest rates and buy bonds much faster than elected officials can pass legislation and mail out checks.
This time is no exception. The central bank has gone from making its first emergency rate cut on March 3 to slashing interest rates to near-zero. It has beefed up programs to keep money markets functioning and rolled out an emergency lending scheme to help businesses access short-term funding. Late Wednesday, the Fed said it would offer loans to money market mutual funds, the vehicles that millions of Americans use to save money that can be readily tapped. Those lending programs were done in coordination with Treasury, an indication that a partnership does exist, even if it is not readily apparent.This time is no exception. The central bank has gone from making its first emergency rate cut on March 3 to slashing interest rates to near-zero. It has beefed up programs to keep money markets functioning and rolled out an emergency lending scheme to help businesses access short-term funding. Late Wednesday, the Fed said it would offer loans to money market mutual funds, the vehicles that millions of Americans use to save money that can be readily tapped. Those lending programs were done in coordination with Treasury, an indication that a partnership does exist, even if it is not readily apparent.
On Thursday, the Fed said it would also extend currency swap lines to nine more countries — on top of the five relationships it already has — in an attempt to keep dollars flowing to banks around the world.On Thursday, the Fed said it would also extend currency swap lines to nine more countries — on top of the five relationships it already has — in an attempt to keep dollars flowing to banks around the world.
Officials are “completely willing to do what it takes, to do what is necessary” to support the economy, said Mary C. Daly, the president of the Federal Reserve Bank of San Francisco. “We learned a lot during the financial crisis about what tools are at our disposal.”Officials are “completely willing to do what it takes, to do what is necessary” to support the economy, said Mary C. Daly, the president of the Federal Reserve Bank of San Francisco. “We learned a lot during the financial crisis about what tools are at our disposal.”
She added, “But we did not stop learning.”She added, “But we did not stop learning.”
The Fed is throwing a kitchen sink of policies at the financial system to keep it operating smoothly, because short-term economic pain could turn into long-term suffering if credit crunches prevent companies from getting the cash they need to continue operating.The Fed is throwing a kitchen sink of policies at the financial system to keep it operating smoothly, because short-term economic pain could turn into long-term suffering if credit crunches prevent companies from getting the cash they need to continue operating.
Markets are not yet soothed. Investors continue to sell everything to raise cash, roiling Treasury markets, making corporate debt more expensive and challenging state and local financing schemes. Some have questioned whether the Fed is falling behind.Markets are not yet soothed. Investors continue to sell everything to raise cash, roiling Treasury markets, making corporate debt more expensive and challenging state and local financing schemes. Some have questioned whether the Fed is falling behind.
Officials point out that it takes some time to get programs in place, and it will take time for them to work.Officials point out that it takes some time to get programs in place, and it will take time for them to work.
“These facilities are hard work, to get all of the operational aspects correct,” said Eric Rosengren, the president of the Federal Reserve Bank of Boston and an overseer of the money market program.“These facilities are hard work, to get all of the operational aspects correct,” said Eric Rosengren, the president of the Federal Reserve Bank of Boston and an overseer of the money market program.
The central bank is taking communication partly into its own hands. It held a media blitz on Wednesday and Thursday, with regional presidents on television and press calls to pound out with one key message: The Fed is moving quickly, and it stands ready to act and willing to get creative.The central bank is taking communication partly into its own hands. It held a media blitz on Wednesday and Thursday, with regional presidents on television and press calls to pound out with one key message: The Fed is moving quickly, and it stands ready to act and willing to get creative.
“We should keep an open mind as to what else we have to do,” Mr. Rosengren said in an interview.“We should keep an open mind as to what else we have to do,” Mr. Rosengren said in an interview.