President bushs council of economic advisers. Dr. Yellen served as vice chair of the Federal Reserve until 2010 to 2014 before being appointed chair. In 2014 by president barack obama. Dr. Yellen also previously asved in the white house chair of the council of economic advisers. Time eitherfirst dr. Bernanke or dr. Yellen have testified before Congress Since stepping down from the Federal Reserve. These extraordinary times require congress to seek out of experts with extraordinary experience. As Congress Works to end the economic crisis and enable a strong recovery, we are fortunate to benefit from their individual insights and gain from their unique position as Federal Reserve chairs in the last economic crisis and recovery. I want to thank both of them for agreeing to testify today. Crisis, thento this coronavirus pandemic continues to spiral out of control. Today, over 3 million americans have tested positive for the virus, including a recordbreaking 75,600 confirmed yesterday. Than 140,000 americans have died. Far more than any other country. This administration has not only failed to fix the problem, it has made things worse. They want to push states to reopen without a plan to keep everyone safe. As a result, we have new arizona,s in florida, texas, and here in our home state of south carolina. Floridas the capital infection, now 20 higher than new york was at the peak of the outbreak in april. Now the administration is undermining its own Public Health experts in the rush to reopen schools again without a plan. Unemployment is at a historic high. Americans areion collecting Unemployment Benefits. Just last week, several Federal Reserve officials expressed the law that the countrys modest recovery is starting to level off. Has beenomic crisis especially damaging to communities of color. Who as our witness recently are bearing the greatest share of covid19 deaths, and also face higher rates of unemployment than their white counterparts. Is whattion for today can we do about it . Address ournnot economic woes until we first address the urgent Public Health crisis. It is far past time for the white house to take responsibility for others and provide the muchneeded federal leadership and a clear National Strategy to fight this pandemic. Second, the Federal Reserve and usesury must act quickly to the authority and Funding Congress provided to help american families. Crisis an unprecedented that requires an unprecedented response. While the fed has taken significant steps to sure up credit markets and protect big businesses, it has done less to protect workers. In fact, the feds primary mechanism to protect jobs, main Street Lending program, has struggled to get off of the ground. The fed should do more to ensure the Lending Program is accessible for the Small Businesses who most need it and deserve this assistance and to protect the workers the program was designed to help. Third, the white house must work with congress to act boldly and decisively to prevent an economic catastrophe. American families and Small Businesses cannot wait any longer for relief. Congress must pass another economic recovery package that includes support for lowwage workers and the unemployed. States andnce to localities. And programs that invest in Public Health. On may 15, more than two months ago, the house passed the heroes act to do exactly that. I urge my colleagues in the senate to end the delays and pass this vital legislation. Id also like to address one final point. After we announced this hearing, my republican colleagues call up a witness who is not a Federal Reserve chair, or a former Federal Reserve chair. Now, i have accepted. Every other witness my republican colleagues have proposed, and i think it has been five thus far, and i look forward to hearing from this proposed witness at a future date. Is to hearmy goal from the unique insights from chair bernanke and chair yellen on their efforts to help our nation recover from the 2008 financial crisis as leaders of the fed. Hasexample, dr. Bernanke the initial 2009 Fiscal Program was perhaps not adequately sized, given the size of the problem. We must not make that same mistake again. Honorably under president s of both parties. I am hopeful all of our colleagues will participate in this hearing in a bipartisan manner and help us search for solutions to benefit the American People. The chair now recognizes the distinguished Ranking Member for his opening statement. Thank you, mr. Chairman. I want to thank our witnesses for appearing before the subcommittee. They can offer important insight on the hearing about responding to the economic crisis, which is todays topic. With due respect, both of todays witnesses were selected by the majority. I know we spoke about this, but i requested as rule 11 of the house of representatives actually requires, that the minority get to also have a witness so the select committee can hear from a diversity of perspectives. Whether from different parties, both bringing a similar perspective on an issue, thats not the intention of the house rules, which is why i asked for a witness, as well. Somebody as widely regarded as an expert on the economy. He has testified before Congress Dozens of time. He was the former head of the congressional budget office. He is the person tasked to inform congress on understanding budget and Economic Impacts of policy decisions. Mr. Chairman, i know you denied the witness, we talked about it, but because of the decision, we are also being denied the diversity of opinion we should be getting on todays topic. We should always request and seek at the house rules as they require, welcome that diversity of opinion, which is why both parties are allowed to invite witnesses to provide us with pertinent testimony. That was denied today to us at this hearing. It hinders our ability to get all of the facts. But with that, pursuant to clause 2j1 over rule 11, im requesting we get what we are allowed under the rules, a minority hearing. The rules require it. There were not followed in the request we made. It doesnt allow the chair to select both republican and democrat, it allows the chair to select witnesses, but allows the minority to be able to submit a witness. We did that, it was denied. In lieu of that, we required we have a minority day of hearing. I just wanted to invoke that. I know our staff can work through that. But as a point of order, i did want to bring that up. Why dont we talk about the state of the economy . Thank you very much. I understand you have somebody we received the letter. I will take it under advisement. I will commit to you today that i will consider your request in accordance with the house rules. As i understand it, one of the requestedyou have already appeared before this Committee Just last month. And that, i will yield back thank you. Im sure we will be able to deal with this. Thank you, mr. Chairman. Im confident we will be able to work through this. Why dont we talk about the economy. The Unemployment Rate in february was 3. 5 percent. The lowest in over 50 years. The Unemployment Rate for African Americans and hispanic was the lowest in recorded history in this country. Hourly wages were growing at the fastest pace in over a decade. America was experiencing the hottest economy we have ever seen in every segment of our country reaping those benefits. Then a Global Pandemic hit our shores. China lied and hid the truth about it. The organization the world looks to for medical expertise and guidance in a pandemic, the world health organization, was corruptly complicit and regurgitated chinas lies. America got hit hard and fast, like the rest of the world did. The worst we have seen in over 100 years. Immediately, america came together to fight the invisible enemy and prevent our hospitals from being overwhelmed. And we did so without knowing nearly as much as we do today about this unique and destructive virus. All we could really do was shut down. For the largest, most prosperous economy in Human History on pause, the pause was necessary, but came at a staggering cost. From the lowest unemployment in 15 years, to over 40 million jobs lost. Income inequality was made worse. 40 of people making less than 40,000 were laid off. Children lost irretrievable months of in school learning. Vaccinations plummeted. Progress on the Opioid Crisis we made working together was reversed. What america must now decide is whether those losses will be shortterm costs or longterm, irrevocable damage. I supported the cares act. Virtually all members of congress did. There are some important structural building box to recovering in that legislation. We already know about ppp, and we have had the tremendous success of it saving millions of jobs. But we put billions of dollars in place for ppe to protect Frontline Health care workers. We put billions in place for testing, development of therapies. And ultimately, a vaccine. But lets be honest about the relief portions of the cares act. What we did was float the u. S. Economy with borrowed money to temporarily compensate for it shutting down. The question before us is knowing now what we know about the unintended cost of the shutdown, do we continue to extend it, or focus on the Building Blocks of longterm, sustainable, and equitable recovery . A few key principles and shared goals should guide us in this direction. Federal policy should reward and support americas workers. Educating our children safely in the classroom is a paramount responsibility. Its not just a goal, but something we have to achieve. Federal policy should accelerate innovation, research, and manufacturing in the u. S. Only a healthy and growing economy can support longterm, sustainable, and equitable prosperity. With that, all americans are concerned about the continued spread of the virus. All americans have a role and responsibility in helping to slow the spread. As we are all Wearing Masks out in public. Lets also acknowledge some key developments. The death rate continues to fall, because we are doing better protecting our most vulnerable populations, and treating covid patients. President trumps operation warp speed is showing great promise, including this weeks remarkable announcement of promising results from vaccine trials. Testing capacity and ppe production continue to ramp up. Red tape is being cut. This progress gives hope to all of us want to end this pandemic. America must continue to forge ahead with this cando attitude and find Practical Solutions for the challenges that must be solved. Beginning with safely reopening schools. Earlier this week, Vice President pence brought his task force to louisiana. I spent the day with them, along with our governor, who happens to be a democrat, talking with school officials, Public Health experts, and even coach osher on, about getting kids back to school and doing it safely. Houserx, who is the white Coronavirus Response coordinator and respected medical official, was there talking about how you can safely reopen. Our attitude has to be how to do it, not whether you can do it. It clearly can be done. Children need to get back to school and continue their education. For many children, the time lost will never be made up. Childrens health will improve if schools reopen. Vaccinations will increase. Child nutrition for our most vulnerable will improve. The american pediatrics issued a report, which among other things quotes all policy considerations for the pump coming school year should start with a goal of having students physically present. The report goes on to say the importance of in Person Learning is well documented. Theres already evidence of the negative impacts on children because of School Closures in the spring. I would hope we would be focused on the damage to students of not reopening as we put our efforts behind how to safely reopen. I would like to ask unanimous consent that this report by the American Academy of pediatrics be entered into the record. If theres any objection. I did want to make that request. Object. Not intend to we will provide you with this report. I would ask it be included if there is no objection. Without objection. Helphool reopenings also the economy, because parents can more readily get back to work. We should resolve no business in america ever again have to compete with a federal policy that makes unemployment relief pay better than actually going to work. Small business after Small Business has told me the biggest obstacle to reopening is getting workers to come back, because the temporary bonus unemployment check in many cases pays more than the actual salary. This policy needs to stop. While some in washington want to continue the shutdown with the federal government continue to flow the economy, or have the Federal Reserve print more money, thats not a path to prosperity. We have faced big challenges throughout americas history. America put a man on a moon. We can surely reopen our schools and safely rebuild our economy. Lets rise to this challenge. I yield back the balance of my time. I think the Ranking Member for hit i thank the Ranking Member for his opening statement. I would like to introduce our witnesses. Ae honorable ben bernanke is resident at the Brookings Institution and served as chair of the board of governors of the Federal Reserve from 2006 to 2014. The honorable janet yellen is also a distinguished fellow and resident at the Brookings Institution and served as chair of the board of governors of the toeral reserve from 2014 2018. The witnesses will be under teded so we can unmu so we can swear them in. Please raise your right hands. Affirm that the testimony you are about to give is the truth, the whole truth, and nothing but the truth, so help you god . I do. Let the record show the witnesses answered in the affirmative. Thank you. Without objection, your joint written statements will be made part of the record. With that, chair bernanke, you are recognized to provide your testimony. Mr. Chairman, can i defer to dr. Yellen to go first . Yes. We coordinated our comments. Very well. The chair now recognizes dr. Yellen. Thank you. Chairman clyburn, Ranking Member scullys, and members of the kadesh scalise, and members of the committee, i appreciate the opportunity to testify before you today. I want to focus on the Economic Impact of the coronavirus and the contribution of fiscal policy can make in addressing it. Former chair bernanke will then discuss the Federal Reserves response. Respects, this position is unique. It is imposing heavy costs. Most downturns result from developments inside the economy. This recession was triggered by a Public Health crisis. It is reflective in the extraordinarily rapid decline in Economic Activity earlier this year. Sharp but incomplete rebound of recent months following the first steps toward reopening. Fallingiest blows are on lower paid workers as well as women and minorities who are overrepresented in the most affected services sectors. They have borne a disproportionate share of losses of jobs and income. Most important factor determining the payoff of the economy would be if the pandemic itself. To support recovery and more importantly save tens of thousands of lives to calling the spread of the virus and mitigating it to fix should be the First Priority for members of congress, local leaders, and other policymakers. This requires support for testing and contact tracing, medical research, and sufficient hospital capacity. It also requires working to ensure businesses, schools, and Public Transportation have what they need to reopen safely. If the pandemic comes under better control, economic recovery should follow. The pace of the recovery could be slow and uneven. In the face of ongoing uncertainty, households and businesses may remain cautious for a time. Increasing precautionary saving and reducing spending, hiring, and capital investment. The recession lasts, the greater damage it will inflict on households and business Balance Sheets. Such as the deterioration of unemployed workers skills with the closure of many businesses. The important goal of fiscal and monetary policies should be to speed the recovery and minimize the recessions lasting effects. The fiscal response to the coronavirus has thus far been quite effective in our view. Unemployment insurance and the Paycheck Protection Program have helped unemployed workers and their Families Together with many businesses to survive the shutdowns. Programsa number of authorized by congress are coming to an end and new actions are necessary. Our recommendations for further fiscal action are as follows. First, nothing is more important than restoring Economic Growth and improving Public Health. Investments in this area are likely to pay off many times over. Second, with unemployment at record levels, enhanced Unemployment Insurance should be extended and complement three programs like food stamps adequately funded. Rather than making a onetime appropriation, we think congress will be well served by tying supplemental Unemployment Insurance and other support programs to the national or state unemployment, thereby preventing a stabilizer. Third, congress should provide substantial support to state and local governments. The enormous loss of revenue from the recession together with the new responsibilities in response to the pandemic, have put budgets deeply in the red. To avoid the recessionary effects of major physical cuts by those governments, federal support should be substantial. The conditions should not be restrictive. Following our advice would further increase the record level budget deficit. With Interest Rates extremely low and likely to remain so for some time, we do not believe concerns about the deficit and debt should be preventing the congress from responding robustly to this emergency. The Top Priorities at this time should be protecting our citizens from the pandemic and pursuing a stronger and equitable economic recovery. Thank you. Thank you very much. We will now hear from dr. Bernanke. Thank you. Opportunity tohe testify before you today. Thell briefly summarize Federal Reserves response to Coronavirus Crisis. The Federal Reserve has moved swiftly and forcefully in this crisis. Ineased Monetary Policy march by lowering the federal funds rate nearly to zero, indicating it plans to keep rates low for several years. The fed may well do more in coming months as reopening proceeds and as the outlook for inflation, jobs, and growth become somewhat clearer. In particular, to maintain downward pressure on longterm Interest Rates, the federal open Market Committee will likely provide Forward Guidance about the Economic Conditions it would need to see before it considers raising its target rate. As well as clarifying plans for further securities purchases or quantitative easing. The fed has also been active beyond Monetary Policy. First, the fed has served as a market maker of last resort by acting to stabilize critical Financial Markets when capital or other regulatory constraints have interfered with normal marketmaking and arbitrage. Pandemic led hedge funds and others to scramble to raise cash by selling longerterm securities. The upsurge in the supply of longerterm securities, including treasuries, was more than dealers and other marketmakers could handle, resulting in substantial volatility. Stabilizing these key markets, the fed purchase large quantities of treasuries and mortgagebacked securities. Risk and liquidity premiums in these markets have since returned closer to normal. The fed has served as lender of last resort to the Financial System. The classic function of central banks. Fortunately, the Financial System is in much better shape today than it was during the financial crisis. The fed has taken steps to assure the Financial System, including banks, brokerdealers, and money market funds, has sufficient liquidity to operate normally and keep extending credit. Third, the Federal Reserve, with the support of congress and treasury, has also served during the Current Crisis as the lender of last resort to the nonfinancial sector. Stopping key credit markets backstopping key credit markets affected by the pandemic. The fed reside financial crisis era facilities to stabilize commercial paper and assetbacked securities markets. The fed has also added new facilities to lend to corporations and state and local governments, and buy outstanding corporate bonds. By establishing these programs, the fed has given private investors the confidence to reengage by reassuring them the government would not allow these critical markets to become dysfunctional. The fed also established the main Street Lending program to lend through banks to mediumsized companies. It is too soon to judge its performance. This program is very different from anything the fed has attempted before, and poses difficult technical challenges. Questions remain about how many banks and bars will participate. The fed and treasury will have to ease terms for borrowers and increased incentives for banks, what is programmed to have the desired effect. Is there more the fed could do . As i noted, the fed likely will provide more clarity about its Monetary Policy plans. It may need to adjust terms or bar ability requirements of various lending requirements. The feds response has been quite comprehensive. As chair powell often notes, the feds authorities allow it to lend, but not to spend. Some households and firms who need subsidies and grants rather than loans to survive this challenging period. Spending is the province of congress. Thank you, mr. Chair. Thank you very much, dr. Bernanke, and thanks to you dr. Yellen. To where eachme member gets five minutes to ask questions. Im going to begin by giving myself five minutes. Id like to begin by asking dr. Bernanke about the oped piece he wrote this week. Im going to quote from that piece. A new package is needed in order to stabilize demand and restore full employment. I would like to ask, what do you economyll happen to the over the next few months if Congress Fails to pass a new stimulus bill . The focus is on state and local governments for this. They are both the firstline providers of critical Financial Services, health, education, and the like, and also big employers. After we learned in the financial crisis was because of balanced budget requirements at the state and local level, as states and localities saw big declines in revenues, they also had to do serious cuts in their employment and capital investment, leading to a slower economic recovery. Some recent estimates suggest the contraction at the state and local level slowed growth in the u. S. Economy after the crisis by about half a percentage point a year, which is significant. This crisis has had similar effects. On one hand, state localities have had greater expenses to deal with the Health Crisis that help companies reopen safely. On the other hand, they have seen big revenue hits. One estimate is the revenue hit for states alone since february is over 500 billion. If no action is taken to help states and localities avoid massive contraction, then it will have a negative effect, both on recovery, but also on Critical Services they provide to their citizens. Dr. Bernanke has given us insight into what will happen if you do not assist state and local governments. What would ask happen if we do not extend support to Public Health agencies through food stamps and other public assistance programs, and Unemployment Insurance . What would happen if we failed to move in those areas . Money spent on Public Health yields a very high return. It means the economy can get back on its feet more rapidly, we can reopen and put people back to work, and of course, we also save lives in the process. With respect to Unemployment Insurance, im tremendously concerned the extended benefits end on july 31 will be a catastrophe not to extend Unemployment Insurance. Tohas done a great deal support the incomes of a large number of individuals disproportionately lowwage workers and minorities, 40 of whom lost their jobs. It has provided a good deal of support to them. And to the economy more broadly, because we need the spending with those unemployed workers. Without it, we would simply see more weakness as their spending contracts, we will see more weakness throughout the entire economy. Those workers, especially the lower income workers benefiting from the 600, they have a very high propensity to spend the money they are given. We have seen higher income workers do more saving, but the lower income workers who were receiving the Unemployment Benefits are spending it, which benefits jobs throughout the economy. Incentives isork raised. If we had a stronger economy, the Unemployment Rate were lower, and we were closer to full employment, i would worry , withthe disincentives more than a 100 replacement ratio involved. But at this point, there is such a shortage of jobs that i really dont think this is i think there is evidence that suggests this is not really stopping the economy and putting people back to work. Unemployment benefits could be based on the individuals preunemployment wages, with a replacement rate that would not receive 100 . But i dont know if at this point, states have the technical ability to put that into effect. Thank you very much for that. I see that im out of time. I do have one other question. I will let the Ranking Member go now. Maybe he will allow me sometime later. Member. He ranking is that working . I hear you now. Thank you. We will let you get that last question in. I do want to point out that when you look at what we need to do to get our economy back open, this isnt a question of reinventing the wheel. Clearly we are dealing with serious challenges we are all working through. But lets look to what did work to get us to the hottest economy in the world before this. That was a robust tax policy. It was making our country competitive again. It was putting more money in the pockets of families. Letting families have more control over their own destiny, their own money that they work hard to earn. That was done by the tax cuts and jobs act. We saw unparalleled growth in our countrys economy. We saw the ability to bring jobs back. And we can do that again once we get through this. Thats why it is so encouraging to see what President Trump is doing on operation warp speed. It doesnt get enough credit or attention, but we see the full focus of the federal government. Agencies like the fda removing red tape to focus everything on finding vaccines, therapies, and ultimately, a cure for covid19. We already saw the remarkable progress this week. We hear from Drug Companies in phase three of testing on very effective vaccines. Thats where our focus should be for longterm to get through this. Hopefully that happens soon. I appreciate President Trump and Vice President pence are focusing so much time on that. As we look to the health of our country, we also need to look at opportunities we will have coming out of this as we push to get people back to work. How we can create more incentives to strengthen this economy in america and address what we saw what china did. We know that china hoarded ppe as we all complained about the shortages of ppe at the very beginning of this. Its because the bulk of it is made in china. They were hoarding the ppe while they were lying to us about it. Thats why we should have a hearing on Holding China accountable to see what they did to shut off the supply of that vital protective equipment for our frontline hospital workers when we were in the midst of trying to find out what was really happening. We didnt have that ability to get it. We are now starting to make that in america. We should have incentives to create more jobs by bringing that back to National Security item. Bringing it back to america, creating the jobs in america. You look at things like drugs made in china. We can make that here in america. That would be something we ought to look at incentivizing. I look at Small Businesses every day who talk about the problems created by paying people, in many cases, over 75 workers in america are making money on the enhanced benefits than in their normal job. Its a true impediment when you talk to Small Businesses across this country at getting them back to work. I do want to ask dr. Yellen, because you talk about a substantial amount of money to bailout states. Do you have a rough idea of how much money you are talking about . We already passed 150 billion to help states get through this. Are you talking about 500 billion, 1 trillion, can you quantify what you mean when you talk about this package that would bailout states . Mentioned thenke response to the chairs question. The centerstudy at for budget and policy priorities that suggests, i believe it is 220 22, that shortfalls for states alone was about 550 billion. There is perhaps not quite as much, but also tremendous shortfall at the local levels. So i think we are talking about very substantial cutbacks. Both bernanke and i are happy to be serving on state reopening committee i appreciate that, i apologize, i know we are on limited time. You talk about 550 billion as a starting point, not even taxing local governments, we need to recognize there are many states, a few states that had massive budget shortfalls, multibilliondollar budget shortfalls, prior to covid19. So the idea of the federal taxpayer, which is already stressed, should bailout those states with failed policies, you should look at the tax policies i talked about earlier. Many had budget shortfalls because they were taxing their people too high, and they were running the good jobs out of their state. Thats what they should be focused on. Focused on fixing the problems they had prior to covid that were causing their economies to collapse and businesses to flee and good jobs to flee. Fix it now while we are in the middle of rebuilding things. Thats where the focus should be, so they can come back stronger, in a more healthy position, not just continuing to ask the federal taxpayer to bailout their state problems. Thats where the focus should be. I want to ask dr. Bernanke, i cited the American Academy of pediatrics study that talks about the importance of bringing kids back to school for many reasons, health reasons, nutrition, but also to be learning at the right pace. Do you agree with the academy of pediatrics talking about the importance to children of getting back in school, not just learning at home . Your time has expired, but i answereddr. Bernanke the question. I will be brief. My wife is a teacher. I do understand the value of in Person Instruction for children, plus the support they get. I understand the importance of working parents, but there is a concern about the health risks. I think local districts will have to make tough decisions based on their local conditions and valuation of the Public Health situation. Im not a doctor, i cant make that judgment, but local district will have to use the advice they get from professionals to make those choices. Dr. Birx talked about some of the steps you can take to do it safely, as the academy of pediatrics did. No tradeoff between safety, but the importance of getting back to school in a safe way can be done. We have to do it. With that, i yield back. Thank you. Thank you very much, mr. Ranking member. Waters, ing to chair would like to ask a question. What you raised, mr. Ranking number, is something we should take a look at. We have heard from several of my colleagues recently that the next package ought to be capped at 1 trillion. The cares package itself is far in excess of that. The heroes package around 3 trillion, of which nearly 1 trillion is devoted to state and local governments. What do you think about capping the next package at 1 trillion . Should that be . If so, why or why not . Ms. Yellen i would be concerned bout capping it when we know the aid needed for local governments comes close to that and a substantial amount will be needed for Unemployment Insurance and for Public Health needs. I dont know what the right number is. We need support of all for all of that spending for Economic Activities so that nemployment doesnt because of aggregate demands and total spending in the economy. At this point we do need fiscal support as well. I would be concerned with the ap that you mentioned. Mr. Clyburn mr. Bernanke, whats your thought about that . Mr. Bernanke the reason for the cap would be fiscal concern bus interest rays are negative, interest burden is very low. Theres a big appetite for debt. Its an opportunity to take advantage of our ability to borrow to do something to help our economy recoverer. In the longer term we have co worry about sustainability but right now we have to do what needs to be done. Whatever it takes is probably what we need to be thinking now. Cant hear you, mr. Chairman. Mr. Clyburn i yield to chair waters for five minutes of questions. Ms. Waters thank you very much, mr. Chairman. This is very important. Im so pleased that you got the past years of the fed to talk with us today. They have shown us how effective they can be with being the venn doctor of last resort. So both of our past chairs have wonderful reputations and backgrounds for the way they having mored the fed when they ere in charge and i appreciate heir advice to all of us as we go through this pandemic thats confronting all. So the first thing i would like explain, air yellen why powell said that with the Interest Rates being low, that we should be very generous in the way that we deal with this pandemic and the resources that we allocate to it. If there was ever a time to put, you know, substantial support into this economy, now is the time. What sit about the Interest Rates that everybody should understand that make powell say that . Ms. Yellen well, Interest Rates federal the cost to the government in tirms of interest n the debt is extremely low. I can give you as an example, Interest Rates were so low even before the pandemic and and now its gone lower, between 2007 and just before the pandemic, the ratio of central debt to g. D. P. Had doubled from 40 to 80 . Yet the interest burden of that debt because Interest Rates fell during that period and stayed low, there was no additional cost relative to the size of the economy. Thats true and will always be more true now. I agree with chair bernanke that one day in the future we will have to get deficits, after this is over and the economy is recovered, well have to deal with deficits to get them under control. But now is the time when i think its not necessary to worry in an economy with resources we dont have to worry about the spending diverting activity from other things. Ms. Waters thank you so very much. We have heard the connection between what the experts, Health Experts are advising us and how that helps to improve the social f we are distancing, if we have the p. P. E. That we need. We have been advised that surgeonly has taken place and we can see the results of that. Every time that happens it sets us back somewhat from being able to deal with the economy. Is that correct . Ms. Yellen people are afraid to engage in activities that risk worse it th and the gets the more true that is so whatever Public Health enables us to get people back to work. Ms. Waters p. C. And so, because of that, we need leadership and now that were talking about the schools, i believe that we make mistakes with some of our governors an some of our states opening up certain businesses too soon. And so were seeing the results i dont know where all this is coming from about open up the schools. I think mr. Bernanke is correct when he said we have to be careful, they have to make sure that they can provide the safety. Otherwise we will continue to ve surge, children may get sick and some may die. Ms. Yellen they do have to be careful. The American Academy on pediatrics report in the National Academy report points that out. And its also expensive for schools to make the modifications they need to be able to open safely. I think Congress Needs to think about funding the expensive expenses that are involved because its an important goal to reopen schools and i cant imagine who would disagree with hat priority that should be. Ms. Waters last seconds that i we have a lack of testing, we have our hospitals not having all the perform p. E. We suffered not even being eligible for unemployment. We suffered because we still need food stamps, etc. How about looking at ways to infuse capital and resources into minority communities. What are you suggesting we do for minority communities that would help us be able to deal with this pan democrat pandemic and not aws us to die in communities that are dying and getting sick. Ms. Yellen with respect to access to capital it seems to me that businesses in minority communities really face tremendous barriers and i believe its important for congress to do many things in order to provide funds for these particular businesses in minority areas. About ways to keep businesses open . Ms. Yellen i think its important for many businesses. Many businesses really didnt benefit, low income areas, that dont have strong relationships with banks. I would say i dont know if its really feasible but i would love o see treasury explore a something with a facility cdfis that would be oriented toward these low and moderate income neighborhoods and banks. S. Waters [inaudible] all these other economies, that was urging us to, ee you know, be very generous with this stimulus. We have a 3 trillion stimulus. Hy did you all sign that document . Mr. Clyburn the gentlewomans time has expired. Ms. Waters could the gentlewoman respond . Ms. Yellen we urge that because we feel its important for equity and the recovery of the economy. Mr. Clyburn thank you, dr. Yellen. I yield five minutes to congressman yordan. Mr. Jordan thank you, mr. Chairman. Dr. Bernanke, whats more important, reopening schools or protesting . Mr. Bernanke opening schools safely is very important and people protest for the causes they feel are important thats part of the american way as you know. Mr. Jordan i agree with that but i wish youd tell democrat leaders that, they obviously think protesting is more important than opening schools. You hear democrat congresspeople, democrat mayors, say they cant reopen schools. But mayor deblasio can stand with protesters, mayor garcetti can go out and neil down to protest, bow down to the mob without a mask, and thats fine but he cant open schools. You know how Many School District there are in the country . Mr. Bernanke no, sir. Mr. Jordan 13,000 school districts. 56 million kids that deserve to get back in school. As you said earlier your wife is a teacher, my wife is a teacher, get back in school and get their education. Democrats seem to say no, no, no. They cant do that. The democrats there are lots of think that they think protesting is more important. They think protesting is more important than going to church. Democrats think protesting is more important than going to school. More important than going to a loved ones funeral. More important than going to work. We have seen from so Many Democrats. And i think whats interesting is we have now seen in portland over the last six weeks some of the we have seen the city burn for the last six weeks. And i have yet to see any condemnation come from democrat leaders. Six weeks of this happening. The protests over the last several weeks. 12 Police Officers shot. 130 injured. 30 secret Service People injured in the district of columbia. Whats more important, dr. Bernanke, whats more important to Economic Growth . Reopening schools or protesting . Mr. Bernanke i have not been involved in any of these commentaries youre referring to. Mr. Jordan youre an expert in Economic Growth. Mr. Bernanke opening schools is more important for the the economy. Protesting is important for democracy. Mr. Jordan you know what the Brookings Institute estimated the cost to the economy when schools are shut down. Mr. Bernanke im sure its large because of the effect on working parents. Mr. Jordan exactly. 2. 5 trillion. Just the cost of the proast tos , pr tests, rioting looting just in one city is 500 million and this is happening in cities across the country. Yet somehow protest is allowed to continue, thats fine. Im all for protests. I want every right under the First Amendment to be recognized and be allowed. The hallmark of our country. But somehow democrats say no, no, no. Governor newsom just closed down places in california but says nothing about protests that continue to take place. This is what i find troubling. Now this push not to let kids go back to school. Youre familiar with the fact that the American Academy of pediatricians said they should go back to cool. Mr. Bernanke i believe if i saw the study right that it has to be done safely. Mr. Jordan of course safely. But thats not what we hear from democrats, we just hear cant open schools. Do you know how many children under the age of 17 have die fed ocoronavirus in california . Mr. Bernanke i have no expertise on. This im not pretending to give youyny advice on whether to open schools or not. Thats not my area of knowledge. Mr. Jordan im saying, the place you work, Brookings Institution, did a study to show what a cost is to our economy, 2. 5 trillion. Why we hear from so Many Democrats why we cant do it. I think we can do it safely and it needs to happen. Whats more important, opening schools or Defunding Police . Mr. Bernanke i think its we cant defund the police, but there are concerns about policecommunity relations and police behavior. Mr. Jordan you need to have a talk with the l. A. Teachers union because they said theyre not going to open their school they wont open their schools until they get an increase in tax a bailout from the district, until they get medicare for all and until the police are the defunded. Then theyll think about opening the schools to help the students get the education that will allow them to achieve the american dream, something youve done. I notice your wife is a teacher, you went to m. I. T. Ms. Yellen went to yale, to brown. You know how important education is to accomplishing the american dream. Tell that to the l. A. Teachers union who said unless the police are defunded they dont want to come back and teach kids in school this fall. Mr. Bernanke i agree that education is important for everyone. Mr. Jordan we need democrat leaders to step forward and say the same darn thing and say its just as important as going out as mayor garcetti did and kneeling down in front of the can sell culture rioters. Education is just as important. We need our schools open. Mr. Chairman, i yield back. Mr. Clybrn thank you so much. I would say to the gentleman, as one of those democrat leaders, also a Public Schoolteacher, at the start of my professional career teaching Public Schools. I will also say im sitting in Congress Today because of a successful protest. With that, i yield five minutes to mrs. Maloney. Mrs. Maloney thank you, mr. Chairman. I have the pleasure of hearing testimony from both of our Witnesses Today for many years on the Financial Services committee, along with ms. Waters, and i have to say that its great to hear from you both again. First id like to ask both of you, were in the middle of the worst economic crisis of our lifetime by far. In april a staggering 20 Million People lost their jobs. Which was a record. Its the highest its been since the great depression, the Unemployment Rate rose to 14. 7 . In the last two months the Unemployment Rate has actually decreased aened now its down to 11. 1 . That surprised me because were still seeing millions of people file for Unemployment Insurance every week. So i want to ask both of you, where do you see the Unemployment Rate going . Is it going to get worse before it gets bet her is it going to continue going down in the months ahead . Lets start with you, dr. Bernanke. Mr. Bernanke its hard to forecast but i suspect that weve seen some slowing in activity because of the increased concern about the virus. So i dont think well see as rapid a decline as weve seen recently. C. B. O. Has numbers around 10 1 2, numbers around 9, 10 at the end of the year. Those seem like reasonable ballpark estimates. Maybe a little lower than we are now but not where wed like to be. Mrs. Maloney dr. Yellen . Ms. Yellen i agree. A lot of workers who lost their jobs were on temporary layoff. They have attachment to their previous job and as lockdown ended and reopening started a reasonable number of those workers were able to go right back to work. But as chair bernanke just said, with the research into the virus, progress is slowing and could even reverse. Even if things had continued on a good track, i think it will take a number of years, two or three years, to get unemployment down to levels anywhere close to where we were before the pandemic. Mrs. Maloney as you both know in the cares act we provied those who lost their job an extra 600 a week in Unemployment Insurance. Business were shutting down and laying people off through no fault of their own. If everyone who was laid off because of the coronavirus stopped spending at the same time, wed see a massive contradiction in the economy and possibly even a depression. From both an economic and moral perspective, we had to make sure that people who were unemployed could keep spending on the necessities of food and clothing and so forth. And the extra 600 a week has been critically important for the millions of american whoffers unemployed and has prevented a depression by boosting the aggregate demand. This extra 600 a week is set to expire at the end of this month. Just 14 days which means that in 14 days we could be headed over an economic cliff. Now youre both economists. You know about the importance of an aggregate demand. I want to ask both of you, do you believe allowing the extra 600 a week in Unemployment Insurance, do you believe we should let it do you think if it expires it would harm the economy . Lets start with you, dr. Bernanke. Mr. Bernanke we have three priorities for congress in fiscal policy. One is continuation of the pandemic u. I. Which is very important on both humanitarian and economic basis. I think you could modify the structure to satisfy some of your republican colleagues in 100 of voiding more than replacement in some case or alternatively giving perhaps a special eitc for people who take jobs that theres a differential. So there are structural things you can do but i agree with the base you canic thrust that its important to continue support the unemployed of which theres a tremendous number as you know. Mrs. Maloney dr. Yellen . Ms. Yellen i agree with that, both on humanitarian grounds and the spending is absolutely needed for more pain not to be extended throughout the economy. To keep employment them from moving down. Some of it is for state and local governments which we also prioritize. If there isnt substantial support there well see massive layoffs in state and local governments. Again the loss in spend, the loss in jobs will harm workers throughout the economy. Mrs. Maloney now the flip side of the question. Do you believe from a purely macroeconomic standpoint that extending the 600 a week would boost the economy . Whats your thoughs on how it would affect the economy . Would it support aggregate mass . Ms. Yellen yes, it does. I believe it supports aggregate demand and spending in the economy that we need to create obs. Mrs. Maloney dr. Bernanke . Mr. Bernanke we advocated that extra Unemployment Insurance be tied in some way to the national Unemployment Rate so it goes up when unemployment goes up, down when unemployment goes down that would make it more responsive to changing conditions. Mrs. Maloney sthaung, i yield back. Mr. Clyburn i thank the gentlelady. The chair yields five minutes to mr. Luetkemeyer. Mr. Luetkemeyer thank you, mr. Chairman. Thank the witnesses for being here today. I serve on the Financial Services committee as well and enjoyed the conversation and your testimony over the years. In a march oped in the Financial Times both of you said that, i quote, to avoid permanent damage from the virusinduced downturn, it is important to ensure that credit is available for otherwise sound borrowers who face a temporary period of low income or revenues, unquote. I think in my person opinion i think this is a critical concept for congress that we must understand. Currently with the stimulus of the cares act and the fore bearance banks have been giving to customers we have not seen broad delinquencies an chargeoffs yet. However as this for boreance ends and the depository institutions get back to business as usual im fearful well see a broad markdown of assets on Balance Sheets and even entire business lines of Financial Institutions similar to what we did in 2008 antwine. I repeatedly called for financial regulators to provide additional fore bearance to Financial Institutions and allow them though the needed reserve accounting needed to allow them to work with customers. I have legislation that i believe accomplish this is goal. So my questions to you are, do you think additional fore bearance for Financial Institution is necessary to allow them the needed time to work with customers . And if our economy continues to be shout dun down are you concerned that nonperforming loans will drastically affect accounts at depository institutions and decrease access to credit particularly in low and moderate income communities . Id like an answer from both of you, please. Mr. Bernanke, well start with you. Mr. Bernanke fore bearance is risky. We need to make sure banks are properly valuing their assets. But the fed is trying to work with the banks. They changed the accounting standard to make they dont have to assess the depth of the recession quite the same way. They changed the supplemental leverage ratio. Theyre telling banks to work with borrowers as you describe. I think we dont want its good news that the Banking System is in such strong condition. But i think its important, we need to evaluate them, for example through stress tests. If it becomes necessary for some banks to raise new capital thats the thing that stopped the crisis in 2009. If it becomes necessary to do that i i hope the fed and other regulators will enforce that mr. Luetkemeyer dr. Yellen. Ms. Yellen i agree with my former colleaguing, my current colleague. I think its important for the fed and the fed has encouraged banks to lend and change regulations in ways that make it easier for banks to lend. But its also very important in my view as ben said that they have the capital necessary to eet the needs of the economy and weve seen now with the recent stress test, the pandemic. Its on about a quarter of the major banks that are subject to that. Are likely to see capital fall below minimum levels. We have a w shape, a second wave the virus, recovery is very prolonged. To it may prove necessary add capital. Mr. Luetkemeyer you made my case with your last comment, i appreciate that. Im concerned, both of you are looking at it from a big bank perspective. There are lots of most of the banks in this country are less than 10 million in assets. Youre looking at Credit Unions that are small in size. Those are the ones i think that we need to be trying to shore up and give the ability to give fore bearance to customers because theyre the ones that supply Small Business loans in this country. You and i, dr. Yellen, have had this conversation many times. Without that fore bearance and we saw the lack of it in 2008 and 2009 and what it did, how devastating it was to businesses, local communities, jobs and the banks an Credit Unions themselves. I would appreciate a response to that. Ms. Yellen well, many banks including Community Banks have built significant Capital Buffers in the aftermath of the financial crisis and its appropriate for them at a time like this to be able to run those buffers down to support the credit needs of their communities. T i agree with ben on fore bearances. We need to know whats happening in those banks. Mr. Luetkemeyer i have one quick question. You guys both indicated how you would like to see the 600 or other Unemployment Insurance extended. What do you think is an incentive to get back people people back to work. Youre trying to take care of people unemployed, i want to get them back to work. What kind of incentive do you see to get people back to work . 600 is a detriment for people going back to work. Mr. Bernanke im sympathetic to that. You could lower the 600 so that the replacement ratio is not above 100 , as is the concern. You could provide additional incentives to work, for example, you could have an enhanced unemployment tax credit for people who are at work, for example. There are ways to improve that ratio so people have appropriate incentive to go to work without taking away the necessary support of the unemployed. Mr. Luetkemeyer i know the president is supportive of a payroll tax cut, which would be a pay raise and incentive for people to go back to work. Its good to see both of you again. I yield back, mr. Chairman. Mr. Clyburn thank you. The chair now yields to ms. Velazquez for five minutes. Ms. Velazquez thank you, mr. Chairman. I heard from a Restaurant Owner in my district who testified before the house Small Business committee this week and stated lifeline. Provided a for cher an eightweek solution to an 18 month problem. Mr. Chairman, i thank you for holding this important hearing. Dr. Bernanke, three out of four Small Businesses have been experiencing a decrease in revenue since march. And an estimated 7. 5 million Small Businesses are at risk of permanent closure as a result of this crisis. You were the fed chair during the Great Recession when access to capital nearly froze for Small Businesses. Congress made changes to the s. B. A. Traditional loan Program Including increasing the guarantees and fee. As Congress Weighs longterm recovery with proposals for Small Businesses, would you recommend similar changes to s. B. A. Loan programs to provide access to affordable capital for Small Businesses . Yes, i think the p. P. P. Program was very help nfl getting capital out to Small Businesses. S. B. A. Could be modified. My colleague, dr. Yellen, talked about the fed and the treasury lending to cdfis, that could be particularly relevant to minority community, for example. So i think there are ways to support Small Business. Many people, many Small Businesses are run by, on the income of the individual who owns them so, you know, using Family Resources and credit cards and the like. So supporting the unemployed or supporting people broadly would also be helpful. I think there is an issue at some point in the future, were going to have to this economy may change in very important ways. We have to allow that at some point to begin to happen. But i think for now i would be inclined to want to continue to provide support to Small Businesses that are being hit by the virus. Ms. Velazquez thank you. Dr. Yellen, in your testimony you mentioned because the recession is uns predened in so many ways, forecasting the recovery is difficult. P. P. P. Was enacted to keep there s on payroll but were big costs. Should the congress consider extending the moratorium for individuals past july 27 and expanding it to control Small Businesses . Ms. Yellen i think with respect o Small Business expenses an approach that looks promising to me that is in the heroes act is an Employee Retention tax credit. It exists now but the heroes act expands it. For Small Businesses it provides a tax credit for expenses other than wage expenses and that struck me as a promising approach in terms of supporting smaller businesses. Ms. Velazquez im concerned about those Small Businesses that lack lickedity that lack the cash that they need in order to remain to pay rent in bose businesses. So tax credit in that respect really doesnt help them. Ms. Yellen its a refundable tax credit so they would be eligible to receive the credit ven if they dont have profit. Ms. Velazquez thank you. Dr. Bernanke, Consumer Spending is at the heart of the u. S. Economy and millions of Small Businesses operating in retail, hotel and low pressure are struggling as your testimony indicates. Extend t so critical to Unemployment Insurance now to help Small Businesses and in what amount would you recommend . Mr. Bernanke as i mentioned, Unemployment Insurance has a humanitarian aspect. We want people to be able to pay their bills and stay in their homes. I would add we need to worry about Health Insurance which is another thing that happens when you lose your job. The other purpose of the Unemployment Insurance is to increase aggregate demand. People will go out and spend. That will help the economy generally. Very powerful sector effects, there are some sectors like restaurants that it will be a while before they can operate normally because of the effects of social distancing and its hard to get around that problem. Ms. Velazquez it is important, the public he Health Crisis if not adequately addressed we will cant to face uncertainties. If consumers dont feel safe they wont go into restaurants or hotels or other Small Businesses. Mr. Bernanke thats correct. Mr. Clyburn the chair mrs. Nizes for five minutes walorski. Mrs. Walorski im grateful to this conversation. If there was ever a time in this country where americans are literally desperate for bipartisan cooperation its now. Its july of 2020. So im just disappointed that were having a onesided conversation, the most important conversation weve heard had on this committee about the recovery in this country and i just think that im so disapointed, i think the American People are as well. But to get to the point today, the pandemic is unlike any crisis in our lifetime. Our country is experiencing a devastating loss of life. Emergency actions like stay at home orders were necessary to slow the spread and flatten the curve but the picture thats emerging on a broader poll of Americans Health we cant ignore. ve heard anecdotal evidence that loneliness and depression is hard on those battling depression and Substance Abuse disorder. Many are skipping doctors visits for fear of contracting coronavirus. Its stag toring think of the Ripple Effect this is going to have for years to come as we brace not only for covid19 death toll but for spikes in deaths from suicide, overdose, heart conditions, cancer and any number of other diseases diagnosed too late. This is an allencompassing tragedy. Right now millions of americans are ready to return to work. Businesses are ready to reopen their doors. This side a positive step, i think, for americans mental and financial health. In order to safely reopen our economy we all need to ensure access to the thing ligse p. P. E. , testing and child care. Common sense tells us every reopening plan should include those. Thats why its been discouraging more me to see democrats playing politics with recovery plans and the one were talking about today this heroes act was not a serious bill that included all sorts of blank check giveaways such as restoring unemploymented deductions for state and local taxes. The nonpartisan joint committee on taxation found that over half the benefits of the policy would go to those with annual incomes of 1 million or more. Only 1 of the benefit goes to those making less than 100,000. Tax experts on both sides agree restoring an unemploymented salt deduction is bad policy that does nothing to help our nations economic recovery. The bill would also extend the 600 per week in temporary supplemental Unemployment Benefits from the cares act through january, 2021. I supported the cares act and the unemployment supplement back in march. Much of the economy was going to be shut down for an undetermined amount of time. This benefit helped pay, i think we all understand, it helps pay rent, put food on the table. It brought peace of mind as people found themselves unemployed or furloughed by no fall of their own. But ive heard from Small Business owners all over my district who are trying to open responsibly and what theyre finding is the supplement as distorted the job market. Its easy to see why. In my home state of indiana workers receiving 600 per week are getting about three times what they would on unemployment. In many cases a worker can stay on unemployment and make more money than if they return to work. The Nonpartisan Congressional Budget Office said that extending the 600 per week supplement through january, 2021 as the heroes act proposes would decrease economic output and decrease unemployment. And increase unemployment. It would hurt our economy. A proposal is allowing workers to keep two weeks, amounting to bonus. Reentry hiring the university of chicago aremates that 2 3 of people ceiving more than they would working. Do you see our plan as reinseent of incentive idesing. In lockdown it didnt make a lot of difference people werent going to work anyway. Ive said a couple of times i think it makes a lot of sense to rethink the structure of u. I. And maybe even put rewards on the work side, like eitc or the thing about the back to work bonus, it rewards people who were unemployed heading back, they might earn more than somebody who was there the whole time. Thats a question. I see no major contradiction between maintaining adequate u. I. Support for those who cant find work but also restruck restructuring so people have incentives to go back to work. I think those things can be done. Mrs. Walorski were going to have companies shutting down that cant rehire because its so big, the difference between unemployment with that 600 a week. If it went to january of 2021, my district and state would be in trouble. Thered be no jobs to go back to at that point. I yield back. Mr. Clyburn i thank the gentlelady for yielding back. The chair recognizes mr. Raskin for five minutes. Mr. Raskin thank you very much, mr. Chairman. 3. 6 meet today we have million coronavirus cases in america, just eight days after we hit three million. Yesterday posted a single day record of 77,000 new cases in a single day. Three of our states, florida, arizona, and texas, are now facing record increases and maxed out hospital intensive care capacity. What do our colleagues do . They blame democrat governors an democrat mayors and the Chinese Communist party and the world health organization. Anybody but the president of the United States of america. What a fraud this is. What disinformation. What a this pet pathetic and transparent effort to distract america from what is going on. Its true china covered up the virus at the begin bug mr. Chairman as i have shown several times before with permission for the record, donald trump covered up for china 37 different times. Their good aising leadership, excellent collaboration in the crisis and their beautiful, beautiful friendship. Our colleagues must have an empty cupboard of excuses if they have to go back to blaming the head of the Chinese Communist party and while praising chi in in china in january, february, march and april, President Trump destroyed our opportunity to wage an Effective National response to the Coronavirus Crisis. Instead burying america in his course of magical thinking, asthiring public the virus would magically disappear one day and selling to the public, which is very with his various pronouncements, his belief in different quack miracle cures like injecting people with disinfectant and drinking hydroxychloroquine. I am sorry we have to spend time on these distrabses but they keep pumping out propaganda and we need to answer it. I would like to ask chairman bernanke this. The Federal Reserve is using section 133 powers under the Federal Reserve act to allocate part of the 454 billion of existing assistance for states and municipalities. Can you describe how much money the fed allocated to the program for states and localities . And do you think, is it your assessment the fed should be putting more money into the states and localities . Mr. Bernanke the fed is not has not gone anywhere close to using its existing capacity. Its only made one or two loans so far. I would say its been worthwhile because the announcement of the Program Reduced quite a bit the uncertainty in the market and the market is functioning better on a private basis. You might consider changing the terms or lengthening the terms but i do think a lot of benefit has been felt in terms of reassuring parties pans that the fed is there as a back stop. Mr. Raskin thank you. Chairman yellen, you said something interesting. I want to make sure i got it right you said get the pandemic under control and economic recovery will follow. During the course of this crisis, some people have seemed to pose the imperative of Public Health and economic recovery as opposites and favor one or the other. You seem to be saying we need to focus on getting the pandemic under control to advance Public Health in order for the economy to come back. I want to make sure i got you right on that. Ms. Yellen its not a tradeoff. So everything we can do and also resources that are needed to get the pandemic under control will speed economic recovery and thats why in our testimony we stated that theres a high payout on the Public Health side that will benefit our economy. Mr. Raskin chairman yellen, President Trump pushed a number of gullible republican governors and mayors to opening up way too quickly. At the same time he was not wearing a mask, sending all kinds of terrible mixed messages about health protocols. Now those stays are having to reverse course and trying to institute the Public Health protocols they didnt do in the first place and the reopening has been closed. Dont you think its important to take the Public Health problem seriously so we can reopen the economy . Ms. Yellen thats what we have seen throughout europe and much of the world where theyve had extreme lockdowns but got things enough test,nd had contact tracing, masks and different steps to remain under control. Its very expensive to have to shut down again. For the economy too. Mr. Raskin thank you, mr. Chairman, i yield back. Mr. Clyburn i thank mr. Raskin. The chair yields five minutes to dr. Green. Mr. Green thank you, mr. Chairman. Ranking member. Thank you to our witnesses. Businesses are facing unprecedented challenges due to this pandemic. Government mandated shutdowns have caused many to luzz their jobs. For the sake of our witnesses i want to let people know about me. After i left the army i started a health care company. I too understand being an entrepreneur, its not easy. It involves a lot of risk and sleepless nights. Ill never forget waking up in the middle of the night to check the lockbox on that nights proceeds many, many nights. During my time as c. E. O. Of that company our team took the company from 180,000 in revenue to 208 million in annual revenue in eight years. Im proud of what we accomplished but through the difficulties an growing pains we faced i cant imagine the challenges facing Small Businesses today. With the witnesses understanding who i am i want to look at Economic Performance in this pandemic. I know chairman iclyburn gave a great picture of how the economy is crashing. Id like to point out its really those blue states that are continuing to crash economically. I can hear the reck rick now. Well, look at the increase in cases in tennessee, florida an texas. I cant talk about those states but i can tell you in tennessee, our cases are going up but our deaths remain low and were monitoring our i. C. U. Beds here in tennessee, ventilators at 32 utilization. That means 68 are sitting there waiting. Recall the objective was to flatten the curve not stop every ingle infection to protect the atrisk population and open up. Weve done that in tennessee. Economically our tennessee recovery is setting records. Just announced after an april unemployment of 15. 5 , may 11 , our june unemployment is down to 9 in tennessee. With retail sales boom, restaurants and Retail Businesses at the top of the clint for retvry. Our governor announced last night our Economic Growth in tennessee is only 0. 2 below what we predicted it would be without covid and before it ever happened. We had the lowest debt in our nation per capita. We have a fully funded pension plan. We are using our ample rainy day fund, money with set aside years to distribution additional dollars to businesses and medical providers. It goes to show it matters who governs. Conservative policies that advance freedom lead to prosperity 9 11 a crisis. In tennessee we appreciate that the Trump Administration is taking bold action to provide economic relief. The president slashed, streamline regulations, worked with congress to enact the Paycheck Protection Programs and billions in additional loans for Small Businesses. If the government is going to force businesses to close it has an obligation to provide relief. The president has also declared war on this virus, expediting supplies on a massive scale, ramping up efforts to create a vaccine in his words at warp speed. America is resil yebt well wie bounce back stronger than ever. Its important that Congress Work with the president and not just bash the president. Its equally important we get our economy blasting on all cylinders. As i and many of my colleagues pointed out the cost of shutdowns are nearly equally as great. As former fed chairs im grateful youre here to share your perspectives on the economic challenge our nation is facing. Real quick my first question is to chairman bernanke. How much debt is enough . Were at 22 trillion before this happened. Looking at 10 trillion more. What is too much . Mr. Bernanke going back to the first part of your comment there is a lot of evidence that peoples behavior does depend on the illness in the local area. So i dont know about your state well have to see how that works out but there is that issue and it makes a lot of sense. Id also mention lockdowns are not the only way to address the problem. There are tools like masks an tests and tracing and so on. Im hopeful that that will be used. On debt, you know, like i said given how low Interest Rates are around the world and thats not just a Monetary Policy thing, this is a global trend going on for 30 years Interest Rates coming down and down. The burden of the debt is not as high as the dollar amount would make you think and this is a how much is too much . I just am looking, whats the number . Mr. Bernanke its not a number. Its a trajectory. The problem is when it keeps growing an growing and the interest keeps compounding and getting bigger and bigger you get to a point where the burden of the interest is so high you have to raise taxes or cut spening or you run into an inflation situation. Thats the kind of outcome you want to avoid. Were not that close to it now given the level of our debt burden. The money the money were printing is it going to cause inflation . Mr. Bernanke no. People said it would have after 2008, they were wrong then too. Mr. Clyburn the gentlemans time has expired. The chair recognizes for five minutes mr. Foster. Mr. Foster thank you. I would like to stay on that same point. What are the factors that one of the factors that prevented response to the recession is we were spending ourselves into hyper inflation an debase the dr. Dr. Bernanke probably shares with me the fond memories of a republican traveling to china in 2009 to warn officials that they should not buy u. S. Treasury securities or other u. S. Debt because u. S. Spending was driving toward default and the Federal Reserve bank was, quote, creating hyperinflation which is something weve heard from republicans again and again and again and are apparently hearing once more. Firstly, did the republicans prediction of hyperinflation materialize . Why or why not . And what were the actual Interest Rates compared to hyperinflation . Either one of you, i guess start with dr. Bernanke. Mr. Bernanke inflation was very low. The fed had a great deal of difficulty tote getting inflation up to the level. Interest rates which include an inflation preemup have been low as. We pretty much in the 2 range until recently and now under 1 . Are you aware of the prediction in macroeconomics . Mr. Bernanke there are a lot of bad predictions in acroeconomics. Inaudible] mr. Clyburn will the gentleman yield for a moment . We need some people to mute because were getting a lot of feedback. Please if youre not speaking, mute yourselves. Mr. Foster . Mr. Foster so going into this crisis the net worth of americans with was roughly 120 trillion. And the market value of property directly owned by the u. S. Government, its hard to estimate but its been estimated in the range of 200 trillion to 300 trillion. So in contrast in this crisis our government had publicly health debt of 20 trillion which was probably around 25 trillion to 30 trillion when the Coronavirus Crisis has been dealt with. Are there credible circumstances under which our government would be unable to pay its debts as a result of a fiscally sufficient response to the Coronavirus Crisis . Dr. Yellen . Ms. Yellen i think its hard to imagine. If some shock were to happen that drastically caused Interest Rates to rise, and i cant imagine what that would be, then e federal government would have a higher interest burden on the debt and would have to deal with it. Essentially, some steps do have to be taken in my view to deal deficits to get them back under control when this is over so that the g. D. P. Ratio stabilizes ather than continuing to rise. Mr. Foster so there is no shortterm emergency in ms. Yellen no. Mr. Foster we can allocate federal spending in many ways, direct payment to vims, rental assistance, payroll and Unemployment Insurance, grants and subsidies to businesses large and small. Guaranteed loans to businesses. Relief to state and local governments. Putting aside all equity issues which of these provides the biggest macroeconomic bang for the buck and where should we look for objective and competent advice on this . Mr. Bernanke our recommendations were first Public Health. That has a very high return. Both the medical side and also the safe opening side. The second is Unemployment Insurance, both because humanitarian reasons and people who are unemployed spend a great deal of their income. Those are the priorities. There are other things to look at like supporting Small Business. I think the p. P. P. Program did a lot of good but those are the three i think that in our judgment are ethis most important priorities. Mr. Foster as anyone has anyone tried to quantify this . Specifically the modeling done by the c. B. O. And fed to incorporate the different multipliers for different kinds of spending or not . Are we sort of on our own in congress . Ms. Yellen i would mr. Bernanke i would imagine the c. B. O. Has estimates, i dont have them to hand. Ms. Yellen huge amounts of work on this. I dont know the c. B. O. Stims but different marginal propensities to spend goes to different groups in the economy. Theres an estimate of work on that. And its been said Unemployment Compensation to lowwage workers virtually all of that is spent. Itll be similar for state and local government spending. Theyre among our Top Priorities. During high impact on spend spending in the economy. Mr. Foster thank you, i yield back. Mr. Clyburn the chair recognize mrs. Kim for five minutes. Mr. Kim thank you, mr. Chairman. Thank you for gathering here and talking about this. I want to start by responding to a comment made earlier in this hearing. Another member of the committee the american bout academy of pediatrics about next steps with our kids. I quickly researched it. I thought its important to clarify the comment made by the academy regarding the statement being misunderstood and isrepresented. Being a strong ad vo cat for kids being physically present at school with a lot of things to consider, that got misrepresented and misunderstood. It goes on to say we have to consider covid activity in the community. It should not be politically motivated. We have to think about whats best for our kids, teachers and families. The American Academy of pediatrics joined with the American Federation of teachers, National Educational association an others to issue a joint statement saying science should drive Decision Making on safely reopening schools. Public Health Agencies must make recommendations based on evidence not politics an leave it up to Health Experts to el tell us when the time is best to open up school buildings. For instance schools in areas of high levels of covid should not be compelled to reopen against the judgment of local experts. A one size fits all approach is not appropriate for return to school decisions. Withholding funding from schools that do not open would be a misguided approach. These are incredibly important things to consider here. I have a young boy who is supposed to start school soon, i would love for him to get a great education and to be able to enjoy kindergarten. I dont want anyone to accuse me of not wanting my kid or our kids to get the education they deserve. But my education taught me to respect science and expertise and make sure families and education professionals are part of that discussion. Going back to the topic of our hearing here i want to just go to chair bernanke. I thank you for what you said and the work youve been doing with regards state and local governments and the need to fund that i was at a Small Business Committee Hearing this morning where treasury secretary mnuchin, i asked him about this issue. He wouldnt commit to me that he would support this type of aid in the next funding package because we should not, quoteunquote, bail out states with mising mored budgets is how we talked about it there. I wanted to ask your stipulation on this. Your experience on the state reopening give you any concern that additional funding for State Government in the midst of this pandemic will creativesenivities for mismanagement . Mr. Bernanke no, i think the think the money can be structured in the ways that eliminate that incentive. It can be done by formulas that do not relate to the existing tax burden. I think there are ways to provide the money that will not provide incentives for mismanagement. You can require money not be used to increase pension funds. I dont think that is really an issue. States ands the localities are big employers. In addition to the issue about mismanagement, i want to address the term bail out. About . 75 weck put in. I do not appreciate taxpayers asking for we are what is fair in the middle of a pandemic. Point, you talk about the challenges we face at the state level. Moret to hear a little bit from you about that. What isnt help states, that going to do . In theade this mistake recovery from the 20072009 recession. Billion, a Fiscal Program. To the states were forced contract, lay off people. Recently, it saw cut about 0. 5 off of the growth rate as the economy was trying to recover. Implications for spending and jobs as well as people within new jersey. Thank you. Mr. Chairman, back to you. Thank you so much. We have reached the end of our questions. Chair would like to recognize the Ranking Member for a closing statement if you would like to make one. You again, mr. Chairman. Good to see both doctors. Whatve been talking about we need to do to reopen the economy. Safely. Always it would have been good to hear more opinions about how it is being done. I get to go to a lot of places and see what people are doing smartly. You can learn from what other people are doing. I talked about the meeting i had with the Vice President tuesday. What Vice President did was bring his whole team town. Down. The head of the lsu system and the Southern University system. They were both talking about what they are doing to safely reopen. It can be done. They both confirmed that. Be berx confirmed it can safely done. You dont do it if it cannot safely be done. Our challenge as policymakers is to go figure out how to do it. Outto allow anybody to cop saying, it is hard so we will not do it. Talk to the people who are doing it safely. There is a serious cost. When you go back to the academy of pediatrics, they talk about, you have to follow guidelines. It is not about whether to follow guidelines. You have to follow guidelines. You can do it. There is a cost of not doing it. There is a cost to kids. There are a lot of other things. A lot of kids get basic nutrition. Is not being done if you are closing schools. For some of these schools to say, they are not going to come back to work unless police are defunded. About the kids. Mr. Jordan talked about the 50 million kids that are losing out. They are losing out if they do not get their schools open. We talked about this with Vice President pence. Sports are key to uniting communities. It is in the psyche, they want to see sports come back. Kidsapplies to 50 million denied that opportunity to go back. Deep ow was pretty predicted to be a sixth round draft pick but because he had the opportunity to prove himself, he became the number one draft pick. Winning the heisman trophy. That would have been denied. Think about the other 50 million plus kids who will be in a night opportunity if we do not do the hard work figuring out how to do it. Not whether to do it but actually whether to do it. It is something we have to do. We put a man on the moon, we can do it. The doctors say we can do it. Lets go get it done. Think the Ranking Member for his statement. I just want to reiterate at the beginning of the hearing, you thed to put documents into record. I did not object. I want to point out that last when President Trump started pushing to reopen schools, the academy of pediatrics issued a clarification. Ou heard it from mr. Kim that statement says science should drive decisionmaking. Schoolsy reopening notice, my friend, you talked about dr. Birx there with the Vice President at Southern University and lsu, being there. Elementarye for some School Teachers to have been there. For some kindergarten teachers to have been there. For some superintendents from those Public School districts around louisiana to have been there. They are the ones who are in the front lines. They are the ones who are committed to taking care of everychildren, all day, day. Not dr. Birx, the not the Vice President. Not the athletic directors and lsu. I am a proud graduate. We just closed it down our program for the whole fall. I love watching my team play. That is not what this is about. Educating our healthy in a safe, environment and we need to go with the experts when it comes to that. I went down to lsu. A big fan of joe burrows. I hope he has a successful career. It is not going to happen if he cannot stay healthy. Insulated from the virus just because he got the heisman trophy. We have to do what is necessary to keep him healthy. Today in closing, i want to thank chair bernanke and chair yellen for being here. We appreciate the distinguished records of government service. And the expertise you have congressmane the used us to chart a path through to the other side of the pandemic. Is clear the economic Recovery Efforts of the federal government are not sufficient. We Face Even Greater economic turmoil without further action. It is going to have a disproportionate impact on communities of color. Todays hearing has also made clear there are steps our government must take now to put us on the road to economic recovery. First, as our witnesses explained, and i quote. Nothing is more important than improving Public Health. For the economy to recover until we successfully control this pandemic. Second, Congress Needs to take bold action and pass a substantive recovery package like the heroes act. Tot includes us support state and local governments. Governments will have to lay off workers. An limit essential services until they get federal help. End of quote chair bernanke he and chair yellen eloquently yellened and chair explained why they cannot do anything else and they passed a comprehensive and robust recovery missive. The termsould adjust of eligibility for lending to allre all barriers borrowers have access to credit. Additional facilities to lend to those who have been harmed by this crisis. They led the nation out of the 2008 financial crisis congress and the administration should heed their advice and acting now get onto the path of recovery in a manner that is effective, efficient, and equitable. Without objection, all members will have five legislative days to submit additional written questions for the witnesses to the chair, which will be forwarded for their response. After i ask witnesses to respond as promptly as you are able to. This meeting this hearing is adjourned. Heres a look at our live coverage monday on cspan. The houses back for legislative business. They will take up the National Defense authorization act. Cspan two, a discussion about russias influence in europe. A look at ways to increase voter considering the noon, aon at National Constitution center event marking the anniversary of womens suffrage parade at 1 30, a hearing in ways the pandemic has exposed outdated systems in federal government rate steven mnuchin
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