Latest news with #SusanCollins
Yahoo
3 days ago
- Business
- Yahoo
Fed officials grow more outspoken—and split—over interest rate cuts
Federal Reserve governor Christopher Waller called for a July rate cut again on Friday. Other Fed officials like New York Fed president John Williams and Boston president Susan Collins said July was too early to lower rates because the extent of inflation from tariffs wasn't clear yet. As the U.S. economy navigates that hazy outlook, Fed officials are trying to figure out whether to cut rates to avoid a rise in unemployment or to maintain them because tariffs could lead to more inflation. A consensus on interest rate cuts is becoming elusive. Federal Reserve officials are having a hard time agreeing on what lies ahead for the U.S. economy in a time of unprecedented tariffs, a straining debt ceiling, and political upheaval. Throughout the spring, the Fed was mostly in agreement there was no rush to cut interest rates. The central bank was content to wait and see how exactly President Donald Trump's tariff policy would impact the economy. A series of revised forecasts in the aftermath of the tariffs called for lower growth and rising inflation. But the details themselves were still debated: How high would inflation go? How long would it last? Would businesses layoff employees if growth stalls? Now, three months on from the early-April tariff announcement, Fed officials are starting to formulate their own answers to those questions. Among the most dovish officials are Fed Board governors Michelle Bowman and Christopher Waller, who believe rate cutting should begin as early as this month. In two public appearances on Thursday and Friday, Waller called for rate cuts to start at the Fed's meeting on July 29-30. Others like John Williams, president of the Federal Reserve Bank of New York, and Susan Collins, president of the Federal Reserve Bank of Boston, see a July rate cut as too early because there is still the possibility of further inflation over the course of the year. These two schools of thought don't just differ on the timing of rate cuts, but on what is the larger threat to the economy: mass layoffs or soaring inflation. Those in Waller and Bowman's camp fear middling growth will cause the U.S. to flatline, forcing businesses to cut costs, including by shedding employees. On the other hand, those who favor holding rates believe a cut would only exacerbate the accelerating inflation they see as likely, if not certain. The prevailing view is that the Fed will keep interest rates steady at its upcoming meeting. The CME FedWatch tool sees a 95% chance of a rate hold at the upcoming meeting. On Friday in an interview with Bloomberg TV, Waller outlined the case for a rate cut he saw as necessary to push a teetering labor market toward safety. The labor market's solid headline numbers masked a weakening in the private sector, Waller argued. The latest Bureau of Labor Statistics report from June outpaced expectations, with the U.S. adding 147,000 jobs and an unemployment rate of 4.1%. An earlier report that specifically tracks the private sector showed it had lost 33,000 jobs in June. Waller said he wanted the Fed to act now, before the labor market turned for the worse. 'If you're walking on a lake and the ice is frozen, it sounds safe but when you start hearing cracks—and that's what I feel like—it's too late once you go through the ice,' Waller said. 'So you've got to start prepping in advance before you have that happen.' Waller's more hawkish colleagues are wary of cutting rates and loosening monetary policy at a time they believe it should remain restrictive. Inflation started to creep up in June, according to the Consumer Price Index report released this week. Prices rose 2.7% over the last 12 months, an uptick from 2.4% in May. The most recent CPI also showed early signs tariffs were pushing prices higher. Consumer staples like clothes, toys, and electronics, which are the exact sorts of products that rely heavily on foreign manufacturing, all saw their prices increase. 'For items that are more exposed to higher tariffs…price increases so far this year have been well above what one would expect based on past trends,' Williams said on Wednesday. Few dispute prices will rise because of tariffs. The split is over whether they will persist or smooth out quickly. Most economists argue any increases are only now starting to show up in the economic data because many companies had stockpiled inventory anticipating the tariffs. Textbook economics would suggest tariffs only lead to a one-time price shock. At the same time, the Trump administration's goal with its signature tariff policy has been to rewrite the rules of global commerce, making for little historical precedent to guide Fed officials and economists. Waller preferred to look through the inflation risk. 'With inflation near [the Fed's 2%] target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate,' he said on Thursday. The Fed's debates about monetary policy come against a bellicose political backdrop, in which the central bank's traditional independence is eroding. Earlier this week, there were multiple reports Trump was preparing to fire Fed chair Jerome Powell, with whom he disagrees with for not lowering interest rates. Markets tanked on the news. They then shot back up when Trump denied the report. Members of the administration are also laying the groundwork for a series of political attacks over the $2.5 billion renovations to the Federal Reserve's Eccles Building in Washington D.C. Certain White House officials said they believe the cost overruns on the project and Powell's testimony about some of the building's planned design features may amount to mismanagement and cause for termination. The acrimony—albeit one-sided—between the White House and the Fed adds a new dimension to what might otherwise be ordinary internal policy deliberations. 'Comments coming from Fed officials suggest the Federal Open Markets Committee is cleaving, with a vocal side arguing for rate cuts to begin now, and another side (including Jay Powell) still wanting a delay,' Macquarie global rates strategist Thierry Wizman wrote in a note on Friday. 'It could evolve into a split along political lines, with one side swayed by political motives, and the need to accommodate fiscal policy, at the expense of adherence to the price-stability mandate.' But while politicians like Trump have waded into the Fed—once considered taboo—the central banks officials have not crossed the line themselves. Powell declines to answer all questions about Trump or his policies. On Thursday when Waller was asked if he'd spoken to any White House officials about possibly succeeding Powell, he gave a one word answer: 'Nope.' Williams brushed off the D.C. machinations. 'We've got a job to do,' he said. This story was originally featured on Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
The Herald Scotland
3 days ago
- Business
- The Herald Scotland
Trump unfreezes $1 billion in school funding after states sued
A spokesman for the White House Office of Management and Budget confirmed that the Republican administration's review of the program is over, states will receive the funding and the money cannot be used in violation of the president's executive orders. The money is only a fraction, however, of the more than $6 billion in education funding the Trump administration put on hold on June 30, creating financial uncertainty for many districts. Though schools only receive a relatively small amount of money from the federal government each year, the delay hindered administrators' budgeting ahead of the fall. It also jeopardized programs families rely on, including for adult learners and students whose parents are seasonal workers. Read more: Billions in federal funding for schools on hold On July 14, two dozen blue states and Washington, D.C., filed a lawsuit to restore all of the paused funding. Read more: Trump paused funding for after-school programs. States are suing. Two days later, 10 Senate Republicans expressed frustration over the frozen money. In a rare break with the White House, a group that included Appropriations Committee Chair Susan Collins of Maine and former Majority Leader Mitch McConnell of Kentucky sent a letter to Russell Vought, who heads the Office of Management and Budget, saying the decision was "contrary to President Trump's goal of returning K-12 education to the states." "Withholding these funds will harm students, families, and local economies," they wrote. Zachary Schermele is an education reporter for USA TODAY. You can reach him by email at zschermele@ Follow him on X at @ZachSchermele and Bluesky at @
Yahoo
4 days ago
- Business
- Yahoo
Senate panel backs plans for $456 billion VA budget next year
Senate appropriators on Thursday advanced plans for a $456 billion budget for Veterans Affairs programs and benefits next fiscal year, putting it generally in line with House and White House goals for future department spending. Unlike the House draft adopted last month, however, the Senate VA appropriations plan advanced out of committee with broad bipartisan support and without a bevy of controversial social issue amendments. Sen. Susan Collins, R-Maine, and chairwoman of the Senate Appropriations Committee, praised the bill's passage as an important step forward for the federal budget process and for supporting America's veterans. 'It helps to fund the VA Health Care System, makes investments to improve mental health care, includes programs to assist in the prevention of veteran suicide, homelessness prevention programs, supports our family caregivers and expands care for our rural veterans,' she said. 'It also funds important veterans benefits, including disabilities, pensions, the GI Bill and employment training programs.' House passes $435 billion spending plan for VA in fiscal 2026 House lawmakers' budget plan for the department totaled about $453 billion, but both the House and Senate drafts call for roughly $134 billion in discretionary funding, money for new program starts and initiatives. That total is slightly less than what White House officials asked for in their budget proposal, but only by about $1 billion. Most of the debate in Thursday's Senate Committee markup focused not on the VA spending plans but instead the controversial rescissions package adopted by the chamber the night before. That measure would pull back about $9 billion in congressionally authorized spending, including money for foreign aid and public media programs. But those objections were not enough to deter most Democrats from backing the Republican-led VA budget plan. The Senate proposal includes language ensuring that veterans 'are never denied care or timely access to care as a result of the damaging or arbitrary cuts to the VA workforce,' a reference to recent workforce reductions at the department. Last week, VA officials backtracked on earlier plans to trim up to 80,000 employees from the department's payroll, instead projecting a reduction of about 30,000 individuals by the end of September. Veterans Affairs leaders have seen regular budget increases annually for more than 20 years, even amid frequent congressional and White House efforts to reduce federal spending. In fiscal 2001, the VA budget — both mandatory and discretionary — totaled just $45 billion. In 2011, it was about $125 billion. In fiscal 2023, the total topped $300 billion for the first time. The House-passed plan for fiscal 2026 would now push that total over the $400 billion level, and cost more than the combined fiscal 2025 budgets of the Army, Air Force and Marine Corps. Senate officials have not said when the budget plan could come before the full chamber for a vote, but Collins said Republican leaders have committed to acting on the issue in coming months.
Axios
4 days ago
- Business
- Axios
Congress votes to strip more than $1 billion in funding for NPR, PBS
Congress on Friday voted to cut nearly $1.1 billion in federal funding for the Corporation for Public Broadcasting, marking a devastating blow for PBS and NPR. Why it matters: The cuts will have a significant impact on local station groups that rely on federal funding to survive. Many are expected to shutter without it. While NPR and PBS nationally are mostly funded by nongovernment sources, such as corporate sponsorships or viewer/listener donations, local member stations are heavily reliant on CPB funding. Those stations are often the only sources of local news programming in rural communities amid a steady decline of local newspapers. Yes, but: While the cuts target NPR and PBS, the national organizations won't feel much of the impact. Only around 1% and 15% of NPR's and PBS' national revenue comes through CPB, respectively. The majority of federal funding is allocated to local member stations, which use it for day-to-day operations. Some of those stations do pay small dues to the national PBS and NPR entities to access nationally syndicated shows, newsgathering and resources, but many rural stations that will be hit hardest by the funding cuts don't currently pay those dues. State of play: The cuts were included in a sweeping rescissions package meant to claw back more than $9 billion in federal spending. The package included nearly $1.1 billion in funding for for CPB through 2026 and 2027. The House voted in favor of the broader rescission package Friday after the Senate voted 51-48 in favor of the package early Thursday morning. The bill passed the upper chamber with only Republican support. It now heads to President Trump to sign into law. Senate Republicans who voted against the package included Sens. Susan Collins (Maine) and Lisa Murkowski (Alaska), whose states rely heavily on public media in rural areas. Between the lines: Every member station of NPR or PBS is expected to feel the impact of the cuts. NPR has 386 public radio grantees that operate around 1,300 stations across the country. Around 40% of them are classified as rural stations. PBS has nearly 350 member television stations. Of note: For some vulnerable NPR affiliate stations, CPB funding can make up to 50% of their total budget. Without CPB funding, PBS estimates that roughly 15% of its stations will be unable to operate. What they're saying: "This vote is an unwarranted dismantling of beloved local civic institutions, and an act of Congress that disregards the public will," said Katherine Maher, President & CEO of NPR Zoom out: While Republicans have made some efforts to defund public media in the past, support for NPR and PBS have historically been considered non-partisan. In 2012, then-presidential candidate Mitt Romney said during a debate that he was "going to stop the subsidy to PBS," if elected. Ahead of Trump's second term, Project 2025 wrote in a detailed memo foreshadowing the president's agenda ways the administration could pull funding for public broadcasters. The Trump administration started taking actions to scrutinize public broadcasters shortly thereafter. The big picture: The cuts are part of a broader effort by the Trump administration to strip funding from public broadcasters.
Yahoo
4 days ago
- Business
- Yahoo
Hill Republicans brace for another grueling fight over Trump's spending cuts
Congressional Republicans have passed Donald Trump's $9 billion rescissions package, capping a painful ordeal that put even members who supported it in a tough spot. Now, many Republicans are wincing at the prospect of having to do it all over again. White House budget director Russ Vought said Thursday that a second request to rescind congressionally approved spending is likely coming soon. That will mean another bitter go-round on an issue that inflamed GOP institutionalists who worry about the administration's steady encroachment on Congress' power of the purse — even as many fiscal hawks embraced the move to cut spending in any way possible. Some Republicans think next time will be different. They believe the White House understands, after multiple warnings from lawmakers, that another norm-shattering rescissions package couldn't land in GOP laps without a lot more transparency around what, exactly, the administration wanted Congress to cut. 'I think we'll probably take a different approach,' Sen. Markwayne Mullin (R-Okla.) said in an interview Thursday, adding, 'I think the lesson on this one is, we need to be including the chair and making sure we're working together.' Mullin was referring to Sen. Susan Collins, the chair of the Senate Appropriations Committee. The Maine Republican was so piqued that she voted against the package alongside just one other GOP senator, fellow appropriator Lisa Murkowski of Alaska. The Appropriations Committee chair cited qualms with both the nature of the original, $9.4 billion spending cut request and the information deficit around the scale and scope of that request. 'There can't be too much communication; there can't be too much information with senators. … We've got to obviously make sure that everybody feels like they're getting all the information they need,' Sen. Eric Schmitt (R-Mo.), who spearheaded the rescissions process in the Senate, said in an interview Thursday about lessons learned. This was something former Senate GOP leader Mitch McConnell was clamoring for. He ultimately supported the rescissions bill on final passage, but made his irritation with the administration clear after opposing a procedural vote to advance it. 'OMB is the problem. They won't tell us how they're going to apply the cut,' the Kentucky Republican said of the Office of Management and Budget this week. 'I want to make it clear I don't have any problem with reducing spending. … They would like a blank check is what they would like, and I don't think that's appropriate.' But it's not clear whether the White House is, in fact, prepared to change its approach. At a Christian Science Monitor breakfast with reporters Thursday morning, Vought appeared unrepentant about the posture the OMB had taken in spearheading the $9 billion spending cut request, which would slash public broadcasting and global health initiatives. 'The appropriations process has to be less bipartisan,' Vought said. Without a course correction from the administration, there's no guarantee Republicans would welcome another interruption of their legislative agenda to conduct another exercise that exposes them to Democratic attacks or forces them to potentially cross the president. That Congress is now entering the pivotal weeks before the Sept. 30 deadline to avoid a government shutdown could further diminish the enthusiasm for another rescissions package. Senate Majority Leader John Thune (R-S.D.) was noncommittal this week when asked about Congress signing off on additional funding cuts, pointing instead to the appropriations process as his top priority. 'We'll see what the future holds, but the goal right now is to get into the appropriations process. Let's start marking up bills, trying to get them on the floor,' Thune said. 'So my hope would be that that's the way we deal with a lot of these issues.' Sen. John Hoeven (R-N.D.), a member of the Senate Appropriations Committee, also suggested his priorities were shifting as the funding cliff deadline approaches. Asked what appetite his colleagues had for more rescissions packages, Hoeven said it 'depends who you ask.' While they could try to do rescissions and appropriations, 'I want to get the approps process going,' Hoeven said. Even Schmitt, who confirmed that 'additional rescissions are being contemplated,' conceded the Senate is now facing a major scheduling crunch. Democrats are also warning that pursuing more GOP-only rescissions packages could blow up bipartisan government funding talks, with trust between the two parties already eroding in light of Vought's latest comments. Top Senate Appropriations Democrat Patty Murray (Wash.), during an Appropriations Committee meeting after Vought's comments, called the GOP's multi-part rescissions push a 'dangerous new precedent.' 'Bipartisanship does not end with any one line being crossed,' she said. 'It erodes over time, bit by bit. And frankly I am alarmed by how quickly that erosion is happening.' At the same time, GOP leaders may have no choice but to plow ahead, especially in the House. Speaker Mike Johnson, his top lieutenants and Trump himself have repeatedly promised votes on an elaborate patchwork of more rescissions packages, party-line reconciliation bills and spending cuts in government funding measures. They did so to appease fiscal hawks who balked at the trillions in new spending in the just-enacted Trump megabill. Rep. Anna Paulina Luna (R-Fla.), a close ally of Trump, said in an interview earlier this month that she's discussed with the president and Republican leadership a 'multi-step plan' to cut spending that includes 'massive rescissions' and more reconciliation bills. Vought indicated the White House is well along in planning the next rescissions package. While Mullin said that Republicans are 'not putting the cart too far before the horse' in planning what could be included, some members have had 'high-level brainstorming' sessions with the White House budget chief on the subject. Vought has also already started calling GOP senators and is getting an eager reception from some of his Hill allies. Sen. John Kennedy (R-La.) said in an interview Thursday that he pushed Vought during a closed-door lunch Tuesday to send additional spending cut packages to Capitol Hill. The budget director, he added, called him on Wednesday morning and said, according to Kennedy, 'another is coming your way.' 'I'm ready to gobble them up,' Kennedy added, before imitating a turkey: 'Gobble, gobble.' Cassandra Dumay, Jennifer Scholtes and Katherine Tully McManus contributed to this report.
