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Jay Powell

W&M Dems huddle on 2025, plus the Powell-Yellen splitscreen

Tax news: Ways and Means Committee Democrats met Monday night to prep for the 2025 fight over the expiring Trump tax cuts with a special guest: Thomas Barthold, the Joint Committee on Taxation chief of staff.

House Democratic tax writers heard from Barthold and talked through the distributional effects of tax provisions for 2025, according to four sources in the meeting.

Ways and Means Democrats have been quietly starting to huddle on next year’s tax cliff with a focus on messaging, education and getting on the same page for the debate to come.

Democrats who were on Ways and Means last Congress before their ranks shrank in the minority have also been invited to the meetings. Rep. Tom Suozzi (D-N.Y.) — who was on the committee before he left Congress to run for governor — was at Monday night’s huddle.

It’s the latest sign of how much focus is shifting to the looming deadline — which both parties see as a key opportunity to shape a major tax bill. House and Senate Republicans have set up more formal working groups to get ready for the 2025 push. Senate Finance Committee Democrats held their first major private meeting in June.

The other big news today: Two of the most powerful figures in financial policy will testify simultaneously this morning. Federal Reserve Chair Jay Powell will appear before the Senate Banking Committee at 10 a.m. And Treasury Secretary Janet Yellen will talk about international finance and probably some other stuff at the House Financial Services Committee.

Here’s what you need to know going in.

Powell: The U.S. central banker is showing up to talk about monetary policy. On that, lawmakers will have no shortage of comments, questions and concerns.

Policymakers, economists and bankers have a keen interest in when the Federal Reserve will move to cut interest rates after keeping them historically high since March 2022. It appears possible — but by no means certain — that the Fed could cut rates in September. That’s the last possible cut before the 2024 general election.

Senate Banking Committee Chair Sherrod Brown (D-Ohio) will devote part of his opening remarks tomorrow to stressing the impact of high rates on consumers. Brown has previously asked Powell to consider cutting rates for the sake of housing costs.

“Keeping rates too high for too long threatens workers’ paychecks while keeping other costs high – particularly housing,” Brown will say today. “Housing prices and rents continue to go up.”

Powell will appear before the House Financial Services Committee on Wednesday. Rep. Andy Barr (R-Ky.) told reporters Monday night that a September rate hike “will not be perceived as apolitical.”

“I want [Powell] to reiterate that the Fed’s monetary policy trajectory is going to be data dependent and not political,” Barr said.

Yellen: The Treasury Secretary will be testifying about international finance today. As we wrote over the weekend, we also expect her to be grilled on less topical affairs, including the well-being of President Joe Biden and possible applications of the 25th amendment.

But international finance has plenty going on. Rep. French Hill (R-Ark.) told us he planned to press Yellen to use the REPO Act to its full extent. Hill was a key architect behind that law, which passed earlier this spring. The statute authorizes the U.S. government to seize Russian assets to aid Ukraine. That approach makes our European allies nervous, and Yellen has responded by pushing for a compromise approach.

“I’d like the secretary to address why she’s not using the full powers of our REPO Act that was enacted with strong bipartisan consensus and majorities,” Hill said.

— Laura Weiss and Brendan Pedersen

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