Big drama over OMBFebruary 23, 2021
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OMB Drama — Much of the Biden transition and nomination process has been relatively drama free. Not so at the Office of Management and Budget where Neera Tanden’s nomination hung by a thin thread late Monday night following the announcement of opposition by GOP Sens. Susan Collins and Mitt Romney. Sen. Joe Manchin (D-W.Va.) on Friday announced his plans to oppose Tanden, who has been skewered over her tough tweets against Republicans the last few years.
Biden officials said late Monday they were not yet giving up on Tanden’s nomination even though they now need at least one Republican Senator — Alaska’s Lisa Murkowski being pretty much the only hope — to vote in favor in order to get to 51. If Murkowski says she is a no, Tanden is done and the nomination won’t even get to the floor.
Most of the jockeying now is around who would replace her for the critical economic post with progressives pushing for veteran congressional aide Shalanda Young, who was already slated as deputy and would be the office’s first Black female director. But others inside Biden world are pushing for Gene Sperling who served in top economic roles for Presidents Clinton and Obama. Sperling, while still supporting Tanden’s nomination, would clearly take the job though it would involve a lot of commuting between Los Angeles (where he lives) and DC.
The argument for Sperling is he has deep experience with bruising budget battles and lots of bipartisan relationships on Capitol Hill. He’s also been a top outside economic adviser to President Biden through the campaign and transition, helping shape the Covid relief package.
The battle over a Tanden replacement, should it come to that, will mirror the other drama over the Office of the Comptroller of the Currency where Biden wants former Obama and Clinton official Michael Barr and progressive want UC Irvine professor Mehrsa Baradaran.
Backers of Barr and Sperling note that the economic team already has extensive diversity and that peppering it with some older, experienced hands would help. The result of both tussles will illustrate the extent to which the younger, more diversity-focused wing of the Democratic Party has conquered the older (and whiter) faction. And in Tanden’s case, it’s a fairly amazing case of how a handful of mean Tweets (imagine that!) can somehow derail a nomination.
GOOD TUESDAY MORNING — Email me on [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on [email protected] and follow her on Twitter @AubreeEWeaver.
President Biden this afternoon will meet with Canadian Prime Minister Justin Trudeau … Fed Chair Jerome Powell at 10:00 a.m. testifies before the Senate Banking Committee … House Appropriations subcommittee holds a hearing on the IRS with Commissioner Charles Retting … Senate Finance has a nomination hearing at 10:00 a.m. on Adewale O. Adeyemo to be deputy Treasury secretary.
DEMS COMPLAIN OF BIAS ON BIDEN NOMINATIONS — Our Laura Barrón-López and Christopher Cadelago: “Women’s rights activists and allied Democrats are growing increasingly vocal about what they call the unfair targeting of women and people of color nominated by Joe Biden to top posts in his administration. Their fears had been bubbling for weeks, as Biden’s nominees of color came under sharp attack from conservative groups or saw their nominations delayed or opposed in greater numbers.
“But the worries burst out into open over the weekend as Neera Tanden’s nomination to lead the Office of Management and Budget neared defeat … ‘There's a double standard going on,’ said Rep. Judy Chu (D-Calif.), head of the Congressional Asian Pacific American Caucus. ‘Her nomination is very significant for us Asian American and Pacific Islanders. I do believe that this double standard has to do with the fact that she would be a pioneer in that position.’”
POWELL PREP — Via Pantheon’s Ian Shepherdson: “Powell's semi-annual Monetary Policy Testimony today comes against a backdrop of rapidly rising long-term rates, with the 10-year Treasury up 45bp since the turn of the year, to 1.36%.
“Yields have more than doubled since the 0.64% low during the second Covid wave … We expect Mr. Powell to make the point that rising real yields are a signal of confidence that the economy will rebound as Covid fades, independent of what investors think about inflation”
FEAR AND HOPE ON COVID — Via Renuka Rayasam in POLITICO Nightly: “Right now, there are many reasons to be optimistic. New daily Covid cases have fallen nearly 75 percent to around 64,000 a day from a January peak of around 250,000 a day … The pace of vaccination is quickly picking up, with many of the most vulnerable groups — seniors, nursing homes residents and health care workers — getting inoculated against Covid.
“At the same time, there’s a big divide between Covid researchers right now — between those who think the end of the pandemic is around the corner and those who think the worst is yet to come. … In just 12 months the country has recorded half a million Covid deaths. New variants are circulating that are far more contagious. The researchers who are banking on immunity are extrapolating from a supposition that a large number of people who haven’t been tested have still gotten infected.”
WEAKNESS IN BIG TECH STOCKS LEAVES WALL STREET MOSTLY LOWER — AP’s Damian J. Troise and Alex Veiga: “A sell-off in technology companies led stocks on Wall Street mostly lower Monday, adding to the market’s losses from last week. The S&P 500 fell 0.8 percent, extending its losses to a fifth straight day.
"The benchmark index was just about evenly split between winners and losers, but technology stocks and companies that rely on consumer spending bore the brunt of the selling. Apple fell 3 percent, Microsoft dropped 2.7 percent, Tesla slumped 8.5 percent and Amazon lost 2.1 percent.”
YELLEN, POWELL WARY OF FINANCIAL FROTH AS THEY PUSH STIMULUS — Bloomberg’s Rich Miller: “U.S. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell appear wary of signs of froth in financial markets, even as they press ahead with economic stimulus measures that are elevating the euphoria. There ‘may be sectors where we should be very careful,’ Yellen told CNBC television last week, when asked about possible speculative sizzle.
“The remarks came a day after publication of minutes of the Fed’s Jan. 26-27 policy meeting at which staff characterized the risks to financial stability as notable— an assessment Powell shares, according to a central bank official familiar with the matter.”
FRAUD CHECKS, ERRORS SLOW SMALL BUSINESS RELIEF LOANS — NYT’s Stacy Cowley: “The problems plaguing those seeking loans from the government’s revived small-business relief program have ranged from simple to shocking. Some applications were stalled for weeks by typos. Overzealous fraud filters trapped others.
"A change of taxpayer identification rules snarled many freelancers and sole proprietors. And then there were the thousands of people turned down because they erroneously registered as having a recent criminal conviction.”
WHY TOP ECONOMISTS ARE CITING A HIGHER-THAN-REPORTED JOBLESS RATE — NYT’s Jeanna Smialek: “America’s official unemployment rate has declined sharply after rocketing up last year, but top government economic officials are increasingly citing a different figure — one that puts the jobless rate at nearly 10 percent, well above its official 6.3 percent reading and roughly matching its 2009 peak.
“That emphasis on an alternative statistic, espoused by leaders including the Federal Reserve chair, Jerome H. Powell, and Treasury Secretary Janet Yellen, underlines both the very unusual nature of the coronavirus shock and a long-running shift in the way that economists think about weakness in the labor market.”
BIDEN ECONOMY CHIEF SEES JOBS AS MORE URGENT RISK THAN INFLATION — Bloomberg’s Katia Dmitrieva and Jonathan Ferro: “Inflation is a risk that bears watching, though the bigger danger now is longer-term damage to the labor market, the White House’s chief economic adviser said in addressing criticism of President Joe Biden’s $1.9 trillion aid plan.
“‘We take very seriously the economic risks that are out there, we spend a lot of time thinking about them, a lot of time worrying about them,’ Brian Deese, director of the White House National Economic Council, said in a Bloomberg Television interview Monday. Inflation is ‘a risk that we’re keeping our eye on and it’s something to consider,’ he said.”
WORLD’S TOP 10 HEDGE FUND MANAGERS EARNED $20.1B LAST YEAR — Reuters’ Maiya Keidan: “Millennium Management’s Israel Englander earned $3.8 billion last year, landing him the biggest payday of any hedge fund manager in 2020, showed data from Institutional Investor.
“Englander more than doubled his $1.5 billion payday in 2019 and made $2 billion more than the previous year’s rich list leaders Chris Hohn and Jim Simons, while making gains of 26 percent for his investors. The top 10 hedge fund managers globally earned $20.1 billion in 2020, a 50.2 percent rise from $13.4 billion in 2019, against the backdrop of volatile markets amid the coronavirus pandemic.”
GSE PLANS — A new Brookings report by Mike Calhoun and Lewis Ranieri “lays out a path for the Biden Administration to install utility regulation of the GSEs while creating nearly $100 billion in funding to address America's housing need, including a focus on eliminating the racial homeownership gap. All without Congressional action.”
FTT REPORT — SIFMA has a new report out this morning “showing the economic impact of the financial services industry on NY city and state—almost 1 million jobs are supported by the sector, which supports $365 billion of GDP in NY state.”
TRANSITIONS — Via Talking Biz News: “New York Times White House economics correspondent Jim Tankersley is moving to the White House team. … He will focus on economic policy and most immediately, the COVID economic relief efforts …”
“Wall Street Journal reporter Emily Glazer is moving to a new beat covering business leaders and the power they wield.”