President Biden to Re-Nominate Powell as Fed Chair

November 26, 2021

by Dave Robinson

Ending a recent flurry of speculation, President Biden announced his intention this week to re-nominate Jerome Powell as Chairman of the Fed. CNBC CNN The immediate reaction of the financial markets was positive. Reuters Although Powell has taken heat for underestimating the strength of inflation, he is generally well-regarded by investors. Treasury Secretary Janet Yellen favored his re-nomination. Some members of the Democratic Party’s progressive wing had lobbied Biden to nominate Lael Brainard, a Fed Governor, arguing that Powell had been too lax on banking regulation and that the Fed needed to be more aggressive on climate change.

We suspect that Biden would have been equally comfortable with Brainard, who is experienced and respected. But the US Senate has confirmed Powell once already by a comfortable margin, and there is less chance of a bruising fight to re-nominate him. Brainard’s nomination would have been more politicized, fairly or unfairly. Facing tough negotiations in the Senate over his Build Back Better Act, it may have been a relatively easy choice for Biden to preserve his political capital and to re-nominate Powell. Dollars to donuts, Biden and Powell had an in-depth discussion about how to keep inflation in check before the decision was finalized. Wall Street Journal New York Times

Brainard did not come up empty-handed, as Biden simultaneously indicated that he would nominate her as the Fed’s Vice-Chair. In her role as Vice-Chair, Brainard will have considerable policy influence and visibility, but less formal authority compared to the Fed Chair. We note that this position is also subject to Senate confirmation. New York Times

US House Passes Build Back Better Act: At the end of last week, the US House passed President Biden’s proposed $2 trillion Build Back Better legislation. The bill will fund numerous social programs and major climate change and environmental protection priorities. We will be studying this legislation but understand that it will be heavily debated in the US Senate. What legislation, if any, emerges from the US Senate by year-end could look substantially different. And then it will have to pass the House again. Washington Post Boston Globe New York Times

SALT Deduction Relief? One provision in the US House Build Back Better bill is of particular interest to taxpayers in states like Maine with high state income rates. This provision raises the current limitation on deducting state and local taxes paid (“SALT” deduction) on federal returns from $10,000 to $80,000. Wall Street Journal Bloomberg NPR This modification will be controversial in the US Senate. Opponents decry that it favors the wealthy, and Senators from low to no income tax states argue that it subsidizes high state tax states.

Medicare Premiums Increasing Sharply in 2022: This was announced last Friday night. Part B premiums will go up 14.5%. CNN

Portland Cargo Port Thriving: While many other ports are clogged, Portland’s container port, the International Marine Terminal, is operating smoothly and making new records. The volume of containers has more than doubled since 2017. Press Herald

Reader Quiz! Think you understand grocery store strategy? What national grocery store chain has the highest sales per square foot? One hint is that its less is more marketing strategy is unique and counter-intuitive in many respects. The Strategy

A Quote to Consider: “Patience is power.” James Clear

Quality of Life Short Takes:

Data That Should Get You Walking More: Data on the benefits of walking continues to mount. I urge all of you to at least skim this article summarizing various studies on the benefits of increasing your average daily steps. The average US citizen takes around 4,774 steps a day. But there is data showing major all-cause mortality risk reduction up to an average of 16,000 steps a day. Medium

Simple Ideas for Self-Care During Holidays: Here are five gifts you can give yourself during the holidays. And they are all free. New York Times

Lucid Named Motor Trend Car of the Year: Following up on a short take from two weeks ago, new luxury electric car maker, Lucid, garnered an industry honor. CNN

Wheel of Time Review: For fans of Game of Thrones and Lord of the Rings type fantasies, Wheel of Time, based on the Robert Jordan saga, has made its debut on Amazon Prime. I’ve watched the first three episodes and give it a thumbs up-only hoping that I don’t start having dreams of Trolloc wars. NPR Wikipedia

Range Widely Newsletter Recommendation: This eclectic, original, and thoughtful newsletter by David Epstein has become a favorite. He aims to broaden our cognitive toolbox. David Epstein

Right Amount of Time to Sleep: This research poses a direct challenge to the conventional idea that we need 7-8 hours of sleep to thrive. Does sleeping that long pose a threat to cognitive health? It’s only one study. The Conversation

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