Approved

WASHINGTON — The Senate Banking Committee voted on party lines Wednesday to approve Kevin Warsh as the next chair of the Federal Reserve to replace Jerome Powell, a longtime target of President Trump’s insults for not cutting borrowing costs as far as the president wanted.

The vote was 13-11, with all Republican senators voting in favor and Democrats opposed.

Warsh is a former top Fed official but has also been a sharp critic of the institution and Powell’s leadership. He has called the inflation spike to 9.1% in 2022 the central bank’s biggest policy mistake in four decades. A vote on his nomination probably won’t take place until next month, but he could be confirmed by the time Powell’s term as chair ends May 15.

The Senate Banking vote is the first of two key events surrounding the future of the Fed’s leadership. Also Wednesday, Powell is presiding over what will probably be his last meeting of the Fed’s interest rate-setting committee. At a news conference Wednesday afternoon, Powell may indicate whether he will remain as a member of the central bank’s board of governors after his term as chair ends.

It would be unusual for Powell to stay, but doing so would deprive the Trump administration of an opportunity to appoint a new member to the board. Powell may choose to stay if he sees it as necessary to protect the Fed’s independence, which has become part of his legacy as its leader.

Sen. Tim Scott, a South Carolina Republican and chair of the committee, said Warsh is “battle tested” and added that, “It is incredibly important that we break the bind of Bidenomics on households across this nation.”

Sen. Elizabeth Warren, a Democrat from Massachusetts, criticized the banking panel for voting on Warsh’s nomination. Doing so “will bring the president one step closer to completing his illegal attempt to seize control of the Fed and artificially juice the economy,” she said, citing Trump’s effort to fire Fed governor Lisa Cook and investigate Powell.

The Fed on Wednesday is widely expected to leave its key rate unchanged at about 3.6% for its third straight meeting, defying Trump’s calls for lower rates.

Warsh has called for “regime change” at the Fed and could alter many of its practices, including the economics models it focuses on, how it communicates with the public, and how large its bondholdings will be in the long run.

Those changes could affect financial markets, but otherwise won’t necessarily be visible to the general public. But Warsh has also advocated for additional interest rate cuts, which could potentially lower borrowing costs for mortgages, auto loans, and business loans. He will face barriers to implementing those cuts anytime soon, however, largely because the Iran war has caused a spike in gas prices, pushing inflation to a two-year high of 3.3%.

The Fed typically keeps rates elevated, or even raises them, to combat worsening inflation.

Most of the other 11 members of the Fed’s rate-setting committee have indicated they would prefer to wait and evaluate where inflation and the economy are headed before making any changes to rates. It could take time for Warsh to build up enough influence to push for rapid rate cuts. He will also replace Stephen Miran, a member of the Fed’s rate-setting committee who was appointed by Trump last September and is the most consistent advocate for rate reductions at the central bank.

Warsh also faces questions about his independence from the White House, a key issue that dogged him during a Senate Banking hearing last week. On Wednesday, Warren said, “Mr. Warsh is a Trump sock puppet who is so cowed by the president that he could not even say that Trump lost the 2020 election.”

Last December, Trump called for much lower interest rates in a social media post, and added that “anyone who does not agree with me will never be Fed chair!” And just last week he told Fox Business that he expects rates to head lower, “when Kevin gets in.”

Warsh denied at his hearing, however, that Trump had ever pressured him directly to cut rates.

Rugaber writes for the Associated Press.

The Cabinet on Tuesday approved two prosecution reform bills that would dismantle the current prosecution service later this year to separate its exclusive power to both initiate criminal probes and indict suspects.

When promulgated, it would mark a sweeping overhaul of the nation’s prosecution system. Under the new laws, the prosecution office will be shut down in October, 78 years after its establishment in 1948, and two new agencies will exercise indictment and investigate roles, respectively.

The bills on establishing the so-called serious crimes investigation agency and the indictment agency, pushed by the ruling Democratic Party (DP), were passed at the National Assembly last week in a plenary session boycotted by the main opposition People Power Party (PPP).

Under the laws, the new indictment agency will handle only indictments, while investigative powers will be transferred to the newly established serious crimes investigation agency.

The new investigative body will be established under the Ministry of the Interior and Safety and will be responsible for probing six major crimes, including corruption, economic offenses, defense industry-related crimes and drug offenses.

The government has been seeking to separate the prosecution service’s authority over both indictment and investigation amid longstanding criticism that the prosecution has abused its exclusive powers by carrying out politically motivated investigations.

The DP has argued that the reform is needed to curb potential political abuse of prosecutorial power, while the PPP has warned it could weaken checks on investigators and increase the risk of political influence.

The two new agencies are set to be established after the abolition of the prosecution office.

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WASHINGTON — In session for rare weekend votes with the election fast approaching, Congress acted Saturday to keep the government running for another 24 hours but made little apparent progress in breaking a budget impasse.

Despite the action of the House and the Senate on the eighth stopgap spending measure since the fiscal year began Oct. 1, a weird limbo enveloped the Capitol as neither Republicans nor Democrats predicted a quick deal. Gone for the time being was the usual year-end pressure to adjourn. Instead, both sides seemed willing to wait to see who would blink first.

Negotiations focused on the handful of issues still dividing the parties, issues that might or might not influence voters at the polls Nov. 7. Among them were tax credits for school construction, proposed workplace safety regulations and measures to ease immigration law.

President Clinton, who forced the weekend votes by insisting that lawmakers pass daily stopgap budget measures, urged the Republican-led Congress to wrap up its budget work and include an increase in the federal minimum wage.

“I’m not trying to harass [Congress],” Clinton said at a news conference. “I’m just trying to get them to finish their job and go home.”

Clinton cited an agriculture spending bill he signed Saturday as a model of bipartisanship. The president said he signed the bill–which included milestone language easing a decades-old trade embargo on Cuba to allow U.S. agricultural exports–even though he was critical of provisions that would limit the effect of the trade opening.

In a GOP radio address, New Jersey Gov. Christine Todd Whitman called the budget showdown “a case in point” of Washington gridlock that voters will punish.

“I think we are ready for a change,” Whitman said. “And the difference between the parties is striking. Republicans at all levels of government work with people to accomplish results–not make excuses for why we can’t even try to solve them.”

Republican congressional leaders note that they wrapped a minimum-wage increase Clinton supports into tax legislation that he is holding up with a promised veto. And they accuse the White House of constantly shifting its goals on the two government spending bills for fiscal 2001 that have not been finalized.

“I tell you, I’ve reached the end of my rope,” said Sen. Ted Stevens (R-Alaska), chairman of the Senate Appropriations Committee. To illustrate his frustration, Stevens said in an interview on the Capitol steps that the administration had sought $3.5 billion in extra spending on a bill containing $106.8 billion for discretionary spending on education, health and other programs. Then $4 billion. Then $4.1 billion. And now, he said, the demand is up to $4.5 billion.

“What can you do?” Stevens asked.

To register his protest, Stevens was one of two senators to vote against the daily budget resolution. The other was Sen. Patrick J. Leahy (D-Vt.). Sixty-seven senators voted for the resolution.

Thirty-one senators–11 Democrats and 20 Republicans–were absent for what the chamber regarded as a ritual vote. Many missed it because of campaign events, a few for health reasons. California’s Democratic senators, Dianne Feinstein–who is running for reelection–and Barbara Boxer, were both absent.

The House vote for the stopgap measure was 339 to 7. All seven dissenters were Democrats, including Rep. George Miller of Martinez. Of the 86 representatives who were absent, 42 were Republicans and 44 Democrats.

Twelve of California’s 52-member House delegation did not vote. They were Feinstein’s opponent in the Senate race, GOP Rep. Tom Campbell of San Jose, and Reps. Brian P. Bilbray (R-San Diego), Ken Calvert (R-Riverside), Christopher Cox (R-Newport Beach), Matthew G. Martinez (R-Monterey Park), Howard P. “Buck” McKeon (R-Santa Clarita), George P. Radanovich (R-Mariposa), Joe Baca (D-Rialto), Xavier Becerra (D-Los Angeles), Tom Lantos (D-San Mateo), Pete Stark (D-Hayward) and Maxine Waters (D-Los Angeles).

The roll call showed the political importance of the vote to many House members–all wary of the potential charge that their absence would reflect an insensitivity to the possibility of a government shutdown.

Bilbray was the only California absentee in a tough reelection race. Other California incumbents in contested races, such as Reps. James E. Rogan (R-Glendale), Steven T. Kuykendall (R-Rancho Palos Verdes), Calvin Dooley (D-Visalia), Lois Capps (D-Santa Barbara) and Stephen Horn (R-Long Beach), all eschewed campaign events to remain in Washington for the vote.

More stopgap budget votes were expected today.