by Jonathan Decker
This week we had some interesting economic developments in both monetary policy and regulatory policy. Here is a look at the top stories you should pay attention to:
Yesterday House Democrats voted almost unanimously in favor of raising the federal minimum wage to $15 an hour. Only six House Democrats voted “no” while only three House Republicans voted “yes.” You can see those who bucked the party leadership here.
Putting aside the fact that the Congressional Budget Office estimates this legislation would destroy 1.3 to 3.7 million jobs, raising the federal minimum wage to $15 an hour doesn’t even pass the test of commonsense. Why should Mississippi have the same minimum wage as New York City? $15 an hour amounts to over $31,000 per year as a full time salary, but more than 20 percent of four-person households in Mississippi make less than $24,300. Is the Democrats’ solution to ban their jobs?
For whatever merits the three Republicans who voted “yes” think raising the minimum wage to $15 will have, can they really not see the ridiculousness of mandating this policy nationwide? Thankfully, the legislation is presumed dead-on-arrival in the Senate.
Readers of this column know I am a Judy Shelton super-fan — I have been rooting for her Fed nomination since the beginning of the year. Recently, President Trump finally put her name forward as a nominee for the Federal Reserve Board of Governors, a decision that was instantly cheered by supply-siders including Trump’s previous Fed nominee Stephen Moore. In its editorial celebrating Shelton’s nomination, the New York Sun wrote, “What Ms. Shelton would do at the Fed is to enrich our central bank’s own policy debate…She’s perfect for the job.”
Fantastic pick, President Trump. Thank you for giving supply-siders another chance at-bat to bring a new perspective to the Federal Reserve Board.
This story is a really cool one. As you are likely aware, President Trump’s National Economic Council Director Larry Kudlow and Rep. Alexandria Ocasio-Cortez (D-N.Y.) don’t necessarily see eye to eye on a lot of economic policy issues. The old “Kudlow Creed” is “Free Market Capitalism Is the Best Path to Prosperity.” Ocasio-Cortez, on the other hand, is a proud socialist.
Nonetheless, Ocasio-Cortez absolutely crushed it at a recent congressional hearing featuring Fed Chair Jerome Powell. In a nutshell, the congresswoman grilled Powell on why the Fed’s Phillip’s Curve model (which purports to show that economic growth causes inflation) has been broken. Much to the surprise of viewers including myself, Powell essentially conceded that Ocasio-Cortez was correct. She got the Fed Chair to admit during congressional testimony that the Fed’s own models might be fatally flawed.
Ocasio-Cortez had clearly done her homework before the hearing and was very well prepared. For getting the Fed Chair to admit what so many have tried in vain to, she earned the praise of Director Kudlow who stated “hats off to Ms. AOC…she kind of nailed that….I got to give her high marks for that. She got that out of the chairman.”
Director Kudlow also extended an invitation to Ocasio-Cortez to discuss monetary policy. I sincerely hope she takes him up on the offer — it would be a beautiful flash of bipartisanship during these politically polarizing times.
That’s all we have for this week, but we will keep you updated on these stories and more in the weeks ahead.
Photo credit: Anna Waters via Flickr, CC BY 2.0