Sen. Tina Smith (D-MN) on Build Back Better: We need to ‘find a package that 50 of us can support’

Sen. Tina Smith (D-MN) joins Yahoo Finance Live to discuss Fed chair Jerome Powell's confirmation hearing, inflation, climate infrastructure, and the outlook for President Biden's Build Back Better bill.

Video Transcript

- Inflation's the big focus of the confirmation hearing for Federal Reserve Chair Jerome Powell on Tuesday. He testified before the Senate Banking Committee for more than two hours, saying the Central Bank needed to be a little bit nimble and a little humble as it navigates a strong recovery, but also rising inflation. Let's bring in a member of the Senate Banking Committee. We've got Senator Tina Smith joining us today.

And Senator, it's good to talk to you today. Going into that hearing yesterday, you had some Senate colleagues who'd said that they're not comfortable voting for the re-confirmation of Jay Powell, just given his stance on some issues like climate change. I wonder based on what you heard yesterday, how comfortable are you in saying, yes, in fact he should get a second term?

TINA SMITH: Well, thank you, Akiko. It's great to be with you today. And I am very comfortable supporting Jay Powell for reconfirmation. I also think it's important to note that there's going to be a really strong combination I hope with both Jay Powell and Lael Brainard in the vice chair role. I think together they're going to bring exactly the kind of leadership that we need to the Federal Reserve.

And let me say that the concerns that some of my colleagues have expressed about needing to see the Fed take a more robust approach to climate and really appreciating the systemic risk that climate poses for financial institutions in our country I think is a really important point to make. And I make that point with Chair Powell all the time when I speak with him and look forward to seeing the Fed really take that issue on and in a much more full-throated way.

- Yeah, Senator. The other big issue we were watching play out there too was kind of the issue of inflation, prices rising across the country, and how much the Fed really has its tools and how prepared they are to use some of those things. But when we talk about, I guess, Main Street Americans too in battling all this, some of those relief actions by the government rolling off now as we move ahead to this year. Questions around whether or not the Build Back Better plan can get through here. I mean, how much impetus here is on Congress to maybe start taking a more active approach in trying to get some more relief if some of these things continue to persist in a way that does start to impact prices to a more extreme degree beyond just what we're seeing now?

TINA SMITH: Well, I think what we talked about yesterday in the Banking Housing Committee was really illustrative. The issues with inflation are having a significant impact on Americans in my home state of Minnesota. We have this sort of strong, strong demand at the same time that we are having supply side bottlenecks and challenges that are caused so much by the pandemic. And so that mismatch is what's causing the inflation that we're seeing right now. Now, the Fed doesn't have any control over the supply side issues that we need to address. And I want to just note that the Biden administration steps on addressing bottlenecks at our ports is a really important step.

I think long term, the investments in infrastructure, roads, and bridges, and broadband is a really, really important step for building out the resilience of our economy. And then the steps that we can take in Build Back Better, which I remain hopeful that we will pass, will have a direct impact on lowering prices for Americans, whether it's prescription drugs, or child care, or home health care, the kinds of things that are non-negotiable parts of so many families' budgets. So I think it's important to think about the work that Congress has to do on the supply side while the Fed uses the tools that it has with regard to monetary policy to what ends up putting a little bit of a damper on demand.

- Senator, let's talk about where things stand on Build Back Better. Obviously, Senator Manchin has held up the package. The legislation as it stands right now, it feels like there's a bit of a split in your party about how to move forward on this, those who are saying that they're optimistic, there can still be a large package here that can be passed. And I know you've also talked about separating out some of the climate legislation that's included in there. You've been a huge proponent of something like a clean energy standard, which is no longer, at least on paper. Where does the conversation go from here? Are you already moving forward with a separate package so that at least you could get these climate initiatives out ahead while this other larger package stalls?

TINA SMITH: So in my view of it is that after the end of the year there was a lot of frustration. We kind of needed to cool off a little bit. I think that that's been happening. When we come back, we're going to work hard to, I hope, pass an important voting rights bill. Now, there's a lot of work still to be done on that. And then we're going to come back to Build Back Better. And my view of it is what we need to do is to find a package that 50 of us can support. And then we need to get it done.

When there are things in there right now that don't have 50 votes, then we should take them out. And this is not a process that can just go on for months and months and months. We need to kind of fish or cut bait on this. The good news if you care about climate and you care about bringing the clean energy transformation here to the United States is there appears to be some pretty good consensus about the provisions in Build Back Better around clean energy tax credits and the policies in there to help us to build out clean energy. Now, this is super important.

Just for a moment as we think about the long-term impacts of climate change on our economy and on our prices, for us to go into the lead now on addressing those challenges, this is going to be really important if we want to be doing the things that we need to do to control the increases in energy prices down the road. And that's what Build Back Better does with these clean energy tax credits, supporting carbon capture, and solar, and wind, and also supporting expansion of the transmission system so that it works better. All these are good things and will help us have a stronger economy around long term.

- And going back to whether, in fact, you have the support in place. If you separate the clean energy initiatives in Build Back Better-- roughly $550 billion-- do you have those votes in place to pass those initiatives as is? Or do you still have to strip out some of those incentives that have been included in there for that because you don't have the support?

TINA SMITH: I mean, my sense of it is that there is good consensus. I wouldn't say it's all buckled up and tied up in a bow. But my sense is that we're in a pretty good place on the climate provisions. It's the rest of the package that we have to come to agreement on. And I think what we need to do is to give ourselves a few weeks after we get through this discussion-- really important, epic discussion on voting rights in this country-- to get that done. And then we just need to vote on it. So I'm not a proponent of taking the climate provisions out and trying to pass those separately. I think that for the time being, what we need to do is to try to get this all done together. And I think it's doable.

- Akiko mentioned Senator Manchin's, I guess, push back to getting some of this passed. And some people have flagged his connections with the coal industry perhaps as maybe being some of that in terms of his conflict of interest. It was interesting in the confirmation hearing yesterday, you know, talking about perhaps other conflicts that exist in Congress. And your Democratic colleague from Georgia, Senator Ossoff, was talking about maybe barring congressmen and women from trading stocks.

I mean, I'd be curious because if we're talking about conflict of interest for Manchin and what it might mean for this plan here, it does extend the question to maybe conflict of interests in Congress. I mean, what's your take on maybe how that could be potentially a problem, as we've seen others, including Nancy Pelosi, really push back on the idea of that being an issue.

TINA SMITH: Well, my view of it is that people need to be able to trust that their elected leaders are making decisions based with the people's interests at heart and not their own personal financial interests at heart. That is why I think full disclosure is absolutely essential. And then it is up to the constituents and folks in the states that elect those senators to decide for themselves whether they think that they're being represented fairly and honestly or not.

So I think that's the question that is-- I think that's the answer to the question that you raise. And that's what I think that we need to be focused on. And it's interesting. I'll just turn it back to the Federal Reserve because these were some of the questions that were asked of Chair Powell yesterday. I think that it's-- as you think about what's going on with the Fed, it's extremely important that we have good disclosure and that we know that people that are making these huge financial decisions are not self-dealing at the same time.

- And on that front, the Fed Chair did talk about changes he's made at the Central Bank, not allowing members to trade individual stocks, and also giving a 45-day notice before selling their positions. Do you think that should be a template for lawmakers?

TINA SMITH: I think we should look at what we need to do to make sure that people have confidence in the Senate and in all lawmakers that they're making decisions based on the best interests of the people that they represent and not their own personal self-dealings. So I think these are all really important discussions to have, especially at a time, frankly, where there is a real-- we're kind of at a nadir of trust in elected officials. This is sort of a baseline.

- Minnesota Senator Tina Smith, always good to have you on the show. Really appreciate the time today.