Economic Impact of Regulatory Volatility

It's Consider This, where every day we go deep on one big news story. Today, the Supreme Court wades into major political battles and two key rulings. The first deals with male in voting, which President Trump has criticized for years. We as a Republican party are going to do everything possible that we get rid of mail in voting. The problem I have with Colorado, one of the big problems they do mail in voting. When a state is for mail in voting, that means they want dishonest elections because that's what that means. We should pass voter ID . We should pass no mail in voting. We should pass all the things that we want to pass make our election secure and safe. Today's ruling is a major loss for the president and his party. It upholds a Mississippi law, one that allows election officials to count mail in ballots postmarked by election day but received up to five days later. And another ruling today involves the independence of a key regulat or, the Federal Reserve. Here's President Trump speaking to reporters last August. You know if I lisa cook, the Fed governor over she doesn't resign, yeah. She's what she did was abandon I'll fire her if she doesn't resign. But today, the Supreme Court said that Lisa Cook can stay in her job for now . Consider this. The Supreme Court has weighed in on two major issues that mean a lot to President Trump. What do the rulings say and are they truly the final word? From NPR, I'm Scott Detro it It's considered this from NPR. The Conservative Supreme Court took sides against the Republican Party in a major ruling today. The case was about mail in voting. The court upheld a Mississippi law that allows election officials to count mail in ballots that are postmarked by election day but received after election day. Here to explain the court's ruling is NPR political correspondent Ashley Lopez, hey Ashley. Hey there. Tell us more about the case. Yeah, so this case was centered on a Mississippi law that allows election administrators to count postmark ballots that arrive up to five days after election day. The Republican National Committee and the Trump campaign filed a challenge to that law before the twenty twenty four election, arguing that these sorts of grace periods for voters amount to an unlawful extension of elections. They argued that Congress sets an election day and counting votes after that jeopardizes the integrity of American elections. And it seems like the courts majority did not buy that argument. They did not. In a FIVER ruling were two conservative justices Amy Coney Barrett and John Roberts sided with the Liberal Wing of the Court. They said that Mississippi's law isn't violating federal statute. Justice Barrett authored this opinion. She wrote that states have the right to maintain some latitude in how they run their elections, which includes how they run their mail and ballot programs. And while this might be out of step with President Trump and some GOP officials, this is actually historically a pretty conservative principle. The majority also said in clear language that voting is happening when voters fill out a ballot, not when ballots are making their way through the mail. I mean the split from the conservatives of the court is pretty interesting, but I'm curious what the reaction has been from conservatives not sitting in the Supreme Court. Yeah, I mean, well President Trump was obviously upset, right? He renewed his call to severely restrict mail and ballots nationwide, even though he often votes by mail himself. He also urged Congress to pass an elections overhaul bill that so far has gone nowhere in the Senate and notably doesn't include anything about ballot receipt deadlines. There is Mississippi's Republican governor too, Tate Reeves. Even though the court upheld his state's own law, he said he disagreed with the ruling and plans to get rid of the state's grace period. He said this is a COVID era law that doesn't need to stay in place. I think it's worth noting the Republican led state legislature could have changed the law years ago , but this case was part of a larger GOP effort to undermine access to mail and voting. That just didn't pan out in this case. Because of the way that President Trump attacks this, this gets a lot of attention, but how many voters are really talking about big picture who have their mail ballots arrive after election day? You know, so right now, eighteen states in territories have a grace period for most voters casting ballots by mail. And it's even more voters when you factor in people overseas, including members of the military. A good example of this is Washington State. In twenty twenty four, a quarter million mail and ballots were counted that were received after election day. So I mean, it's a pretty significant number of people who could have been affected. Interesting. Tell me more about how this would affect people beyond voters, right? Like election officials. Yeah, I mean, this would have been a big change for them. This could have been a lot of chaos, right? Especially in states that have universal mail in ballot programs. I've seen statements from various secretaries of state that say that educating voters about changes to deadlines would have been like this huge undertaking ahead of the midterms . And like , there's data that suggests that voters in general adapt to tighter deadlines over time , but changing the rules so close to an election could create a lot of upheaval in some states. So voting rights advocates say they're relieved the court did not side with Republicans on this. And PR's Ashley Lopez, thank you so much. Yeah, thank you. In another major ruling today, the Supreme Court says the Federal Reserve's Lisa Cook can stay in her job for now. Nil Kashari is president and CEO of the Federal Reserve Bank of Minneapolis, and he's here to discuss today's ruling. Neil Kashari, thanks for joining us. Thanks for having me. What was your overall reaction to this decision . I was relieved. I was relieved when the majority opinion or the majority of the court went to great lengths to explain why independent monetary policy, monetary policy independent of short term political considerations is not only of paramount importance for the economy today, but it's rooted in American history. And I was gratified that the court understood why that is so important. As we heard though, this was a narrow decision essentially that Lisa Cook didn't receive due process . She could still be fired theoretically if the lower court determines she committed mortgage fraud, which she denies . Are you worried about that outcome? Well, I have to defer to the lawyers to sort out those details, but I think at the end of the day, the Supreme Court has clearly expressed its it segmented the Federal Reserve from all of the other independent or formerly independent agencies, and it said that monetary policy has this unique history in America and it should be kept independent of the political process. The fact that the court so strongly reached that conclusion, which I of course agree with , that gives me great comfort that whatever may come forward, that they're going to do their best within the bounds of the law and the Constitution to keep the Fed independent. And I feel good about that. So despite the fact that this was a narrow ruling on the legal side of things, you feel like you read this , you see this opinion, and you feel like this is a clear cut vote for an independent Fed . Exactly. Yes. You know, I do want to ask you and Governor Cook are both members of the Federal Open Market Committee , the group that meets eight times a year to set monetary policy, including interest rates. Have you discussed this case with her? Has she said anything to you about her concerns about this case as it played out? You know, Lisa is not only a colleague, she's a friend. I've talked to her a number of times on a personal level just saying, Hey, how are you doing? How are you hanging in there? She's been under enormous pressure. I think that she has carried herself. First of all, she's done her job throughout this process. She comes fully prepared to her FOM C meetings. She fully contributes with very rich and robust analysis backing up her views. And so I think I've just shared with her my admiration for the way that she's continued to do her job given the pressure that she's been under , and that's really been the extent of our conversations. For people who don't follow this as closely, why to you is an independent Fed so important? And why was this such a dangerous case? Well, what history has shown, not just in America, but around the world is that politicians of both sides of the aisle, both leanings, would prefer when they're in power to have lower interest rates to boost the economy, to make their constituents happy and boost their political chances. And when central banks have acted in terms of in favor of politics over analysis and data, it ends up leading to much worse economic outcomes for their public over the long term. It leads to higher inflation, it leads to more volatility. It can even lead to financial crises. And so every single advanced economy in the world has adopted the view that monetary policy should be kept independent of short term political considerations , and the Supreme Court did its part today to affirm that view. I mean, given how central interest rates were to all of this and the pressure that President Trump was putting on the Fed to lower them, I am curious you've made comments in the past , you know, given what is happening with inflation, how likely is Trump to get his way as the rest of the year plays out? Well, I mean, we're all going to focus on the data. I certainly am, and I know my colleagues on the federal open market committee are, and inflation is still too high . And if we look at most of the readings of inflation, it's not moving down. It's moving sideways or maybe even moving up . It's not just related to oil. I mean, oil prices are a big driver of inflation, but so is what we call serv ices inflation, which is not directly related to oil or energy prices. And so there are a lot of factors that have been pushing inflation higher. Inflation has been too high for five years. The American people really don't like high inflation and we have a job to do and that's get inflation back down to our two percent target. And I know that we are committed to doing so. I wanted to ask about the other case that we heard about. I'm curious. Have you had a chance to think about this economically? Do you have any concerns about what this ruling about broader regulatory agencies could mean for the economy if suddenly these agencies that have a big say over comerce can suddenly be a lot more at the whim of a current administration? You know, it's I think it'll lead to more volatility in the economy. We hear about this in different sectors where there are regulatory policies that Congress passes for, let's say, a two year period or a four year period, and then it's due to renewal. And there's uncertainty about whether Congress would renew it. And many businesses say, hey, we can't make long term investment decisions if we don't know that the regulatory apparatus is going to be consistent for the life of our investments, say a ten year investment. If we end up in a world where every four years or every eight years the pendulum swings dramatically across different sectors of the economy, I think it would lead to more volatility and it could be a more challenging environment for businesses to make long term investment decisions. Neil Kashari is president of the Federal Reserve Bank of Minneapolis. Thank you so much for talking to us. Thank you for having me. This episode was produced by Jeffrey Pierre and Vincent Accapino with Audio Engineering by Te ed Mbe. Our director is Alejandra Marques Hanza. It was edited by Benjamin Swazey, Patrick Jarin Wadan , and Tinbeat Amius. Our interim executive producer is Courtney Dorne . It's consider this from NPR. I'm Scott Detro