Waters and Bessent Clash Over Economic Issues in House Hearing

During a House Financial Services Committee hearing, Representative Maxine Waters and Treasury Secretary Scott Bessent engaged in a notable exchange concerning economic issues such as tariffs, inflation, and housing affordability. The interaction included Waters using the phrase "reclaiming my time" and requesting the Committee Chairman's intervention to stop Bessent from speaking over her.

Debate on Tariffs and Inflation

Representative Waters asserted that tariffs have contributed to price increases for certain goods, including coffee, bananas, lumber, and steel.

She specifically linked tariffs on housing production goods to a worsening housing affordability crisis.

Secretary Bessent countered, citing a San Francisco Federal Reserve report indicating that historically, tariffs do not cause broad-based inflation. He also stated that lumber prices were at a five-year low.

Bessent attributed rising housing costs to an influx of immigration, referencing a Wharton study, and questioned Waters' definition of inflation.

Economic Perspectives

The article notes that while tariffs have increased prices for specific imported goods, historical data suggests they do not typically cause widespread, sustained inflation.

The San Francisco Fed report indicates that increased tariffs can lead to economic uncertainty, potentially reducing demand and counterbalancing price increases in the short term.

Tariffs are described as an import tax resulting in a one-time price increase rather than ongoing inflationary pressure.

Regarding housing, Bessent highlighted the impact of immigration on housing demand. However, the article also points out that immigrants are significantly represented in the construction sector, which is essential for addressing the existing housing shortage.

While Waters criticized tariffs on materials like lumber and steel, Bessent noted that lumber prices had declined, paradoxically due to tariffs that spurred increased imports, creating a supply glut. Future factors like declining interest rates and legislative efforts to incentivize homebuilding could influence housing supply and demand dynamics.