Trump Says He’s Picked the Next Fed Chair

Hassett may have reason to smile.
Reuters
By Yuval Rosenberg and Michael Rainey

Happy Monday and welcome to December! The final month of the year brings a host of year-end awards and accolades, including several selections for Word of the Year. Oxford University Press, publisher of the Oxford English Dictionary, announced today that it picked "rage bait" as its word for 2025, following last year's selection, "brain rot." Never mind that both choices are actually two-word phrases. Oxford says "rage bait" - "online content deliberately designed to elicit anger or outrage by being frustrating, provocative, or offensive, typically posted in order to increase traffic to or engagement with a particular web page or social media content" - has tripled in usage in the last 12 months.

We promise we're not looking to elicit anger. We can't promise our news won't do so. Here's your evening update.

Hassett for Fed Chair? Trump Says He's Made His Choice

President Trump told reporters Sunday that he has decided who he will nominate as the next leader of the Federal Reserve, but did not provide a name, even as speculation swirls that he will tap Kevin Hassett, the current National Economic Council director, to fill the role starting in May.

Hassett, who served as chair of the Council of Economic Advisers during the first Trump administration, has been an enthusiastic supporter of the president's economic policies. If Hassett is chosen and confirmed, Trump would gain a close ally at the top of the nation's central bank, one who could be expected to push for the president's preferred policies, including lower interest rates - something Trump has been demanding for months from the embattled current Fed chief, Jerome Powell.

Powell was nominated for the top position by Trump in 2017, replacing Janet Yellen starting in 2018, and President Biden reappointed Powell for another four-year term, ending in May 2026. Over the past few months, Trump has expressed great frustration with Powell for his caution in cutting rates - driven by concerns about Trump's tariffs sparking new inflationary pressure - while aiming a steady stream of insults at the Fed chief, calling him a "a complete moron," a "knucklehead" and a "major loser."

Hassett on Sunday lightly pushed back against a report by Bloomberg that he is Trump's pick, telling CBS News's "Face the Nation" that while he is honored to be mentioned in the conversation, he is "not sure that Bloomberg has the story right."

At the same time, Hassett noted that the markets were responding positively to the news, with interest rates dropping in the expectation that more rate cuts by the Fed are in store. "I think that the American people could expect President Trump to pick somebody who's going to help them have cheaper car loans and easier access to mortgages at lower rates - and that's what we saw in the market response to the rumor about me," he said.

Still, the path ahead for interest rates may be rockier than the initial reaction suggests. While stocks and other assets could jump on the promise of easier monetary conditions, some economists are worried that if rates are cut too much, inflation could move higher, sparking a new cycle of rate hikes and economic turmoil.

More broadly, some economists are worried about what could happen if the Fed becomes more politicized. Once his new chair takes control, Trump will have appointed a majority of the seven members of the Federal Reserve's Board of Governors, giving him significant influence over the bank's actions.

In the meantime, the markets may have to contend with what Reuters's Mike Dolan calls a "shadow Fed Chair" for the next five months. If Hassett is nominated, "his every public utterance could be market-moving," Dolan writes. "How his views compare and contrast with Powell's over that period will be forensically examined - with the chance of considerable market volatility where they differ."

Congress Returns With Lots to Do, Little Time to Do It

The House and Senate will be busy this month - certainly busier than they were in October and November - as they try to pass more government funding bills, come up with some sort of healthcare plan that may address expiring Obamacare subsidies, pass the annual defense policy bill and tackle a slew of other issues, all before their Christmas break, which is set to begin on December 19 or 20.

Here's a quick look at where things stand on a couple of those priorities.

Funding the government: The deal to end the shutdown fight included three of the 12 full-year spending bills and extended funding for the rest of the federal government until the end of January. That means Congress still has nine annual funding bills to deal with for fiscal year 2026, which started in October.

Senate Majority Leader John Thune reportedly has been looking to package the four appropriations bills funding the departments of Defense, Labor, Health and Human Services, Transportation, Housing and Urban Development, Commerce and Justice into one big "minibus." But he told reporters Monday that the Senate might not have time this month to pass such a package given objections from lawmakers who would have to give unanimous consent to speed the process.

"It would be great if, in fact, we could get the approps process going and actually have a package on the floor," Thune told reporters Monday afternoon. "Whether we conclude it before the Christmas holiday or not - at least it would be queued up and ready to go in January."

House Republican appropriators reportedly are looking to strike a deal with the Senate on a smaller bundle of bills that leaves Defense and Labor-HHS-Education for later.

Healthcare subsidies, or broader reforms: As part of the deal to end the shutdown, Thune promised Democrats a vote this month on a healthcare bill they draft. It's not clear yet what that will be. Senate Democratic Leader Chuck Schumer told CNN that his party is still discussing what it will include in the measure as it looks to extend enhanced Affordable Care Act subsidies set to expire in just weeks. "I've talked to every member of my caucus over the weekend. We are united in extending the ACA, because if we don't, it does such damage to people, and we're going to discuss it in our caucus tomorrow, but we're totally united," Schumer said.

The White House floated its own plan calling for a two-year extension of the subsidies paired with GOP reforms to tighten eligibility but backpedaled after GOP lawmakers objected. "It even appears that the Trump administration was ready to put forth a plan that would at least have been worthy of consideration, and that Mike Johnson tanked it," House Democratic Leader Hakeem Jeffries said at a news conference Monday.

Trump last week told reporters that he doesn't really want to extend the subsidies but acknowledged it might be required. "Somebody said I want to extend them for two years. I don't want to extend them for two years. I'd rather not extend them at all," Trump said, before going on to say that "some kind of an extension may be necessary" to buy time "to get something else done."

Some lawmakers are still working to hash out a bipartisan compromise to prevent some 22 million Americans from being hit with higher premium payments or a loss of coverage. Lawmakers in both parties reportedly agree that any path to a deal will have to go through Trump. "There's widespread skepticism that Republicans will agree to any plan that isn't fully endorsed by Trump," Politico notes.

It's not clear yet if the president will get behind a compromise - and some Republicans won't vote to strengthen Obamacare even if he does. If Trump doesn't back a deal, Democrats' promised Senate vote this month will likely end up being a messaging exercise and Republicans may push ahead with another vote on a plan of their own, if they can agree on one.

Quote of the Day

"One of the challenges in explaining the impact of enhanced ACA tax credits expiring on premium payments is that it varies so much, depending on income, age, family size, and geography. The average increase would be 114%, or $1,016, but there is a wide range."

  • Larry Levitt, executive vice president for health policy at the nonpartisan healthcare foundation KKF, writing on social media Monday about the Obamacare tax credits scheduled to expire at the end of the year.

Levitt notes that a 60-year-old in Charleston, West Virginia, earning $65,000 who gets their health insurance under the Affordable Care Act would see their annual premium cost rise from $5,525 to $27,864. The same individual living in Charlottesville, Virginia, would see costs rise from $5,525 to $12,616.

Medicare Announces New Batch of Drug Discounts

The Centers for Medicare & Medicaid Services announced last week that it has secured price discounts for 15 commonly used drugs, to take effect starting in 2027.

The announcement marks the conclusion of the second round of negotiations under the Medicare Drug Price Negotiation Program established by the Inflation Reduction Act of 2022. Discounts on a first batch of 10 drugs were announced in 2024.

The discounts for Medicare participants include a 71% reduction in the price of the popular diabetes and weight loss drugs Ozempic, Wegovy and Rybelsus, the cost of which will fall to $274 a month. (Drugmakers have already pledged to reduce the price of the first two drugs to $245 a month, and it's not clear which price will be in effect.)

Janumet, another diabetes drug, will see an 85% discount, while Otezla, used to treat ulcers and arthritis, will be discounted 65%. (A full list of the discounted drugs is available here.)

Although the discount negotiation program was created under President Biden and passed through Congress without any Republican support, the Trump administration was happy to take credit for it, saying the negotiated prices will save $12 billion annually. "These savings are the result of the Trump Administration's aggressive push for lower prices for Medicare beneficiaries," CMS said.

Number of the Day: 57

President Trump has withdrawn 57 nominations so far in his second term - a record pace for a president's first year in office, Politico reports, citing Senate data. So while the Senate has confirmed more than 300 of Trump's civilian nominees this term, "there are clear signs of breakdowns behind the scenes," Politico says, with some picks failing to get proper vetting and some running into concerns from Republican lawmakers, or even Trump himself. Asked by Politico about the withdrawals, White House spokesperson Liz Huston said in a statement that Trump is "nominating the most talented patriots to successfully carry out his America First agenda."

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