News brief: Wyoming economic summit, student debt equity, nuclear plant at risk
A MARTÍNEZ, HOST:
Every summer, economic leaders from around the world swap their dress shoes for hiking boots and head to Jackson Hole, Wyo.
RACHEL MARTIN, HOST:
This morning, they will hear from Federal Reserve Chairman Jerome Powell. And expectations for this speech are as high as the Grand Teton Mountains around them. Powell and his colleagues at the Fed are under pressure to curb inflation, and investors want to know what they're going to do.
MARTÍNEZ: NPR's chief economic correspondent Scott Horsley joins us now. Scott, what is Powell's mission today?
SCOTT HORSLEY, BYLINE: Well, A, he wants to show that the Federal Reserve has both the tools and the willpower to get a handle on inflation. In a sense, Powell's going to be channeling his legendary predecessor, Paul Volcker, who helped to kick off this annual gathering back in 1982. Organizers of the Kansas City Fed knew Volcker was an avid fly fisherman, so they chose a beautiful fishing spot in the Tetons to lure Volcker to their meeting. And central bankers have been coming back to Jackson Hole ever since. Powell wants to show he and his colleagues are just as committed as Volcker was to fighting inflation. But hopefully, they can do so without triggering the kind of deep recession that Volcker did back in the early 1980s.
MARTÍNEZ: Well, the Fed has been raising interest rates pretty aggressively. I mean, how high rates are likely to go?
HORSLEY: Well, that is the big question. And investors will be listening for any clues Powell might offer this morning. Remember, the Fed kept interest rates close to zero through much of the pandemic. But since March, the central bank has raised rates by 2 1/4 percentage points. Another rate hike is expected at the next Fed policy meeting in September, and investors have been toggling back and forth about whether they expect another three-quarter percentage point increase like in June and July or if the Fed might slow down a bit and raise rates by only half a percentage point like it did in May. Now, ordinarily, even a half-point increase would be a big move. And Kansas City Fed President Esther George, who's hosting this meeting, says it's odd to think about rates going up only half a point. But whether it's by a little or a lot, George told Bloomberg TV, interest rates are going up.
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ESTHER GEORGE: We have to get interest rates higher to slow down demand and bring inflation back to our target.
HORSLEY: And you can see the effects of this policy in the housing market. This week, mortgage rates jumped back above 5 1/2%. A year ago, you could get a mortgage for less than 3%. Those rising rates have started to put the brakes on both new and existing home sales, and higher borrowing costs are also making it more expensive to get a car loan, for example, or carry a balance on your credit card.
MARTÍNEZ: Now, Powell and his colleagues have said they're going to be flexible as new information about the economy comes in. And we're getting some of that data later this morning.
HORSLEY: That's right. The Commerce Department will have an update this morning on how much money people made, spent and saved in the month of July. We're also going to get a new reading on inflation for that month. We know gasoline prices have been coming down, but, of course, a lot of other prices are still climbing. So far, consumer spending has held up pretty well, but it's not necessarily keeping pace with these prices. So in some cases, consumers are spending more and getting less. The Fed's also keeping a close eye on the job market, of course, which for now looks to be really strong. And yesterday, we learned the U.S. economy shrank less in April, May and June than was initially reported last month.
MARTÍNEZ: And one more thing. I mean, inflation has been a bone of contention in the president's announcement that he's forgiving some student loan debt. How will that factor in?
HORSLEY: Yeah. President Biden announced plans this week to forgive up to $20,000 in student debt for tens of millions of borrowers. To the extent those borrowers now turn around and spend that extra money, it could add to inflationary pressures, probably not a whole lot. But that is one more thing for the central bank to keep an eye on.
MARTÍNEZ: All right. That's NPR's Scott Horsley. Thanks, Scott.
HORSLEY: You're welcome.
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MARTÍNEZ: President Biden announced a plan this week to offer up to $20,000 in student loan forgiveness for millions of borrowers.
GISELLE PARKS: Holy cow. Holy cow. OK. That's amazing. OK. Wow.
MARTIN: That's Giselle Parks of Orlando, Fla., when she heard the news. She expects to have her $5,000 in student loans completely erased. But many other borrowers are still going to have to pay loans off after Biden's changes.
MARTÍNEZ: NPR's Sequoia Carrillo is here to talk us through this. Now, Sequoia, Biden's plan is giving money to households making up to $250,000. The Census Bureau says they're top 5% earners. So is this all really just helping well-off college grads that maybe don't need the help?
SEQUOIA CARRILLO, BYLINE: Not exactly. This plan is actually designed to mostly help low-income borrowers. The administration estimates that among borrowers who aren't in school anymore, about 90% of relief dollars will go to people earning less than $75,000 a year. And keep in mind that not all borrowers are graduates. According to the Education Department, a third of all student loan borrowers have some debt but no degree. This plan would help those folks a lot. And then, of course, another big part of Biden's announcement is that Pell Grant recipients qualify for up to $20,000 in loan relief, and that's twice as much as other borrowers.
MARTÍNEZ: OK. So it sounds like they're the big winners here, but why is it fair to give them more help?
CARRILLO: Pell Grants are designed to help the lowest income students afford college. According to the White House, more than 60% of current federal student loan borrowers are also Pell Grant recipients. And at one point, these grants covered almost the entire cost of college, but they haven't kept up with rising tuition. So you end up having the lowest income students having to borrow more just to make it in the classroom. And that brings us to another core tenet of this plan, which is to help address racial inequalities around student loans. Black student loan borrowers tend to take out more loans to pay for college, and those debts tend to last longer compared to their white peers. They're also twice as likely to have received Pell Grants. Member station reporter Alexis Marshall spoke to graduate student Hailee B. Roye in Nashville. Roye is a Pell Grant recipient, and she thinks she'll qualify for forgiveness, but she's expecting to owe over $100,000 after she graduates.
HAILEE B ROYE: It's, like, a bittersweet type of thing. Like, it's sweet, like, yeah, 20k, like, knocked off. You know, that may be, like, a year or two knocked off that I have to pay. But it's also, like, now I still have 80 grand left, so how am I going to pay this back?
MARTÍNEZ: All right. So that brings up a kind of opposite beef over Biden's move, that it did not go far enough. So what gives?
CARRILLO: We heard from other Black borrowers who still expect to owe a lot even after some of their debt is forgiven. And that's something the NAACP in particular is trying to draw attention to. In fact, the morning after Biden's announcement, they hosted a rally with a brass band outside the White House calling for even more debt relief. But many Democrats who'd been arguing for higher debt cancellation, like Elizabeth Warren and Ayanna Pressley, ended up applauding the move.
MARTÍNEZ: Lots of GOP lawmakers have been opposed to any level of forgiveness. What's been their argument against?
CARRILLO: Republicans have criticized the plan for being unfair to people who have already paid off their student loans. And they've also called it out because it does nothing to address the high cost of college. Florida Governor Ron DeSantis spoke about it this Thursday. He called Biden's plan, quote, "a policy disaster and a political disaster."
MARTÍNEZ: That's NPR's Sequoia Carrillo. Thanks a lot.
CARRILLO: Thank you.
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MARTÍNEZ: Conditions are deteriorating at a Ukrainian nuclear plant currently under Russian occupation.
MARTIN: Yeah. On Thursday, the world's atomic watchdog warned that the Zaporizhzhya nuclear plant lost power twice, disconnecting for the first time ever from the power grid entirely. It was all later restored, but it's still very troubling.
MARTÍNEZ: NPR's Geoff Brumfiel has been following all of this. Geoff, what's happening at the plant right now?
GEOFF BRUMFIEL, BYLINE: Well, honestly, there is still a lot we don't know. But what we're told by the International Atomic Energy Agency is that the plant lost power, as you said. It was enough to trigger emergency systems at two operating nuclear reactors there. Now, a power line has since been reconnected to the plant, but the reactors are not currently on the grid producing electricity, according to the Ukrainian authorities.
MARTÍNEZ: So what caused the power to go out?
BRUMFIEL: Satellite imagery has shown wildfires burning very close to the plant and its power lines in recent days. It seems reasonable to assume they may have played a role. Russian state media says those fires were started by Ukrainian shelling. Ukraine blames the Russians, but, of course, there's no way to know for sure.
MARTÍNEZ: But help me understand why a nuclear power plant needs power from the outside.
BRUMFIEL: The plant produces power, of course, but it also takes power from the grid, just like any other industrial facility would. And that power runs safety systems. It runs radiation monitors. And maybe most importantly, it runs cooling for the reactor cores. And that cooling, in this case, is the really big thing because even after a nuclear reactor shuts down its core, the nuclear fuel remains physically really hot, and cooling water is required to prevent it from melting down. In a speech last night, Ukrainian President Zelenskyy said emergency diesel generators actually had to be turned on to keep that cooling water running. And that's really one of the very last lines of defense.
MARTÍNEZ: Now, on a scale of one to 10, Geoff, I mean, how worried should we be?
BRUMFIEL: Well, I asked Ed Lyman this very question. He's a nuclear expert at the Union of Concerned Scientists. And he told me he's up into the sort of seven to eight range at this point.
BRUMFIEL: I mean, it's not great. The danger here is that the site loses power again, the backup systems don't work right, and one or more of the reactors goes into meltdown. This would probably look a lot more like the 2011 Fukushima nuclear accident. And we could see radiation spreading from Ukraine to parts of Europe, Russia, maybe even Turkey. It would depend on the weather. It's a scenario, I think it's safe to say, nobody really wants to see.
MARTÍNEZ: OK. Considering the worry level is around seven to eight, can anything be done to prevent this?
BRUMFIEL: Well, ideally, there'd be some kind of demilitarized zone around the plant, but the Russians aren't willing to give up control. In fact, they've appeared to move some of their vehicles and troops even closer to the reactors in recent weeks. And short of that, the IAEA wants to send international monitors to the plant. Ukrainian officials want that to happen as early as next week.
MARTÍNEZ: All right. That's NPR's Geoff Brumfiel, who came through with a 10 report. How about that?
MARTÍNEZ: Before we leave, we wanted to mention one more piece of news.
MARTIN: A federal judge has given the Justice Department until noon today, Eastern Time, to release a redacted version of the Mar-a-Lago search warrant affidavit. This is the document that allowed federal investigators to get a warrant to search former President Donald Trump's home. It could reveal much more about why investigators believe there was probable cause that crimes have been committed.
MARTÍNEZ: Stay tuned to NPR to hear all about the latest developments. Transcript provided by NPR, Copyright NPR.