TIME Benjamin Netanyahu

Netanyahu: Speech Not Intended to Disrespect Obama

Israeli Prime Minister Benjamin Netanyahu expressed “regret” Monday that his address to a joint session of Congress has become politicized, but pledged to continue to criticize the emerging Iran nuclear agreement.

Addressing the American Israel Public Affairs Committee in Washington, Netanyahu was greeted by the friendly audience with multiple standing ovations, saying he appreciates all that President Obama has done in support of his country.

“My speech is not intended to show any disrespect to President Obama or the esteemed office which he holds,” he said. Republicans invited Netanyahu to address Congress Tuesday without first consulting the White House in a breach of diplomatic protocol. The White House responded by refusing to meet with the Israeli leader, citing proximity to this month’s Israeli elections.

Netanyahu appeared to acknowledge that his address has become a distraction from the very talks he aims to criticize.

“You know, never has so much been written about a speech that hasn’t been given,” he quipped. Even attendance at the Tuesday speech has become controversial, with a number of Democratic lawmakers pledging to boycott.

“The last thing that I would want is for Israel to become a partisan issue, and I regret that some people have misperceived my visit here this week as doing that,” Netanyahu said.

But the Prime Minister said he would proceed with his plan to aggressively criticize the P5+1 Iran nuclear talks, which are inching closer to an agreement and he warns could “threaten the survival of Israel.”

“I have a moral obligation to speak up in the face of these dangers while there’s still time to avert them,” Netanyahu said, alluding to the Jewish people’s millennia in diaspora. “Today we are no longer silent. Today we have a voice. And tomorrow, as Prime Minister of the one and only Jewish state, I plan to use that voice.”

“Israel and the U.S. agree that Iran should not have nuclear weapons, but we disagree on the best way to prevent Iran for developing those weapons,” he added.

Before Netanyahu took the stage, U.S. Ambassador to the U.N. Samantha Power defended the Obama Administration’s support for Israel and criticized the politicization of the alliance. Later Monday, National Security Adviser Susan Rice is set to address the pro-Israel group to deliver in-depth remarks about the Iran talks in advance of Netanyahu’s criticism.

“Debating the most effective policy both within our respective democracies and among partners is more than useful, it is a necessary part of arriving at informed decisions,” Power said, attempting to separate out the politics from the substance. “Politicizing that process is not. The stakes are too high for that.”

TIME 2016 Election

Barbara Mikulski, Longest-Serving Woman in Congress, to Retire

Sen. Barbara Mikulski
Bill Clark—AP Senator Barbara Mikulsk (D., Md.) speaks with reporters as she arrives for the Senate Democrats' policy lunch on Dec. 9, 2014, in Washington, D.C.

The Maryland Senator's retirement in 2016 leaves a gaping hole in the state's Democratic power structure

Barbara Mikulski, the Maryland Democrat who has served in Congress for nearly 40 years, will retire from her current position as U.S. Senator at the end of her term in 2016.

“I had to decide whether to spend my time fighting to keep my job or fighting for your job. Do I spend my time raising money or raising hell to meet your day-to-day needs?” she said at a Monday press conference announcing her decision. She vowed to continue to work to pass legislation in the Senate for the remainder of her term.

Mikulski, 78, was first elected to the House of Representatives in 1977 before moving to the Senate in 1987. She was the first woman to chair the influential Appropriations Committee, a coveted position given the committee’s oversight over hundreds of billions of dollars of discretionary spending.

Senate minority leader Harry Reid, who entered the Senate the same year as Mikulski, praised his Maryland counterpart as a “trailblazer”:

“Senator Barbara Mikulski’s career has been devoted to serving others,” he said in a statement. “As Dean of the women of the Senate, Barbara has been a mentor and friend to Senators on both sides of the aisle. Through her work, she has helped a generation of women leaders rise in the Senate.”

The departure of one of the most revered figures in Maryland politics leaves a gaping hole in the state’s Democratic power structure. A slew of members of the House may vie for her seat. It also may have implications for the 2016 presidential race if Maryland Governor Martin O’Malley, a Democrat, opts to run for the Senate seat instead of challenging Hillary Clinton.

TIME Congress

7 Times World Leaders Addressed Congress

Israeli Prime Minister Benjamin Netanyahu addressed Congress on Tuesday, a speech that has raised tensions with the Obama Administration because it wasn’t consulted before House Speaker John Boehner made the invite—and it comes two weeks before Israeli elections.

From boundary-pushing leaders to controversial figures and world-changing peace visits, here are seven other times foreign dignitaries addressed a joint session of Congress.

TIME Congress

House Democrats Save DHS From Shutdown, Republicans From Themselves

With just hours to go before a midnight deadline, Congress passed a one-week extension to fund the Department of Homeland Security and prevent sending 30,000 government employees home on furlough.

The vote ended a tumultuous day in the House as Republican Speaker John Boehner and his aides lost control of their right flank, failing to deliver a three-week funding measure for the department and relying instead on Democrats to pass the one-week measure to avoid a DHS shutdown.

Boehner had hoped the three-week extension would buy his conference time to figure out how to protest immigration measures put forward by President Obama last year, without shutting down DHS. But his fellow Republicans turned on the bill and it failed by a handful of votes late in the afternoon.

The Senate, led by newly elected Majority Leader Mitch McConnell, then calmly passed a one-week extension of funding for the department and sent that bill back across the Capitol to the House. After House Democratic leader Nancy Pelosi spoke with Obama, House Democrats opted to vote with Boehner and the Republican leadership rather than allow funding for the department to fail.

The one-week extension in funding for DHS meant that McConnell could technically uphold his promise that there would be no government shutdowns under his leadership. But House conservatives effectively ended McConnell’s other major promise as leader: that the party would no longer be “scary.”

On the Senate side of the Capitol, the House disarray brought scorn from Democrats and Republicans alike. “Hopefully we’re gonna end the attaching of bullshit to essential items of the government,” Illinois GOP Sen. Mark Kirk, who’s up for reelection in 2016, told TPM. “In the long-run, if you are blessed with the majority, you’re blessed with the power to govern. If you’re gonna govern, you have to act responsibly.”

The DHS fight originated in November, when Obama announced he would unilaterally, temporarily defer deportations for up to five million immigrants who came to the country illegally. While Republicans in Congress were furious at what they called the “unconstitutional” action, they were faced with few good options to effectively negate Obama’s executive actions.

Their best option emerged last week, when a federal judge in Texas ordered Obama to stop his action through an injunction. Still, some of the top legal experts in the country say the president’s actions are lawful. Some Republicans applauded the three-week plan put forward by Boehner Thursday night, saying that it gave time to highlight the ruling.

“America should have an opportunity to understand why we object to the president’s action [and] why a federal judge found that the president didn’t have the authority,” said California GOP Rep. Darrell Issa. “So the Speaker has offered a very reasoned way to create space in which to have that debate with the Senate.”

Other Republicans believe that the party should have just passed what the Democrats wanted, a so-called “clean” bill that would not have added immigration riders. “We’ve got him into an arena that is honestly better than the Capitol,” says Oklahoma GOP Rep. Tom Cole. “We can’t achieve a complete victory in Congress. We don’t have the Senate. The President does have a veto. But in the courts we actually could achieve it. … I actually would argue this is actually a little bit of a sideshow,” he added. “I think the decisive arena is the court.”

The backlash among conservatives caught Boehner and his aides by surprise. Republican Rep. Walter Jones reached into his pocket for a copy of the Constitution when asked Thursday night why he wouldn’t support the plan. “How can I support money going to a president who violated the Constitution,” he said. “We cave in all the time up here,” he added, referring to previous spending fights. In a closed-door meeting, Jones noted “strong feelings” on both sides of the conference. On one side he said were “those of us who feel so passionately about the Constitution.” On the other, he said, were “those from other parts of the United States that are more concerned about the terrorist attacks.”

The passage of the one-week bill represented the second time since December that Congress has punted on DHS funding and left Republicans with the question of how they can viably protest the president’s immigration actions without shutting down the agency.

That’s a challenge Boehner will now face in just one week — two weeks earlier than he had hoped.

TIME Education

White House Takes The Gloves Off in Education Fight

President Barack Obama holds a bilateral meeting with the Amir of Qatar - DC
Olivier Douliery—Pool/Corbis President Barack Obama looks on during a meeting with the Amir of Qatar, in the Oval Office of the White House in Washington on Feb. 24, 2015.

After years of bipartisan language urging Congress to seize on “common goals” and “shared interests” to revise a dysfunctional federal education law, the Obama administration appears to be taking the gloves off.

In a conference call with the press this week, the Department of Education slammed the House Republicans’ proposed bill to reauthorize the Elementary and Secondary Education Act, also known as No Child Left Behind, which is scheduled for a House vote Friday.

The Department of Education called the bill regressive, “bad for children” and said it would amount to hundreds of millions of dollars of cuts to education spending. It then stopped short—but just barely—of calling the House bill outright racist.

Those fightin’ words come on the heels of yet another pugnacious White House report, released Feb. 13, which described the House Republicans’ proposal as a vehicle for shifting federal dollars “from high-poverty schools to more affluent districts.”

Rep. John Kline, the Chairman of the House Committee on Education and the Workforce, has parried the administration’s attacks, arguing that the bill does not cut funding at all and that it simply changes the way federal dollars are allocated to low-income districts, which serve mostly black and Latino kids.

But Cecilia Muñoz, the director of the White House Domestic Policy Council, told TIME that these issues are “very, very important” to the White House. “It’s very, very hard to reconcile the contents of this bill with the president’s long term goal of making sure every child is successful in school,” she said.

From the Obama Administration’s perspective, there are two primary issues at stake here. The first is how the new education law allocates federal dollars—known as Title I funding—to low-income school districts, which disproportionately serve black and Latino students.

Under the current version of ESEA, known as No Child Left Behind, Title I funding goes to districts with the highest percentages of low-income kids. The idea is that poor kids who attend schools full of mostly middle- and upper-middle-class kids are in a much better position—and therefore less in need of federal help—than poor kids who attend schools with lots of other poor kids. That analysis, a senior Department of Education official told TIME, is based on “decades of research” into how low-income students perform at different schools.

The House Republican proposal, which mirrors language in a recent draft of the Senate version of the bill, would fundamentally change that formula. Instead of funneling federal dollars to the schools with the highest percentages of low-income students, Title I funding would be allocated on a per-student basis. Kline has said that rejiggering that formula allows every low-income child who attends a public school to receive his or her “fair share” of federal assistance.

The Administration argues that would be a disaster. Allocating Title I funding on a per-student basis would lead to huge funding cuts in 100 of the largest school districts in the country, according to a White House report. Philadelphia City School District, which is 55% black, could lose $412 million, according to the DOE. Shelby County schools in Tennessee, which are 81% black, could lose $114 million.

Kline dismissed the White House’s claims, saying that they were “budget gimmicks” and “scare tactics” that entered “the realm of make-believe.”

The second issue at stake is the overall federal education budget. As it is, federal education spending is still at sequestration levels, roughly $800 million below where it was before. The House bill proposes to more or less leave that spending level in place, increasing it by only a smidgen—from $14 to 14.8 billion total—until 2021. It does not cut spending, staffers say, it simply retains a budget slightly higher than the current status quo.

A senior Department of Education official told TIME that while it’s technically true that the House bill does not cut spending, the point is that “it will feel like a cut,” especially in low-income school districts that, under the House bill, might see less Title I funding too. “The House bill cements sequestration level budget caps for an additional six years,” he said, and does not increase, even to keep up with inflation or rising enrollment. “The result is that by 2021, schools will have less money than they had before 2012.”

This week’s battle of words is mostly a dress rehearsal for a much larger fight over the final version of ESEA. Senate Education Committee Chairman Lamar Alexander expects to bring a Senate version the floor next month, with a vote on a final bill this summer.

The House bill, which is up for a vote on Friday, won’t have an easy path to victory. In addition to scathing criticism from the Obama administration, it is also up against a growing coalition of opponents on the right. This week, conservative mainstays like the Heritage Action and the Club For Growth have been pushing Republican lawmakers to vote against the bill on the grounds that it allows too much federal control over education.

In an effort to quell this conservative mutiny, Republicans adopted an amendment to the bill Thursday night that would allow school districts and states to come up with their own assessment systems—a move that further alienates the Obama Administration.

President Obama announced this week that if the final rewrite of the federal education bill ends up looking like the House version, he will veto it.

Muñoz, who spoke to TIME over the phone on Tuesday, said that the White House will fight hard for a bill that reflects “the president’s idea of what education should be.”

“It’s our job, the federal government, Congress’ job, to make sure every student is successful,” she said, adding that the House Republicans’ bill does not do that. “It’s just manifestly true that when you reduce resource to a place like Detroit and increase resources to a place like Grosse Pointe, you’re undercutting our primary goal of ensuring that every child is successful,” she said.

TIME Congress

Real Time: Ted Cruz Rallies the Right at CPAC

Sen. Ted Cruz (R-Texas) fired up the conservative base during his speech Thursday, the first day of CPAC 2015.

Watch #RealTime to see what you missed.

TIME Congress

Congress Scrambles As Time Runs Out on Homeland Security Funding

John Boehner Holds Weekly Press Briefing At Capitol
Chip Somodevilla—Getty Images Speaker of the House John Boehner holds his weekly news conference at the U.S. Capitol on Feb. 5, 2015 in Washington, DC.

At 12:01 a.m. on Saturday morning, the Department of Homeland Security will begin sending 30,000 of its employees home on furlough while the other 200,000 work without pay until and unless Congress passes a bill.

Despite dwindling time, it’s unclear what the House GOP leadership will do once it receives the Senate bill, which could pass as soon as Thursday. When a reporter asked House Speaker John Boehner what would happen, he simply blew kisses to the crowd.

“We have two different institutions that don’t have the same body temperature every day and so we tend to try and work to narrow the differences,” he said of himself and Senate Majority Leader Mitch McConnell. “But sometimes there are differences. The House by nature and by design is a hell of a lot more rambunctious place than the Senate. Much more.”

The prospect of a partial government shutdown is not all that surprising. This particular bomb has had a long fuse.

On Dec. 16, President Obama signed a bill that funded all aspects of government through September, except the agency tasked to carry out his most recent executive actions granting temporary work permits to up to five million immigrants who came to the country illegally. Homeland Security was funded through Feb. 27 to appease Republicans, who believed their new Senate majority would give them greater leverage to protest in 2015.

 

But the agreement gave House conservatives more time and the confidence to sway Boehner and his lieutenants to pass their dream bill in mid-January, which would strip funding for other executive actions, including one that would defund Obama’s more popular 2012 program granting deportation relief to hundreds of thousands of young adults who came to the country illegally as children.

It was clear at least a month ago that the House bill was unacceptable in the face of a Senate Democratic filibuster. But without any acceptable compromise, Senate Majority Leader Mitch McConnell announced two days ago that he would capitulate to the Democrats’ position, allowing a vote on a so-called “clean” bill that doesn’t include any immigration riders. He also will allow a vote on a separate bill so Republicans and potentially even a few Democrats can protest the recent and “most egregious” example of “executive overreach.”

House conservatives, some of whom wanted McConnell to change the filibuster rules to push through their bill, are furious.

“Harry is over there dictating terms to the Senate still,” says South Carolina Republican Rep. Mick Mulvaney, who hates the idea of a short-term compromise that would punt the deadline an extra few months.

“How do I go home and tell people that elections have consequences and that all the work they did to help the Republicans take the Senate has paid off if all we end up with is a three-month clean [bill],” he says. “That’s the same outcome we would have had if Harry was in charge.”

Democratic leaders twisted the knife Thursday, noting that Republicans could let the courts take up their fight, now that a Texas federal judge has ordered Obama to halt his most recent executive actions. Boehner, who believes that Obama’s executive actions are “unconstitutional,” dismissed that idea Thursday, calling for the Senate to act on the bill the House passed six weeks ago. “I think there’s a role for Congress to play,” he added.

House Democratic Leader Nancy Pelosi shot back Thursday in a separate press conference that “the gamesmanship should end.”

“Shutting down the government is their motive,” she said of House Republicans. “The Texas case … gave them a face-saving way to just end this.”

“If they send over a bill with all the riders in it, they’ve shut down the government,” added Senate Minority Leader Harry Reid. “We’re not going to play games.”

TIME Congress

Lawmakers Feel No Rush on War Powers Debate

Andrew Harrer—Bloomberg/Getty Images Senator Bob Corker questions Janet Yellen, chair of the U.S. Federal Reserve, during a Senate Banking Committee hearing in Washington on Feb. 24, 2015

After over six months and over 2,300 airstrikes against Islamic militants in Syria and Iraq, Congress doesn’t feel that much pressure to authorize the President to do what he already is doing.

Though lawmakers are faced with a debate over whether to formally authorize President Obama to take action against the extremist group known as the Islamic State of Iraq and Syria, the fact that he’s essentially claimed that authority under old post-9/11 authorization has kept the issue on the back burner.

“This is unusual because typically you authorize before actions are taken,” says Senate Foreign Relations Committee Chairman Bob Corker, who will helm a hearing on ISIS Wednesday. “In this case, people have been watching for six months and have a lot of questions as to whether they really are committed to dealing with ISIS. So that makes the dynamic here different than probably any authorization in modern history.”

“It’s not like anybody necessarily is going to feel a sense of urgency to act because they know it’s not going to alter the [current or immediate] operations in any way,” he told TIME.

The congressional war powers debate is one many members wished to avoid. Democrats, many of whom were elected on an anti-Iraq war platform, are especially wary of approving any resolution that would give the President the go-ahead to send troops into another Middle East quagmire. And if Republicans vote to approve what’s known as an authorization for use of military force—or an AUMF—they could open themselves up to criticism if the White House strategy fails.

But now, a few weeks after the White House sent over its war powers request, Congress will begin the politically divisive and solemn responsibility of debating the use of military action against a brutal enemy that split off from al-Qaeda a year ago. The first step will be to figure out what the role of U.S. troops should be.

Corker, who says he grabs breakfast with former Secretary of State Henry Kissinger every two or three months and recently held a long phone call with another former Secretary of State to discuss the ISIS threat, is just as confused as a back-bench Congressmen with five words in the White House’s war powers request: “enduring offensive ground combat operations.” The White House’s proposed ban on such activities has led to head scratching across the aisle and will be the focus of intense hearings over the coming weeks.

“That’s part of what people are hoping to understand,” says Corker, who adds that the 700,000 U.S. troops involved in the Gulf War could not classify as an “enduring” operation. “Obviously they haven’t limited enduring defensive [operations and] they haven’t limited Special Ops … But what does that mean?”

“I think ‘enduring’ is defined however the White House intends it to be,” says Senate Intelligence Committee Chairman Richard Burr. “I don’t know whether that’s a week, three weeks, a month … I’d rather go into this with the President asking for more than he needs and not use it as much than not asking for enough and not following through with the mission.”

Some Republicans would like to see the Administration interpret those five words to allow the President to send in ground troops against ISIS. No Republican on the Senate Foreign Relations Committee voted for a Democrat-led AUMF late last year that would have limited ground operations to intelligence collection, operational planning and the protection of U.S. troops from “imminent danger.” Over the past several months, Senate Republicans have met with top Administration officials, including White House counsel Neil Eggleston, and lobbied for expanded authority on the ground.

“It wasn’t just a message to us, it was input from our side too,” says Arizona Sen. Jeff Flake of the Administration meetings, where he says Republicans pushed back on any “strict prohibition” of ground troops.

“What the president put forward reflects a lot of what I think Republicans have wanted,” he adds. “Obviously we didn’t like the product that the Democrats pushed through the committee in December; we thought that that was too restrictive. This is better but we’ll see what works in the process.”

Burr, for example, thinks that the draft should be even broader to explicitly allow the President to send in troops. “I don’t think he does [have that authority] the way it’s written,” he says.

Much of the opposition to the AUMF will come from the President’s party on this issue. While some Democrats are trying to change the draft’s wording to include greater geographic or time constraints, many more will pressure Obama to ban in the AUMF what he said he would in an accompanying letter: “long-term, large-scale ground combat operations.”

“I think it’s quite open-ended,” says California Democratic Sen. Barbara Boxer of the AUMF. “When they say no enduring offensive operations, that means there will be offensive operations. And when you ask, ‘What is the definition of enduring?’ No answer comes back. So that’s a big problem for me—huge.”

Asked if she supports the AUMF as written, Boxer added: “No, no, no, no, no.”

There are other concerns from liberal Democrats who believe that the Administration should be authorized to attack ISIS only in Syria and Iraq. But most Democrats on the Senate Foreign Relations Committee have dismissed that idea and the White House’s draft doesn’t include such restrictions.

“I don’t think you do a geographic limitation,” says Boxer. “How can you? These guys sprout all over the world. You’ve got to take the fight to them. Not say we’re only going to go after them in these two places. Then they can go to other places and they know they’re free—that doesn’t make sense.”

Other progressives have expressed concern that the White House draft only repeals a 2002 Iraq AUMF and not another written in the aftermath of 9/11, which the White House has been using to go after ISIS. Maryland Rep. Chris Van Hollen, a member of the House Democratic leadership, has called the 2001 AUMF a “blank check” for indefinite war while hawks like Florida Republican Sen. Marco Rubio, who is exploring a White House bid, has called it the “the cornerstone of the war on terror.”

Most Democrats, however, are pleased that the AUMF proposes a rare self-imposed foreign policy constraint: a three-year “sunset” in which the next president would have to go back to Congress for reauthorization.

“If it’s open ended like that foolish thing the Senate voted for on Iraq—I was one of the 22 who voted against it—I’d vote no,” says Vermont Democratic Sen. Patrick Leahy. “Let’s see what it says though.”

Complicating the political calculus are libertarian-minded Republicans like Kentucky Sen. Rand Paul, who has written his own AUMF that is more restrictive than the White House’s war powers request, including how the roles of troops are defined. With Rubio and Paul, another Senator considering a White House run, on the same panel at the center of the debate—and a wide gulf between many Democrats and President Obama—the AUMF debate could become exactly what Corker fears most.

“What I hope doesn’t happen: that this in some way dissolves into some partisan exercise,” he says.

TIME White House

Obama Vetoes Keystone Pipeline, Only 3rd in Presidency

Keystone Pipeline
Andrew Cullen—Reuters A depot used to store pipes for Transcanada Corp's planned Keystone XL oil pipeline is seen in Gascoyne, N.D. on Nov. 14, 2014.

President Obama issued his first veto since 2010, striking down a law that would authorize the Keystone XL pipeline, a major symbolic battle between environmental activists and the oil industry.

“Through this bill, the United States Congress attempts to circumvent longstanding and proven processes for determining whether or not building and operating a cross-border pipeline serves the national interest,” Obama said in a statement.

The pipeline would help link up to 830,000 barrels a day from Alberta, Canada, to Gulf Coast oil refineries. Over the past six years, the project has become one of the highest-profile environmental debates in the country and could pose problems for some Democratic candidates in the 2016 presidential cycle.

But with low oil prices, the 1,179-mile pipeline will likely have less of an effect on both the environment and economy by lowering the chance that it will be completely utilized. The State Department reported last year that the pipeline would indirectly and directly support around 42,000 jobs over two years, but would only employ around 50 people once the pipeline was functional.

The new Republican-led Congress decried the veto before the ink was dry. In a USA Today op-ed, House Speaker John Boehner and Senate Majority Leader Mitch McConnell wrote that the Administration had blocked a job-creating project to heed the voices of special interests.

“The allure of appeasing environmental extremists may be too powerful for the president to ignore,” they wrote. “But the president is sadly mistaken if he thinks vetoing this bill will end this fight. Far from it. We are just getting started.”

“This shouldn’t be a difficult decision,” they added. “It shouldn’t be about politics, that’s for sure.”

Of course, the Keystone debate has drawn lobbyists on both sides of the aisle and a reason why Senate Republicans brought the bill up first was because it would pass and draw a favorable political contrast. Polls show that around 60% of Americans agree with the GOP’s position.

The Keystone veto was only the third in the Obama presidency.

MONEY

What Today’s Fed Testimony Means for Your Money

Federal Reserve Board Chair Janet Yellen prepares to testify on Capitol Hill in Washington, Tuesday, Feb. 24, 2015, before the Senate Banking Committee.
Susan Walsh—AP

Fed chair Janet Yellen is signalling a gradual interest rate hike this year. Here's how to be ready.

Federal Reserve Chair Janet Yellen’s testimony before Congress today bore her usual cautious language. But she signaled that an interest rate hike may still be on the table for later this year.

“If economic conditions continue to improve, as the Committee anticipates, the Committee will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis,” Yellen said.

Yellen worked hard to assure lawmakers that any rise in rates would be gradual, and wouldn’t begin before June. The reason Fed chiefs take such care when talking about interest rates is that rates—and expectations about where they are headed—affect all aspects of Americans’ financial lives, from student loans and mortgages to inflation and retirement portfolios. And right now the Fed has an especially delicate task, because it is trying decide how to transition from the near-zero short-term rates it has stuck to since the 2008 financial crisis.

Here’s what could happen to your money when the Fed finally decides it is time to for interest rates to “lift-off”:

1. Home loans could get pricier

Higher rates make borrowing more expensive for banks, and they in turn pass that expense on to their own borrowers. That generally tamps down inflation but also means it’s harder to get loans for education, cars, and homes.

As a result, it’s a good idea to refinance your mortgage now while rates are relatively cheap. Interest on 30-year fixed rate mortgage remains much lower than before the financial crisis, but rates have been inching up as of late and would grow further if the Fed becomes more hawkish.

2. The “safe” part of your retirement portfolio could take a hit (but that might hurt you less than you fear)

Investors traditionally hold bonds to hedge against stock market risk, but a rise in interest rates will cause the value of a bond portfolio to drop. For those who have time to keep their money invested, however, the higher yields you’ll earn in the future will help make up for a drop in bond prices.

Short-term bonds are less risky than longer-maturity ones, and generally less sensitive to interest rate changes. But how your bonds perform will depend on exactly which interest rates change. The Fed directly controls short-term interest rates, so when they start moving those up, you can expect short-term funds to lose some value.

What happens to longer-term bonds is more ambiguous. They can have significantly more loss potential than short-maturity bonds. But MONEY contributor Carla Fried points out that it’s possible that even as the Fed tries to raise short rates, bonds like the 10-year Treasury could remain in demand by global investors, who see the U.S. economy outperforming Europe and Japan and want to hold a safe-haven asset. That would keep long rates down—bond prices and rates move in opposite directions—and for a time deliver comparatively better returns to investors in longer-term bond funds.

So for many investors, an intermediate-term bond mutual fund is a good way to balance the general riskiness of long-term bonds against short-term bonds’ specific vulnerability to a Fed rate hike this year.

3. The economy could slow down

Again, if the U.S. keeps growing, rising interest rates might be appropriate, and helpful in holding inflation and financial speculation in check. But it’s important the Fed gets its timing right, or a rate hike could stall the recovery—or even put it in reverse.

That’s what happened in Sweden, where the nation’s central bank trashed what was a promising recovery by pulling the trigger too soon. Like the U.S. Federal Reserve, Sweden’s Riksbank lowered rates during the recession in order to spur economic growth. Once that growth arrived in 2011, bankers decided to begin raising rates in order to thwart a real estate bubble. Soon after, hiring began to fall, deflation hit, and Sweden’s magic recovery was over. The country has yet to return to its 2011 level of growth.

In deciding when to get rates back to normal, that’s the scenario Yellen is trying to avoid.

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