Investors and politicians like Sen. Sherrod Brown (D-OH) perked up when Federal Reserve Chairman Jay Powell signaled a change in the Fed's repeated statement that inflation is transitory.

“I think it’s probably a good time to retire that word and try to explain more clearly what we mean,” Powell told the Senate Committee on Banking Housing and Urban Affairs.

Inflation running at an annual 6.2% rate is the highest it's been in more than 30 years and more than two times higher than the Fed's 2% inflation target.

"What he also said the rest of the paragraph was how important it is to fix the supply chain and the biggest contributing factors to inflation, it's surely not government spending," Brown, who chairs the Senate banking committee, told Yahoo Finance. "The contributing factor is it's what happened in the pandemic that nobody quite foresaw lumber prices, and chips and all of those contributing factors."

But Brown's colleague and ranking member on the committee, Sen. Pat Toomey (R-PA), said more government spending, as proposed in the $1.75 trillion Build Back Better Act, threaten to stoke the flames of inflation.

"It’s still pushing a multi-trillion dollar reckless tax-and-spend plan that will contribute to more inflation and damage our economy. Its plan is a massive expansion of the welfare state and will be partially paid for by large tax increases that hurt American families, and make the U.S. a less competitive place to do business," Toomey said.

Brown defends the proposed new spending, pointing to bipartisan bills like the $1.2 trillion infrastructure plan and the earlier $1.9 trillion American Rescue Plan Act, which helped reduce poverty and softened the economic blow from the COVID-19 pandemic.

'CEOs are making just incredibly high salaries'

Fed Chair Powell said the risk of persistent higher inflation has risen but still expects inflation to fall next year. Brown said employers are using inflation as an excuse to not raise employee wages.

"CEOs are making just incredibly high salaries," Brown said. "It's 300 times what the average worker is making, average CEO salaries, they keep making more and more and more and more, and then they say I can't increase wages, we can't afford it and then they say we've got increased prices. Well, no and no. And that's why we fight back."

Toomey called inflation, "a tax that is eroding Americans’ paychecks every day. Even though wages are growing, inflation is growing faster and causing workers to fall further and further behind."