Campaign News

Activists in Jackson Hole Pressure Fed on Inflation, Endorse Yellen

The Fed Up campaign is holding events to show support for raising the Fed's 2% inflation target as well as allowing Janet Yellen to serve a second term as the central bank's chairwoman.

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Huffington Post - February 26, 2013, by Camille Rivera - In March of 1968 -- just three weeks before he was assassinated -- Dr. Martin Luther King Jr. declared in a speech that one of the great lessons of the civil rights struggle was that it was not just about integration -- but also about economic justice.

"We know now that it isn't enough to integrate lunch counters," Dr. King said. "What does it profit a man to be able to eat at an integrated lunch counter if he doesn't have enough money to buy a hamburger? ... What does it profit one to be able to attend an integrated school, when he doesn't earn enough money to buy his children school clothes?"

Unfortunately, 45 years later, we can still ask those questions.

New York is one of the richest cities in America, but it also has one of the widest income inequality gap in the nation: A report last year found that the top one percent of income earners made 32 percent of the income.

We have far too many hard-working New Yorkers, many of them people of color, working at or below minimum wage, often without overtime and benefits. They work in car washes, fast food restaurants, as airport security guards and in food service and small supermarkets.

That's Why UnitedNY, Make the Road NY, New York Communities for Change and labor organizations like the Retail, Wholesale and Department Store Union and 32BJ SEIU supported the workers when they formed an unprecedented coalition across all industries last summer, and held a big rally and march in New York City on July 24.

Since then, there have been actions, a boycott and a one-day fast food walk out -- all of which generated a great deal of public support. Five car washes have voted to join RWDSU; some supermarkets have settled unfair labor practices suits and agreed to pay a combined $750,000 in lost wages and back pay.

That's also why UnitedNY and the Center for Popular Democracy released a report on the ongoing plight of low-wage workers in New York City at a "Workers Rising" symposium on Feb. 13. The report spelled out the problem -- and organizing efforts -- and offered a list of recommendations to improve wages and working conditions for those at the bottom of the socio-economic ladder.

The recommendations range from supporting legislation to allow paid sick days for workers, to establishing a Mayor's Office of Labor Standards to ensure that employment laws are enforced, to urging New York State to allow the City to set a minimum wage higher than the State minimum, due to the higher cost of living in the five boroughs. These proposals are the result of conversations with workers who have struggled for far too long to make ends meet. They are the result of hearing from families who have lost loved ones who could not afford to take time off from work to get the medical care they needed before it was too late.

Hundreds of workers, advocates and community members turned out for the symposium, which featured lively panel discussions about strategies to help lift low-wage workers into the middle class. The energy inside those rooms was electric; the air was thick with hope and dreams.

A gaggle of elected officials was on hand for the Workers Rising event, including two declared mayoral candidates -- Public Advocate Bill de Blasio and former city comptroller Bill Thompson - as well as City Council members and others.

The report came just one day after President Obama said in his State of The Union speech that America should not be a place where working people who make minimum wage are still in poverty.

"That's wrong," he told a joint session of Congress. "In the wealthiest nation on earth, no one who works full-time should have to live in poverty."

Obama called for raising the federal minimum wage to $9 an hour, with indexing tied to cost of living increase. That's certainly a lot better than $7.25, which is the minimum wage at the federal level and in the State of New York, but nowhere near enough in New York City.

The UnitedNY/CPD report said raising the minimum wage to $10 an hour would allow full-time workers to make just $20,000 a year. The report also noted that more than 110,000 full-time workers live in poverty.

Any way you look at it, an increase in the minimum wage is overdue, and needs to be enacted immediately. If it can't be approved on the federal or state levels, those of us here in New York City must find a way to increase it locally. It is clear that $7.25 an hour is not enough to make ends meet, and the time for change is now.

All in all, the symposium helped to foster real conversation between elected officials, policy experts, and the low-wage workers themselves about the economic issues that are plaguing New York's workforce. Symposium attendees left the conference energized, engaged and filled with hope. They would have made Dr. King proud.

Source: Huffington Post

Global Shock

It's true that many of the causes of the recent stock market turmoil are global, rather than domestic. But those distinctions are becoming less important in a world of unfettered capital flow. Regional markets, like regional ecosystems, are interconnected.

Europe is struggling because of a misguided attachment to growth-killing austerity policies. Like Republicans in this country, Europe's leaders are focused on unwise government cost-cutting measures that hurt the overall economy.

China's superheated markets have experienced a sharp downturn, and its devaluing of the yuan is likely to affect American monetary policy. Many of the so-called "emerging markets" are in grave trouble, their problems exacerbated by an anticipated interest rate hike from the U.S. Fed.

Plunging crude oil prices are a major factor in the events of the last few days. But questions remain about the underlying forces affecting those prices. Demand is somewhat weaker, and Saudi officials are refusing to cut production. But there is still some debate about whether these and other well-reported factors are enough to explain the fact that the price of a barrel of oil is roughly half what it was just over a year ago, in June 2014.

American Turmoil

Talk of recovery here in the U.S. has been significantly dampened by events of the last several days. The now-interrupted stock market boom had been Exhibit A in the case for recovery.

Exhibit B was the ongoing drop in the official unemployment rate. There, too, signs of underlying weakness can be found. The labor force participation rate remains very low for people in their peak working years, as economist Elise Gould notes, and has only come back about halfway from pre-2008 levels. Jared Bernstein notes that pressure to raise wages, which one would also expect in a recovering job market, also remains weak.

All this argues for a rational and coordinated policy, one in which the Federal Reserve and the U.S. government act together to restore a wounded economy. What would that look like?

It would not include raised interest rates -- something that nevertheless continues to be a topic of serious discussion. As Dean Baker points out, China's currency devaluation alone should have been enough to take that idea off the table. What's more, as Baker rightly notes, such a move would only make sense if the Fed "is worried that the U.S. economy was growing too quickly and creating too many jobs."  That's a notion most Americans would probably reject as absurd. Most are not seeing their paychecks grow or their job opportunities multiply.

Anxiety about inflation, while all but omnipresent in some circles, is not a rational fear. A slow rise in prices (0.2 percent in the 12 months ending in July, as opposed to the Fed's recommended 2 percent per year) tells us that inflation is not exactly looming on the horizon.

Now what?

"Everything is going to be dictated by government policy," the chief investment officerof a well-known investment firm said this week. In that case, isn't it time for a national conversation about that policy?

Another investment strategist told the Wall Street Journal that today's challenges come at a time when "global central banks have exhausted almost all their tools ... It's difficult to see how central banks come in to support markets."

If they've exhausted all their commonly-used tools, it may be time to develop new ones -- not to support "markets," but to promote jobs and growth for everyone.

First, do no harm. The Fed needs to hold off on any move to raise interest rates. But inaction is not enough. It was given a dual mandate by Congress: to stabilize prices and keep employment at reasonable levels.

Activist groups like the "Fed Up" coalition, led by the Center for Popular Democracy (and including the Campaign for America's Future), are working to move the Fed toward that second objective. They've been pushing to change its governing boards, which are heavily dominated by big banks and other major financial interests, and have called for policies that focus on improving the economic lives of most Americans.

Those policies could take a number of forms. One idea comes from Jeremy Corbyn, the populist politician who's on track to become the next leader of Great Britain's Labour Party. Corbyn's economic plan includes "quantitative easing for people instead of banks." Corbyn proposes to grow the financial sector in a targeted way, by giving the Bank of England (the UK's version of the Fed) a mandate to "invest in new large scale housing, energy, transport and digital projects."

A headline on the website of the Financial Times says (with apparent surprise) that "Corbyn's "People's QE" could actually be a decent idea."

Corbyn also proposes to "strip out some of the huge tax reliefs and subsidies on offer to the corporate sector." The added revenue would go to "direct public investment," including the creation of a 'National Investment Bank' to "invest in the new infrastructure we need and in the hi-tech and innovative industries of the future."

Qualitative Easing

Call it "qualitative," rather than "quantitative," easing. It would increase the money supply, but for money that is to be invested in the real-world economy -- the one that creates jobs, lifts wages, and creates broad economic growth.

Could something like Corbyn's plan ever happen here? There's no reason why not. The Federal Reserve wasn't created by bankers, nor is it there to serve bankers -- although a lot of people inside and outside the Fed act as if it were. (The choice of a former Goldman Sachs executive for its latest major appointment won't help change that.)

The Federal Reserve was created by the American people through an act of Congress. Its governors and its policies are there to protect and serve the public. The Fed should use its oversight capabilities to ensure that banks don't behave in a reckless manner or help private funds and other unsupervised institutions to behave recklessly.

We are still paying the price for allowing big-money interests to dominate both lawmaking on Capitol Hill and monetary policy at the Federal Reserve. That must change. Congress and the Fed, acting together, should ensure that our nation's policies benefit the many who are in need of help, not the few who already have more than they need.

Richard Eskow is a writer and editor with the Bernie 2016 campaign, the host of The Zero Hour radio program, and a Senior Fellow with the Campaign for America's Future. The opinions expressed here are his own.

Source: Huffington Post

Hillary Clinton's support from financial institutions has always been her Achilles heel but running counter to this criticism is her pledge to end systemic racism. The two are actually closely related and if she is to make good on her promises on racial justice, she will have to test those close connections to Wall Street by directly pushing for a reinstatement of Glass-Steagall and closing the carried interest tax loophole.

The Movement for Black Lives' policy platform calls for a reinstatement of Glass-Steagall, the 1933 law that separated commercial and investment banking. The law has lately become a core focus of economic progressives. 

Groups involved with the Movement for Black Lives see it as a key way to advance economic racial justice. Hillary Clinton has hesitated to publicly talk about the policy – in no small part because Bill Clinton was the one who repealed the law under his administration. The absence of an impermeable boundary between commercial and investing functions both instigated and then accelerated the 2008 financial crisis, forcing millions to lose their homes and jobs. 

Communities of color were hit hard and recovered more slowly. Mortgage lenders like Wells Fargo systemically targeted black and brown borrowers for subprime loans, putting many at risk of foreclosure. In the years after the recession, many of these lenders settled multi-billion-dollar discrimination lawsuits years after the damage had been done. 

Also, a 2015 American Civil Liberties Union study showed that black families continued to lose wealth years after the recession – even as white families began to climb out. The average black household lost 40 percent of its non-home equity wealth.

"Hillary Clinton has hesitated to publicly talk about Glass Steagall – in no small part because Bill Clinton was the one who repealed the law under his administration."

Home ownership is one of the most stable and reliable ways to acquire wealth in America, and the massive loss of homes among black and brown communities during the 2008 crisis will take decades to recover from. A new Glass-Steagall would help prevent banks from getting bigger and riskier, stopping them from coming back to black and brown neighborhoods and destroying even more wealth.

The carried interest tax loophole is another example. Eliminating this loophole, which lets private equity firms and hedge funds avoid taxes on part of their income, could raise $180 billion. It might sound like a drop in the bucket in the context of a national budget, but when you look closer, it is money that could make a huge difference.

It is also money that could have drastic implications for cities and states around the country that claim they don't have enough funding. The City of Chicago is facing a massive school funding crisis of more than a billion dollars. The hedge fund-cozy Mayor Rahm Emanuel and Governor Bruce Rauner routinely go to the school district for more concessions to make up the gap.

In the meantime, billionaire hedge-funders use the carried interest loophole to get out of paying taxes that translates into much needed revenue. The details of closing the loophole should be worked out by economists, but one thing is clear: if we keep a loophole that costs us billions of dollars while closing schools in black and brown neighborhoods, we are making a strong statement about the level of racial injustice we are willing to accept.

If Hillary Clinton wins the election, she will enter office at one of the most racially charged moments in American history. It is also a moment of some of the greatest income inequality in history – a reality even starker for black and brown communities. If we truly want to achieve racial justice, we should look at policies that prevent a repeat of the 2008 crisis. Closing the carried interest loophole and reinstating a modern Glass-Steagall are the tip of the iceberg. It is up to us to push Clinton for more.

Commentary by Maurice Weeks, who leads the housing & Wall Street accountability campaign at Center for Popular Democracy. Follow him on Twitter @mo87mo87.

By Maurice Weeks

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