Avoiding 'Regressive Mistake,' Fed Holds Off on Rate Hike — For Now
Update 3 PM EDT: In a decision that aligns with progressive demands, the Federal Reserve ...
Update 3 PM EDT:
In a decision that aligns with progressive demands, the Federal Reserve announced on Thursday that it would keep interest rates near zero in light of "recent global economic and financial developments" and in order to "support continued progress toward maximum employment and price stability."
Presidential candidate Bernie Sanders issued the following statement today after the Federal Reserve announced that it would hold off on raising interest rates:
“It is good news that the Federal Reserve did not raise interest rates today. At a time when real unemployment is over 10 percent, we need to do everything possible to create millions of good-paying jobs and raise the wages of the American people. It is now time for the Fed to act with the same sense of urgency to rebuild the disappearing middle class as it did to bail out Wall Street banks seven years ago.”
The New York Times reports that the Fed’s decision, "widely expected by investors, showed that officials still lacked confidence in the strength of the domestic economy even as the central bank has entered its eighth year of overwhelming efforts to stimulate growth."
Progressives cheered the news, with Josh Bivens of the Economic Policy Institute saying, "Today’s decision by the Federal Reserve to keep short-term rates unchanged is welcome. [...] We hope they continue their pragmatic, data-based approach and allow unemployment to keep moving lower, and only tighten after there is a significant and durable increase in inflation."
He continued: "Tightening before the economy has reached genuine full-employment is not just a mistake, it’s a regressive mistake that would hurt the most vulnerable workers—low-wage earners and workers from communities of color—the most."
However, Reuters reports that "the central bank maintained its bias toward a rate hike sometime this year, while lowering its long-term outlook for the economy."
Which means that pro-worker organizations, which have largely opposed a rate increase that they say would slow the economy and stifle wage growth, will have to keep up the fight.
"We applaud Chair Yellen and the Federal Reserve for resisting the pressure being put on them to intentionally slow down the economy," said Ady Barkan, campaign director for the Fed Up coalition, which rallied outside the Federal Reserve on Thursday.
"Weak wage growth proves that the labor market is still very far from full employment," Barkan continued. "And with inflation still below the Fed’s already low target, there is simply no reason to raise interest rates anytime soon. Across America, working families know that the economy still has not recovered. We hope that the Fed continues to look at the data and refrain from any rate hikes until we reach genuine full employment for all, particularly for the Black and Latino communities who are being left behind in this so-called recovery."
Earlier...
Progressives are cautioning the U.S. Federal Reserve against slowing the economy by raising interest rates "prematurely"—a decision the Fed will announce Thursday.
The U.S. central bank will issue its highly anticipated short-term interest rate decision following a two-day policy meeting, with a 2 pm news conference led by Fed Chair Janet Yellen.
As CBS Moneywatch notes, "[t]he decision affects everything from the returns people get on their bank deposits to how much consumers and employers pay for credit cards, mortgages, small business loans, and student debt." That's because a higher rate makes it more expensive for individuals and businesses to borrow, with rising bank lending rates shrinking the nation's money supply and pushing up rates for mortgages, credit cards, and other loans.
Just before the announcement, the advocates, economists, and workers of the Fed Up coalition will be joined by Rep. John Conyers (D-Mich.) at a rally outside the Fed, calling on the central bank to keep interest rates low to allow for more jobs and higher wages.
"The point of raising rates is to rein in an overheating economy that is threatening to push inflation outside the Fed’s comfort zone," explained Josh Bivens of the Economic Policy Institute in the Wall Street Journal on Wednesday. "But inflation has been running below the Fed’s target for years—and its recent moves have been down, not up."
Furthermore, wrote economist Joseph Stiglitz at the Guardian earlier this month: "If the Fed focuses excessively on inflation, it worsens inequality, which in turn worsens overall economic performance. Wages falter during recessions; if the Fed then raises interest rates every time there is a sign of wage growth, workers’ share will be ratcheted down—never recovering what was lost in the downturn."
Progressive activists opposed to an interest rate hike overwhelmed the Fed's public comment system on Monday in a last-minute effort to sway the central bank. Raising the rate, they said, would be catastrophic for working families, particularly in communities of color that are still struggling. The Fed Up campaign, which includes groups like the Center for Popular Democracy, Economic Policy Institute, and CREDO Action, say the central bank "privileges the voices and needs of corporate elites rather than those of America's working families."
"A higher interest rate means that fewer jobs will be created, and that the wages of workers at the bottom will remain too low to live on," wrote Rod Adams, a member of Neighborhoods Organizing for Change in Minneapolis, in an op-ed published Wednesdayat Common Dreams. "That’s because when the Fed raises rates, they are deliberately trying to slow down the economy. They’re saying that there are too many jobs and wages are too high. They’re saying that the economy is exactly where it should be, that people like me are exactly where we should be."
However, at this point, "many observers believe the Fed will not raise rates this week," analyst Richard Eskow wrote on Wednesday.
"The Fed is really the central bank of the world. If the Fed raise rates a little bit, it will have an impact all over the world, particularly in emerging markets," billionaire private equity professional David Rubenstein told CNBC's "Squawk Box" on Thursday.
"I think the Fed is sensitive to that," Rubenstein said, "and I think therefore the Fed is likely to wait for another month or two to get additional data and probably telegraph a little bit better than it has now that it's about ready to do it at a particular time."
Meanwhile, global markets are fluctuating wildly in anticipation of Yellen's announcement and subsequent news conference.
But as Eskow noted, Thursday's real surprise "is that there’s any question at all what [the Fed] will do. That suggests that our economic debate is not yet grounded in economic reality, at least as most Americans experience it."
While the Guardian is providing live updates on the Fed's decision, others are making comment under hashtags that reflect the unbalanced economic recovery:
Source: CommonDreams
Data on immigrants won't be safe from Trump, unless the data doesn't exist
Data on immigrants won't be safe from Trump, unless the data doesn't exist
When New York City implemented its IDNYC municipal ID system, it was meant to give undocumented immigrants a way to...
When New York City implemented its IDNYC municipal ID system, it was meant to give undocumented immigrants a way to access crucial services that require government identification. But as Donald Trump’s inauguration looms, a new lawsuit will test the wisdom of keeping sensitive data for the program.
A NEW LAWSUIT WILL TEST THE WISDOM OF HOLDING THE DATA
Two Republican state assembly members have sued to stop the destruction of records on hundreds of thousands of cardholders, and a court has decided that the records must remain, pending a hearing later this month. Soon after, Trump will take office, as advocates worry whether he’ll target the information to identify undocumented immigrants.
There is no guarantee the lawsuit will succeed, or that Trump will be able to use the records — which contain information on many people besides immigrants — for deportation purposes. But what looked like a clever bureaucratic gambit is unexpectedly something very different, and to immigrants, possibly more dangerous.
When it designed the IDNYC program, New York retained information on cardholders, but with a caveat: at the end of this year, the city would have the power to change how it holds the data. In an act of partisan gamesmanship, the clause in the local law amounted to a kill switch — one that was put in place, as one Councilman almost presciently put it, “in case a Tea Party Republican comes into office.”
THE CLEVER GAMBIT SUDDENLY LOOKS VERY DIFFERENT
The suit filed this week rests on New York’s state transparency law, known as the Freedom of Information Law, or FOIL. According to the suit, since there are no provisions in the law that allow for the destruction of government records, the city would be overstepping its bounds by destroying the IDNYC data, especially based on who is in office.
The dispute isn’t without precedent. In New Haven, Connecticut, a similar legal battle unfolded over the city’s municipal ID program. There, an anti-immigration group also sued the city under the state’s freedom of information law, with plans to turn the information over to ICE. In that case, the city beat back the lawsuit, but that won’t ensure the same outcome in New York.
“The city is violating state law,” Nicole Malliotakis, one of the Assembly members involved in the suit, told The Verge. “They are not doing what’s in the best interest of the citizens that they are representing.”
In many ways, the database debate parallels other stories of unintended consequences unfolding as the government prepares to transition from Obama to Trump. How will Trump use the surveillance apparatus created by Obama? What does this mean for the undocumented immigrants brought to the US as children, who are staying through an Obama executive order?
THE DATABASE DEBATE PARALLELS STORIES UNFOLDING ACROSS GOVERNMENT
As the Center for Popular Democracy, which advocates for immigrants’ rights, pointed out in a report last year, there are two generally accepted ways to safeguard sensitive data: explicitly prevent its release in the legislation, or never provide the data in the first place. Cities have already proven that not retaining underlying personal information is viable — San Francisco operates a program without using underlying application documents, for one example.
Win or lose, if there’s any lesson for privacy advocates and local governments to carry from the unexpected battle over its data, it may be that even planned self-destruction is no impenetrable barrier against misuse. The best way to keep sensitive data private may still be to never hold the data at all.
By Colin Lecher
Source
Activists: US Justice Department Response to Baltimore Police Racism Falls Short
Activists: US Justice Department Response to Baltimore Police Racism Falls Short
The response by the US Department of Justice to exposing Baltimore Police Department (BPD) violations of citizens’...
The response by the US Department of Justice to exposing Baltimore Police Department (BPD) violations of citizens’ constitutional rights falls short of addressing the systemic problem of racism in US policing, activists said.
Read the full article here.
Nina Tassler, Denise Di Novi Launch New Studio PatMa Productions
The studio has already set up partnerships with a number of organizations promoting diversity, inclusion, and human...
The studio has already set up partnerships with a number of organizations promoting diversity, inclusion, and human rights, among them the Geena Davis Institute on Gender in Media, the Center for Popular Democracy, and Planned Parenthood.
Read the full article here.
Amazon’s ripple effects: Six things that might happen if Pittsburgh gets HQ2
Amazon’s ripple effects: Six things that might happen if Pittsburgh gets HQ2
Sarah Johnson, the Local Progress Director for national advocacy group Center for Popular Democracy, said she doesn’t...
Sarah Johnson, the Local Progress Director for national advocacy group Center for Popular Democracy, said she doesn’t expect Amazon to change how it operates.
Read the full article here.
Commentary: Emeryville action could change working world
Like many people, when the alarm goes off, I hit snooze a few times and wish for more sleep. But what gets me out of...
Like many people, when the alarm goes off, I hit snooze a few times and wish for more sleep. But what gets me out of bed is that precious hour I have with my young son. We eat breakfast together, we race to see who can get dressed first, and then I walk him to school.
I’m lucky– as a salaried employee at an organization that values flexibility and family, I can arrange my schedule around my son if need be. But for people working low-wage hourly jobs, that kind of control over their scheduling is virtually unheard of.
Today, corporations that pay low wages rarely provide their employees with full-time work or reliable hours. Take Manuel, who works at one of Emeryville’s many retail chains. He had his hours cut from 20 a week down to four, and then nothing for two weeks — throwing his family into massive debt.
Emeryville may be the first city in the East Bay to change that, where the City Council is voting on a Fair Workweek policy on Oct. 18. This is part of a simple set of standards needed to ensure that working people can afford to stay in the East Bay region.
What is a Fair Workweek? It means employers must provide reliable, predictable hours so their employees can budget. Workers get schedules two weeks in advance so they can plan childcare, second jobs, family time, and even rest. And when more hours are available, current employees get priority so they can get closer to full-time work.
In Emeryville, the policy would only apply to large companies with more than 12 locations worldwide. These simple improvements would cost employers almost nothing if they follow the law and have a huge impact on the lives of thousands of Emeryville workers. Hundreds of thousands more working people would benefit if other East Bay cities follow suit.
Emeryville’s own Economic Development Advisory Committee – the city’s business advisory group – said even they agree that increasing stability of schedules, reducing employee turnover, and decreasing underemployment in Emeryville is important. And that’s what a Fair Workweek policy would do.
Many companies are already doing the right thing. This policy would reinforce that good behavior and target companies that are bad actors. However, global, multi-billion dollar corporations and their lobbyists are coming out against this low-cost policy, claiming it will kill the economic climate. But I wonder: how exactly would reliable schedules hurt companies like IKEA, The Gap or Home Depot?
Before the recession, big business painted doomsday scenarios saying that raising wages would force them to close shop. During the Great Recession, working people bore the brunt of tough times in the form of reduced pay, slashed benefits, and a cutback to part-time hours. And now that big business has not only recovered but is booming, companies are back to the mantra that improving standards for their workers will hurt them.
Common sense tells us that business — especially big business — is doing fine. Look at quarterly earning reports of Emeryville’s global retail chains. Sales tax revenue in Emeryville was up 2.4 percent in 2015 compared to the previous year according to the city’s Finance Department. Retail vacancies in the region are at a post-recession low of 6 percent. And of course, there are growing lines of cars and customers coming in and out of Emeryville’s shopping centers.
While business is thriving, working people have waited long enough for something so very basic: a single job that pays enough with enough hours to allow folks to meet their basic needs.
Raising the minimum wage helped struggling workers. Now we must finish the job by providing reliable, predictable hours. This economic boom shouldn’t just be a boon for shareholders. It should also lift the working people who are the backbone of our economy.
By Jennifer Lin
Source
A Campaign for Full Employment, and the Federal Reserve
Fed Up Field Director Shawn Sebastian with the Center for Popular Democracy joins us to talk about their campaign...
Fed Up Field Director Shawn Sebastian with the Center for Popular Democracy joins us to talk about their campaign pushing the Federal Reserve to adopt pro-worker policies, keeping interest rates low, and how they re getting public support to build a better economy.
CHARLES SHOWALTER AND SHAWN SEBASTIAN
Source
NYTimes Letter to the Editor: Deportations for Minor Offenses
New York Times - April 13, 2014 To the Editor: Re “...
New York Times - April 13, 2014
To the Editor:
Re “More Deportations Follow Minor Crimes, Data Shows” (front page, April 7):
It’s a mistake to focus the debate about immigration enforcement on the question of which immigrants are sufficiently “criminal” to deserve deportation. When the Obama administration talks about deporting people with convictions, they are talking about people who have already served their sentences for those convictions.
If you are a citizen who commits an offense, you pay the penalty issued by the criminal legal system, and then you are free to try to rebuild your life. If you are a noncitizen who commits that same offense and pays that same penalty, you can be subjected to the double punishment of permanent exile from your home and family.
This two-tiered system of justice is morally abhorrent regardless of how serious the underlying offense may have been. It’s an unfairness compounded by the well-documented unfairness of the criminal legal system itself, which disproportionately targets poor people and minorities.
Let’s not rely on our corrupt criminal justice system to justify the operations of our corrupt immigration system.
EMILY TUCKER Brooklyn, April 7, 2014
The writer is staff attorney for immigrant rights and racial justice at the Center for Popular Democracy.
Source
For Safer City Schools, More Counselors, Fewer Cops
Our city is facing a tough question: how do we make schools safer? New York City schools are on the precipice of...
Our city is facing a tough question: how do we make schools safer?
New York City schools are on the precipice of returning to ineffective policies and practices like more policing and metal detectors that have harmed the students who are most in need. The city could and should instead take this opportunity to move further towards school culture and climate priorities that are designed to meet the social, emotional, and mental health needs of young people.
Read the full article here.
Is the Fed Due for a Revamp?
US News & World Report - November 13, 2014, by Katherine Peralta - Building on momentum from earlier this year, a...
US News & World Report - November 13, 2014, by Katherine Peralta - Building on momentum from earlier this year, a group of policy advocates, economists and community organizations is calling for more transparency at the Federal Reserve, imploring that the Fed consider the plight of many who haven’t enjoyed the kind of recovery that recent positive economic data suggest.
The push for more access to the Fed is gaining momentum among the public and in Congress, though revamping a decades-old central banking system that’s helped stabilize the economy through multiple crises is not without controversy.
As two of the Fed’s most vocal critics of its current monetary policy near their retirement at the beginning of next year, a coalition called “Fed Up” is asking that the public have more say in the process of appointing their replacements and future Fed leaders. Members sent letters outlining their concerns to the Fed and will meet Friday with Fed Chair Janet Yellen in the District of Columbia.
As it progresses toward its dual objective of price stability and full employment, the Fed has said it will eventually raise short-term interest rates, which have been kept near zero since 2008 to stimulate growth. The coalition says since the economy isn’t yet strong enough to stand on its own, the Fed should maintain its easy-money policies, which make lending cheap for borrowers and businesses but don’t do much to boost those on fixed incomes like retirees.
“We're going to talk about our request that the Fed create more transparency in a democratic process for appointments and that it adopt more pro-jobs, pro-wages policies, more expansionary policies, so as to get us to full employment,” says Ady Barkan, staff attorney at the left-leaning Center for Popular Democracy, which is part of the coalition. “They need to target higher wage growth instead of stepping on the brakes the moment that wages start to rise, which is what the hawks want to do."
The term "hawk" refers to those who see the labor market as strong enough to merit a faster interest rate hike to keep inflation in check and pertains to outgoing regional Fed bank presidents Richard Fisher of Dallas and Charles Plosser of Philadelphia. Doves, like Yellen, believe that there is still enough slack in the labor market to warrant maintaining as low interest rates as possible.
Each of the 12 regional Federal Reserve banks selects its own president through a process that’s criticized as rather opaque. Those presidents rotate on five of the 12 seats on the Federal Open Market Committee, the group at the Fed that sets interest rates. The remaining seven members of the committee, including Yellen, are appointed by the president and confirmed by the Senate.
The 12 regional presidents report back to the rest of the Fed about economic trends from their respective districts on a regular basis – a compilation of data amalgamated in a “Beige Book” published eight times a year and used to assess the economy’s health.
A spokeswoman for the Philadelphia Fed said it has retained the services of executive search firm Korn Ferry to replace Plosser and “will consider a diverse group of candidates from inside and outside the Federal Reserve system.” A Dallas Fed representative said the bank’s board of directors is meeting today to discuss the presidential search process to replace Fisher.
Stronger economic data this year have prompted many to wonder whether the Fed should start raising interest rates sooner rather than later. The U.S. economy’s reached the lowest jobless rate in six years and has enjoyed the strongest stretch of job gains since 1999.
But the coalition argues that despite what the national numbers may say about the recovery, they don’t necessarily speak to the experience of a lot of people who still feel the recession in their communities.
Even though the Dallas metropolitan area had one of the strongest monthly job gains in the country in September and has a jobless rate of 5 percent, well below the national rate of 5.8 percent, Connie Paredes, a volunteer with the Texas Organizing Project who will meet with Yellen Friday, says the economy in Dallas still feels “not that great.”
“There are a lot of statistics out there about the unemployment rate and how things have gotten better. It doesn't really reflect the fact that there is a lot of underemployment,” Paredes says. “There are a lot of college graduates who aren't able to find jobs. There are a lot of professionals who have to take on extra jobs in order to make ends meet.”
But attempting to change the appointment system might not be the solution to get more “everyday” voices before the Fed. Guy Lebas, chief fixed income strategist at Janney Capital Markets, says it’s a “solution in search of a problem.”
“There’s very little wrong from an economic perspective with how the Fed selection process works now, and a majority of the members who have input into monetary policy are democratically selected,” Lebas says.
Yellen herself has said it’s important to maintain a diverse group of viewpoints within the Fed.
“I believe decisions by the Federal Reserve Board and the Federal Open Market Committee are better because of the range of views and perspectives brought to the table by my fellow policymakers, and I have encouraged this approach to decision-making at all levels and throughout the Fed System,” she said in an Oct. 30 speech in Washington.
There’s also a push in Congress for changes at the Fed. The new GOP leadership could introduce a new version of former congressman and presidential candidate Ron Paul’s Audit the Fed bill, which, as its name implies, calls for a full audit of the Fed – including internal discussions on monetary policy – by the Government Accountability Office. Critics worry if passed, the bill would allow Congress to interfere with the Fed’s decision-making.
And a level of independence from the public may not be such a bad thing, says Gary Burtless, a senior fellow at the Brookings Institution, citing the Fed’s handling of the economic crisis – which included bailing out large financial institutions and beginning unprecedented and controversial economic stimulus programs.
“I realize many things the Fed did, although most economists think were entirely justified, are still immensely unpopular among the public, but so what?” Burtless says. “We do have this layer of insulation that I think we should protect. The events of 2007 through 2009 confirm the absolute importance of having that level of insulation so that members of the Federal Reserve Board don’t worry that their deliberations, their decisions about monetary policy, are going to be immediately undone by populist and perhaps poorly understood objections from the general public.”
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