For Many Americans, the Great Recession Never Ended. Is the Fed About to Make It Worse?
When the Federal Reserve considers raising interest rates on July 28—and then again every six weeks after—MyAsia Reid,...
When the Federal Reserve considers raising interest rates on July 28—and then again every six weeks after—MyAsia Reid, of Philadelphia, will be paying close attention. Despite holding a bachelor’s degree in computer science, completing a series of related internships, and presenting original research across the country, Reid could not find a job in her field and, instead, pieces together a nine-hour-per-week tutoring job and a 20-hour-per-week cosmetology gig. The 25-year-old knows that an interest-rate hike will hurt her chances of finding the kinds of jobs for which she has trained, and earning the wage increase she so desperately needs.
A Fed decision to raise interest rates, expected sometime this year, amounts to a vote of confidence in the economy—a declaration that we have achieved the robust recovery we need. “We are close to where we want to be, and we now think that the economy cannot only tolerate but needs higher interest rates,” the chairwoman of the Federal Reserve, Janet Yellen, told Congress during a July 15 policy briefing.
But for many millions of Americans, the recovery has yet to arrive, and for them, a rate hike will be disastrous. It will put the brakes on an economy still trudging toward stability; stall progress on unemployment, especially for African-Americans; and slow wage growth even more for the vast majority of American workers.
The general argument for raising interest rates is that it will prevent wage costs from pushing up inflation. However, there is no data suggesting price instability; nor is there any indication that wages have risen enough to spur such inflation. For the overwhelming majority of American workers, wages have stagnated or even dropped over the past 35 years, even as CEOs have seen their compensation grow 937 percent. During the same period, wage gaps between white workers and workers of color have increased, and black unemployment is at the level of white unemployment at the height of the Great Recession. Meanwhile, the labor-force participation rate is less than 63 percent, the lowest in nearly four decades, suggesting that many Americans have simply given up looking for work.
Yellen has herself often urged the Fed to look at the broadest possible employment picture. Yet, during her recent congressional testimony, shedownplayed the Fed’s ability to address racial disparities, saying that the central bank does not “have the tools to be able to address the structure of unemployment across groups” and that “there isn’t anything directly that the Federal Reserve can do” about it. She cited, rightly, a range of other factors, including disparate educational attainment and skill levels, that contribute to economic and social disparities between racial groups. But she also glossed over the importance of the economic environment in shaping workers’ unequal chances.
One defining metric in shaping workers’ chances is the unemployment rate. A high unemployment rate facilitates racial discrimination. When there are too many qualified job candidates for every job, employers can arbitrarily limit their labor pool based on unnecessary educational requirements, irrelevant credit or background checks, or straightforward bias. A tight labor market, by contrast, makes it much harder for employers to succumb to prejudices and overlook qualified workers simply because of bias. When the number of job seekers matches the number of job vacancies, African-Americans, Latinos, women, gays and lesbians, injured veterans, and formerly incarcerated workers finally get their due in the workforce.
The late 1990s, when unemployment was at about 4 percent, bear out this thesis. During that rosier era, black unemployment was 7.6 percent, and the ratio of black family income to white family income rose substantially.
As the guardian of monetary policy, the Federal Reserve has a number of tools for encouraging a tight labor market, and one of those tools is to keep interest rates low. By keeping rates low, the Fed creates a hospitable environment for job growth by lowering the borrowing costs for consumer and business spending—including hiring new workers. By contrast, raising rates deliberately suppresses spending by consumers and businesses. In the process, it slows job growth, holds down wages, and unnecessarily maintains racial disparities.
With so many workers still struggling, there is no need to cut off this recovery prematurely. Inflation remains below the Fed’s already-low 2 percent target, unemployment and underemployment are too high, and wage growth and labor-force participation are too low. In fact, the Fed should be doing everything within its power to keep nudging the recovery forward for the workers still caught in the slipstream of the Great Recession.
The Federal Reserve should not raise interest rates this week, nor when it meets again six weeks after that. It should not raise rates at all in 2015. Doing so would cause tremendous harm to the aspirations and lives of tens of millions of working families, and would disproportionately hurt African-Americans.
MyAsia Reid knows the difference that a full-employment economy can make. She is ready to participate in the economic recovery. And she will be watching as the Fed decides whether to hold to a strategy of strengthening the recovery or pursue a new strategy that jeopardizes her chances and her community.
Source: The Nation
Blow up the deficit!
As most working Americans could tell you, the economy is still not doing well. Right now, political pressure to fix...
As most working Americans could tell you, the economy is still not doing well.
Right now, political pressure to fix this tends to focus on the Federal Reserve. When the Fed hikes interest rates to curb inflation, it also risks squashing job growth. So activists like the Fed Up campaign are pushing Fed officials to lay off their recent interest rate increases. And a bevy of economists just released a letter urging the Fed to target inflation higher than 2 percent.
Read the full article here.
Americans for Democratic Action Hosts Philly Charter School Forum: Who’s Minding the Store?
Weekly Press - December 17, 2014, by Nicole Contosta - Charter Schools have become a divisive issue in Philadelphia....
Weekly Press - December 17, 2014, by Nicole Contosta - Charter Schools have become a divisive issue in Philadelphia. Supporters swear to their effectiveness. Critics argue that they lack accountability.
Both sides of the charter school debate were heard last Tuesday, December 9th. That’s when the Americans for Democratic Action (ADA), hosted the Philly Charter School Forum: Who’s Minding the Store?
Panelists included Feather Houstoun from the Philadelphia School Reform Commission (SRC); Jurate Krokys, founding principal of the Independence Charter School, Kyle Serette of the Center for Popular Democracy and author of Fraud and Financial Mismanagement in PA’s Charter Schools; and Barbara Dowdall, retired public school teacher and former ADA board member.
Solomon Leach, Philadelphia Daily News Education Reporter, moderated. Leach began the evening’s discourse by asking Houstoun to comment on the evolution of charter schools in Philadelphia.
Houstoun, who spent most of her career in managing care, transit and welfare problems, cited her experience with "good oversight." But when Houstoun joined the SRC three and half years ago, "I was really surprised […] about the incredibly precarious situation the school district was in. Now," Houstoun continued, "we’re living within our means, but we’re horrifically under-resourced."
And with regard to charter schools, Houstoun said, "I was really dumbfounded by how badly over the course of time the [Philadelphia School] District had organized itself to assure that we were getting good value for children in charter schools."
To Houstoun, getting good value for the city’s children proves relevant given the fact that "40 percent of our children are being educated at charter schools that are separate from the district apparatus."
But, Houstoun continued, "We must accept responsibility for these things." And in Houstoun’s opinion, part of the problem resulted from the fact that "the District did not set up standards for academic performances. There were no systematic annual check-ups about what they were doing in terms of finance, corporate or academic measures."
Houstoun cited the fact that the SRC only renews charter schools on a five-year basis as contributing to the lack of oversight. However, at the same time, Houstoun expressed optimism when it comes to moving forward with the city’s charter schools. Over the past year, the SRC performed an overhaul of the charter school office, placing Julian Thompson at the helm. "We’re operating within charter school law that gives us the obligation to monitor and review charter schools," Houstoun emphasized.
From the charter school perspective, Krokys said that she hasn’t always had the best experience working with the SRC.
"I’ve been in the charter world for about 14 years," Krokys said, "In the past and sometimes the not so recent past—what it was—the relationship and the process of authorization and renewal were secret, haphazard, and hostile. And I’m not exaggerating. It was always up for grabs."
In answering Leach’s question about what she’s learned from really effective charter schools, Krokys said, "Community partners and stakeholders are one of the things that can be done with all schools—but it’s especially important for charter schools. Site admission selection for parents and staff—there’s nothing like feeling that you have chosen something and were not defaulted to it," Krokys stressed. "That makes a big difference in partnership.
The same thing," Krokys continued, "goes for staff. The staff is not assigned; they’re not grazing until they get their retirement. Staff is selected to work in a specific school."
Serette discussed the history and evolution of charter schools. That began on March 31, 1988. "That’s when our chamber got in front of the press club in DC and announced a new type of school, something that would help figure out the most complicated problems in our education system. And it was the charter school."
As Serette explained it, the charter school concept was designed as a "calculated risk to figure out if we could figure out something that could then be exported into the public system. And," Serette continued, "This makes sense because you don’t want to take a calculated risk and export it into the whole system. I think we forgot that lesson as we were expanding throughout the nation.
We have a situation where we have the largest charter school system in the country-K12 Inc.," Serette continued, "It’s fully funded by public dollars but it’s traded on the stock exchange. The goal of being on the exchange is to make money. So we have slightly diverged from the original mission of charters."
With regard to the effectiveness of charter schools, "they have had a meaningful impact," Serette said, adding, "They have taught us some really smart things to figure out and export to our system. The first charter school started in 1992. And now we have 43 states with charter school laws."
But, Serette noted, citing an investigation of 15 states, his office found, "about 136 million in charter school funding that was abused, that was used for fraud. To us, that was an alarming number."
In PA, Serette explained that he didn’t think the state government "did a great job of regulating the system. So we have here, two auditors looking after a system that has revenue of 700 million, auditing 86 charter schools.
Dowdall, in answering Leach’s question about academic accountability for charter schools said, "Rather than start with the charter school in the quest of academic accountability, we might journey back to the government entities that established, regulates and monitors them namely the PA State Legislature the Governor of PA, the State Department of Education and the SRC.
While the public schools whose assumed inadequacies sparked the takeover," Dowdall continued, "they were more or less placed in a giant petri dish; we more or less organized a dizzying away of name changes, administrative changes, etc. Test prep came to rule and push out libraries, librarians, music, art and other extra curricular activities. Funding cuts led to the disappearance of nurses, counselors, teaching assistants, custodial help and the financial oversight provided by operations personnel.
Twenty three neighborhood schools," Dowdall continued, "were shuttered. And 40 new charters are supposed to open. Since the SRC has the authority to approve schools," Dowdall said, "maybe they should do so based on the actual needs of the district rather than the whims and desires in some highly funded charters."
As the discussion continued, Leach asked Houstoun "how has the introduction [of reversing] no-charter re-imbursement in PA influence the SRC assessment when it comes to renewing charters?"
Leach’s question references the fact that Government Corbett eliminated the $100 million for charter school re-imbursement to the Philadelphia School District in 2011.
Houston cited the cancellation of the re-imbursement as painful. "For every child that’s added to charter school system, we can’t take off $10,000 for expenses. If," Houstoun explained, "we can restore the charter re-imbursement that was in place, it would alleviate the first level of pain that we’re suffering in the district right now."
Leach asked Krokys to comment on how to rectify the public perception of charter schools when taking into account those that are underperforming or fraudulent.
Krokys began her answering by stressing, "There are thousands and thousands of children who would not have had one chance in their neighborhood school. And a lot of them came through my doors and are now graduating from college."
When it comes to addressing inadequacies in Philadelphia charter schools, Krokys said, "It took a while for the charter school community to finally say, ‘yes. There are some charters that need be closed.’ Yes," Krokys said, "we are weary of the few bad apples because that’s what ends up in the papers. And that’s what ends up tainting everything else."
With regard to K12 Inc., "Who the hell gave permission for a for-profit to run a charter school?" Krokys asked. "Whose fault was that?"
To Serette, Leach asked, "One of the original aims of charter schools was to be a model for public schools. But that got lost in the shuffle over time. How do you think we can go back so that public schools can benefit from the successful roles of charters?"
According to Serette, "The narrative in the US is that the public school system is broken, right? And you can’t just get a good education so you have to be saved by a lot of other systems. But the truth is," Serette continued. "We have a good public school system in upper class and upper middle class neighborhoods. Those tend to be wonderful. And then you have the struggling sectors where people can’t make ends meet and we’re trying to figure that out."
Leach then asked Dowdall how charter and public schools could reach a middle ground.
To Dowdall, "It’s about equity. It’s about resources. Whether it’s traditional or charter, it can be defined. It’s about small classes with libraries where the students can be guided."
And in Dowdall’s opinion, "There needs to be an agreement between those on the board that authorization renewal for charter schools should be set at three years as opposed to five."
For more information on the ADA, visit Youth http://www.phillyada.org.
Source
Despair over Supreme Court immigration ruling turns to optimism, promises of action
Despair over Supreme Court immigration ruling turns to optimism, promises of action
The outrage sparked by the defeat of President Obama’s effort to shield millions of immigrants from deportation...
The outrage sparked by the defeat of President Obama’s effort to shield millions of immigrants from deportation morphed Friday into a promise of political action.
“This will be my first presidential election and I will spend all my time, my sweat, my being also registering voters,” said Marian Magdalena Hernandez, an El Salvadorian immigrant who now lives in Long Island.
Hernandez was among nearly 100 immigrants and supporters who gathered at Foley Square to voice their anger over the Supreme Court’s failure to greenlight Obama’s immigration program.
The President’s 2014 executive action called for up to 4 million undocumented immigrants — primarily parents of U.S. citizens — to be spared from deportation and made eligible for work permits.
But the Supreme Court was deadlocked in its decision on the proposal, leaving in place a lower-court decision that blocked Obama’s plan on the grounds that he exceeded his authority.
“In November when elections come, we're going to remind people what we're made of,” said Eliana Fernandez, 28, an Ecuadorian immigrant who now lives in Long Island and workes as a case manager for the nonprofit Make the Road NY.
Protesters at the midtown rally carried signs that read “Today we suffer ... in November we are voters!”
Shayna Elrington, the child of Central American immigrants, called the Supreme Court’s deadlock a “travesty of justice.”
If you want immigration reform, you must fight for it
“Our government is broken. It is not working and we are going to make a stand,” said Elrington, 34, of the Center for Popular Democracy. “We're going to fight. We may have lost yesterday but we did not lose the battle."
By PATRICJA OKUNIEWSKA & RICH SCHAPIRO
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California’s Emeryville is third city to pass Fair Workweek policy
California’s Emeryville is third city to pass Fair Workweek policy
EMERYVILLE, Calif. – On Oct. 18, this city became the third in the nation to pass a Fair Workweek policy. The City...
EMERYVILLE, Calif. – On Oct. 18, this city became the third in the nation to pass a Fair Workweek policy. The City Council passed the ordinance unanimously at its first reading, following testimony at a pre-meeting press conference and during the meeting itself, by those most affected.
Under the new policy, employers will have to give workers their schedules two weeks in advance, compensating them for last-minute changes. When more hours become available, current workers will have priority so they can get closer to fulltime work.
The council must confirm its action with a second vote, scheduled for Nov. 1. The new law, which will affect some 4,000 fast food and retail workers, is to become effective in July 2017.
Almost two years ago, San Francisco’s Board of Supervisors passed the first such measure, the Retail Workers Bill of Rights, and just last month, Seattle followed suit http://www.peoplesworld.org/article/tale-of-two-cities-yes-vs-no-on-fair....
New York City may be next: Mayor Bill de Blasio and City Council members are pressing legislation to require employers to give some 65,000 hourly fast food workers a two week notice of changes in their shift assignments. However, the bill doesn’t extend such requirements to retail stores or full-service restaurants.
Emeryville, a small city across the Bay from San Francisco with a large concentration of retail stores, already has the country’s highest minimum wage, with large employers required to pay their workers at least $14.82 per hour. Smaller businesses must pay at least $13 per hour.
At the state level, earlier this year California passed a new minimum wage law with a path to a $15 hourly minimum.
At the press conference, low wage workers, local residents, community and labor organizations, faith leaders and academic researchers told of the many challenges faced by retail workers who must deal with constantly shifting and unpredictable schedules and variable numbers of work hours.
Moriah Larkins, an Emeryville retail worker and activist with the Alliance of Californians for Community Empowerment (ACCE) who MC’d the press conference, told of her own experience working six days a week for a “bad apple” employer. “And on my days off they would call me in, and I have my son, who was two years old at the time.”
At first, Larkins said, she used to scramble and pay extra for last minute child care. But as she realized her extra hours, and less time for her son, were making him unhappy, she started refusing the extra shifts. After that, her hours, which had been 32 to 40 per week, were cut in half.
“Now,” she said, “I work for a ‘good apple.’ I work 28 hours per week, I can pay all my bills, I can spend time with my son and finish my nursing degree.”
In a conversation after the press conference, Larkins said she hoped the ordinance would pass “without exceptions.” She and others are warning that before the final vote Nov. 1, the California Retail Association is trying hard to weaken the measure.
Other retail and fast food workers described their experiences, including a past employer who paid subminimum wages and another who fired a worker after “forgetting” he had accepted her timely request for a day off.
The new ordinance has been in the making for a while. In May, Emeryville Mayor Dianne Martinez and Councilmember Ruth Atkin wrote an op-ed published by the San Francisco Chronicle, in which they said a regional fair workweek was needed to assure workers “stable schedules so they can pay the bills, live healthier lives, “and contribute more to our communities.
A recent study, Wages and Hours: Why workers in Emeryville’s service sector need a fair workweek, conducted by ACCE, the East Bay Alliance for a Sustainable Economy (EBASE), and the Center for Popular Democracy found that in a sample of more than 100 frontline Emeryville retail workers, some 68 percent had part-time schedules, 82 percent were people of color, eight out of 10 had variable schedules and nearly two-thirds only got their schedules a week or less in advance. Over two-thirds said they wanted to work more hours, while over half said they were scheduled for “clopening” shifts, or back-to-back closings and openings with less than 11 hours off.
The study concluded that employers need to commit to predictable, flexible and responsive schedules that allow for adequate rest.
At the Oct. 18 press conference, EBASE Deputy Director Jennifer Lin said, “Providing a fair work week is not only good for workers, it’s good for business, too.” With many retailers already scheduling in advance, she said, the new ordinance will help level the playing field, and stable schedules and more adequate hours also reduce turnover and absenteeism.
In an article earlier this month in The Nation magazine, author Michelle Chen noted that the Fight for $15 and Fair Workweek struggles are “converging on sectors that used to be known as bastions of dead-end jobs.” The next step, she said, is “to organize, and unionize, to give workers real collective bargaining leverage over their wages and working conditions. Work-life balance comes by shifting the power balance on the job, so that workers have the final say over when they’re on call.”
By Marilyn Bechtel
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Conservatives May Control State Governments, But Progressives Are Rising
Common Dreams - March 13, 2015, by George Goehl, Ana María Archila, and Fred Azcarate - In November, conservatives...
Common Dreams - March 13, 2015, by George Goehl, Ana María Archila, and Fred Azcarate - In November, conservatives swept not only Congress, but a majority of statehouses. While gridlock in Washington is frustrating, the rightward lurch of statehouses could be devastating. Reveling in their newfound power, state lawmakers and their corporate allies are writing regressive policies that could hurt families by exacerbating inequality, further curtailing an already weakened democracy, and worsening an environmental crisis of global proportions.
From a law that would censor public university professors in Kansas to a governor who prohibits state officials from using the term “climate change” in Florida, ideologues in state capitols are wasting little time when it comes to enacting an extreme agenda. And that’s just the tip of the iceberg. Wisconsin officially enacted right to work legislation on Monday, a policy that’s shown to lower wages and benefits by weakening the power of unions. Missouri, New Mexico, West Virginia, Kentucky, and Illinois are all entertaining various versions of the law. In states like New York and Ohio, legislators are considering severe cuts to public education, while vastly expanding charter schools.
Of course, a look at key 2014 ballot initiatives shows voters held progressive values on issues like the minimum wage, paid sick days, and a millionaires tax. And just 36.4 percent of eligible voters cast their ballots in 2014, meaning that there is surely a silent majority sitting on the sidelines.
The path to policies that put families first is not short, but a bold coalition across the country took an aggressive step forward this week.
On March 11th, under the banner “We Rise,” thousands of people joined more than 28 actions in 16 states to awaken that silent majority and call their legislators to account. A joint project of National People’s Action, Center for Popular Democracy, USAction and other allies across the country, the message of the day was simple: our cities and states belong to us, not big corporations and the wealthy. We can work together and push our legislators to enact an agenda that puts people and the planet before profits. And at each local action, leaders unveiled their proposals for what that agenda would look like in their cities and states.
In Minnesota, grassroots leaders are fighting for a proposal to re-enfranchise over 44,000 formerly incarcerated people. In Nevada, our allies are agitating for a $15 minimum wage. In Illinois, we are organizing for closing corporate tax loopholes and a financial transaction tax (a “LaSalle Street tax”) that would help plug the state’s budget hole. With each of these proposals, we are moving from defense to offense and changing the conversation about race, democracy and our economy.
We’ve seen over and over again in American history, change starts close to home – in our towns, cities and states. On March 11th, we saw a fresh reminder of the power of local change. Our families and communities are defining this new front in American public life, and we will continue rising to challenge corporate power and win the policies that put people and planet first - not last.
If November was a wave election, then this Spring will be a wave of bottom-up people power activism. What starts with defending people and our democracy from an extreme corporate conservative agenda, will pivot to offense as grassroots organizations across the country fight to fundamentally reshape our government and our economy from the bottom up. Expect an unabashedly bold agenda that holds the potential for awakening the progressive majority and ushering in a new era in America, an era where our country works for everyone, not just the wealthy and well connected.
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April 15: National Protests on Tax Day Demand Trump Release His Tax Returns
April 15: National Protests on Tax Day Demand Trump Release His Tax Returns
Working Families Party, Thousands to Protest in NY, DC and Nationwide Rallies Demanding Trump Release His Tax Returns...
Working Families Party, Thousands to Protest in NY, DC and Nationwide Rallies Demanding Trump Release His Tax Returns
WASHINGTON - Today, the National Working Families Party announced their participation in the Tax Day March. President Trump’s financial ties to Russia are causing growing questions for both Democrats and Republicans. As a result, thousands of people plan to gather in Washington, D.C., on Saturday, April 15, 2017, at 11 a.m. The Tax March was an idea that started on Twitter, but has gained momentum on and offline, with over 135 marches planned in cities across the country.
Read full article here.
Turning Immigrants Into Citizens Puts Money in L.A.'s Pocket
LA Weekly - September 18, 2014, by Dennis Romero - Most Californians are...
LA Weekly - September 18, 2014, by Dennis Romero - Most Californians are on-board with federal legislation that would create a path to citizenship for the undocumented.
Maybe we're just being selfish. It turns out that naturalization, the process of going from immigrant to citizen, puts cash in our pockets, concludes a new report from the Center for Popular Democracy, the National Partnership for New Americans, and the Center for the Study of Immigrant Integration at USC Dornsife.
If we naturalized folks who are eligible but who are dragging their feet, L.A. would see as much as a $3.3 billion economic impact and as much as $320 million in additional tax revenues over a 10-year span, the report's authors say. Holy frijole.
The researchers say that naturalization makes immigrants eligible to get better jobs and better pay, which in turn helps them spend more money in their communities: "These increased earnings will lead to additional economic activity," the report says.
L.A. immigrants can earn as much as an extra $3,659 a year, more than in New York or Chicago, by starting the citizenship process, the academics say in the paper:
Clearly, naturalization benefits immigrants: it provides full civil and political rights, protects against deportation, eases travel abroad, and provides full access to government jobs and assistance.
While opponents of a pathway to citizenship often paint south-of-the-border immigrants as a burden on taxpayer resources, the paper argues that folks who fully legalize their allegiance to the United States actually contribute to our tax base.
Of course, what they're talking about is "increased naturalization" "over the status quo," according to the report. It's all about potential.
Getting immigrants to naturalize would require some heavy lifting, though.
One barrier to naturalization is the cost, the authors say, which has risen from $225 in 2000 to $680 in 2008. The cheaper U.S. Green Card ($450) "sets up an incentive to continue to defer naturalization," the study says.
The authors say more encouragement in cities like L.A. could go a long way toward seeing more folks naturalize. This week City Hall joined an effort, "Cities for Citizenship," to do just that.
Ana Maria Archila, co-executive director of the Center for Popular Democracy:
Cutting through the administrative and financial red tape of the naturalization process is an outgrowth of that leadership and will benefit millions of American families who have been excluded from the privileges of citizenship. We ask both city leadership and the immigrant community to join us in this initiative.
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Puerto Rico Activists Crash Federal Reserve Panel With Creative Protest
Puerto Rico Activists Crash Federal Reserve Panel With Creative Protest
NEW YORK — Over a dozen activists descended on a building where Federal Reserve chair Janet Yellen and her three living...
NEW YORK — Over a dozen activists descended on a building where Federal Reserve chair Janet Yellen and her three living predecessors were speaking on Thursday to demand that the Fed bail out Puerto Rico’s cash-strapped government.
The demonstrators, who are affiliated with the progressive Fed Up coalition, distributed Puerto Rican flags and empanadas as Puerto Rican music played outside Manhattan’s International House, a student residence. Yellen was there for an unprecedented panel discussion alongside past Fed chairs Ben Bernanke, Paul Volcker and Alan Greenspan, who participated via videostream.
The activists were joined by Puerto Rican lawmaker Manuel Natal, who was in town to participate in a panel discussion hosted by City Council Speaker Melissa Mark-Viverito on Friday.
“They have two mechanisms under their authority to help Puerto Rico: one is to provide a bailout to Puerto Rico similar to the one they did to banks, the same banks that are now in Puerto Rico making a fortune out of our fiscal situation,” Natal said. “And the second would be to buy our debt” and charge Puerto Rico interest rates that are lower than the market would offer.
The activists claim that since the Fed had the authority to buy trillions of dollars of bad debt from Wall Street banks after the 2008 financial crisis, it can do the same for the debt of Puerto Rico.
Economic observers with knowledge of the Fed’s functions consider that argument dubious. Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics who was an economist at the Fed Board of Governors for many years, said that the Fed is not allowed to buy municipal debt — of the kind Puerto Rico owes — that comes due over a period longer than six months. He also said such a purchase would be inconsistent with the Fed’s dual mandate of maintaining price stability and full employment.
The Fed has “never bailed out any insolvent entity as far as I know. They always demand collateral sufficient to cover any loan,” Gagnon said, as the Fed did when it provided aid to major U.S. banks.
Natal, the lawmaker, also believes some of Puerto Rico’s debt has been issued unconstitutionally and can therefore be nullified.
Greg Williams, a spokesman for Jubilee USA, a coalition of faith-based groups that advocates for global debt relief policies, declined to endorse a Fed bailout, but suggested the Fed could broker a deal instead.
“We support a proposal where the Fed facilitates a restructuring process,” Williams said.
More important than the details of the demonstrators’ demands, however, is the protest’s political symbolism in the midst of a heated battle over Puerto Rico’s future. The demonstration was perhaps the most colorful in a series of political moves and counter-moves by the Puerto Rican government and its sympathizers on one hand and the commonwealth’s bondholders and their allies on the other. Both seek to influence a congressional rescue plan that could enable Puerto Rico to restructure its debts.
Members of Congress from both parties are negotiating changes to the draft of a relief bill released last week by the House Committee on Natural Resources, which has jurisdiction over U.S. territories.
But many in Puerto Rico, and some progressives in the mainland United States, object to the Washington-based federal oversight board the bill would introduce to audit Puerto Rico’s finances and recommend reforms. Under the terms of the bill, Puerto Rico would pursue voluntary compromises with its creditors; failing that, the board could greenlight court-supervised debt restructuring that would force bondholders to accept the losses.
Those critics of the draft bill — including lawmaker Natal — view the board as having the trappings of American colonial rule over Puerto Rico.
Critics of the draft House bill say it has the trappings of American colonial rule over Puerto Rico.
They also argue that Puerto Rico should not have to meet any conditions to gain access to court-supervised debt restructuring. Puerto Rico, unlike the fifty mainland states, lacks the power to grant its municipalities and public corporations federal bankruptcy protections.
Puerto Rico is taking a multi-pronged approach to secure debt relief that appears designed to increase its leverage with creditors and win terms that are as favorable as possible.
The island’s governor, Alejandro Garcia Padilla, signed a bill on Wednesday that would empower him to declare a state of emergency and enact a moratorium on the island’s $70 billion debt. Puerto Rico’s next major debt payment — a $422 million tranche — comes due on May 1.
Daniel Hanson, a Puerto Rico specialist for the financial analysis firm The Height, wrote in an email newsletter that Puerto Rico’s creditors will likely challenge the moratorium in court, where Puerto Rico’s “playbook is not likely to be persuasive to American courts adjudicating the contracted rights of creditors.”
Garcia Padilla has said the island is incapable of paying its debts in full. Puerto Rico has enacted spending cuts and tax hikes in recent years that have stifled its economy and depleted its social services, creating a situation that many people already characterize as a humanitarian crisis.
Puerto Rico also argued for the right to enforce a local bankruptcy law that went before the Supreme Court last month after lower courts had blocked the island from putting it into effect. The high court is expected to rule in the case by late June.
In Congress, Democrats sensitive to Puerto Rico’s plight — and solicitous of the votes of former island residents living on the mainland — hope to dilute some of the proposed oversight board’s sweeping powers.
The Height’s Hanson, however, expects subsequent iterations of the House bill to be “more creditor-friendly,” he wrote.
Meanwhile, organizations representing Puerto Rico’s powerful creditors have stepped up their efforts to amend the legislation to limit the restructuring authority that the island would get. The commonwealth’s bondholders include a significant number of so-called vulture funds, which are hedge funds that have bought its debt from other creditors at discounted rates on the promise of recovering the obligations’ original full-dollar value.
A group called Main Street Bondholders, which claims to represent ordinary retirees, has created a web site attacking the draft House bill for granting Puerto Rico “super Chapter 9” bankruptcy protections.
Main Street Bondholders is associated with the conservative seniors group 60 Plus, which played an active role in the fight against the Affordable Care Act. The New York Times reported in December that 60 Plus is funded by a handful of large, anonymous donors and was recruited into the effort by a Republican public relations firm that also represents BlueMountain Capital, a creditor that has been outspoken against federal government help for the island.
The fight over whether to help Puerto Rico has reached the bottom rung of American discourse — cable news ads paid for by undisclosed donors. The ad, which ran on CNN and was paid for by the Center for Individual Freedom, urges Congress to “stop the Washington bailout of Puerto Rico.” The Virginia-based conservative group does not disclose its donors. It was founded in 1998 to combat government restrictions on smoking.
The CFIF did not respond to a Huffington Post question about whether any of its funders have a financial stake in the outcome of the Puerto Rico bailout.
By Daniel Marans & Ben Walsh
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Fed, Eager to Show It’s Listening, Welcomes Protesters
WASHINGTON — When a dozen protesters in green T-shirts showed up two years ago at the Federal Reserve’s annual...
WASHINGTON — When a dozen protesters in green T-shirts showed up two years ago at the Federal Reserve’s annual conference in Jackson Hole, Wyo., they were regarded by many participants as an amusing addition.
Two years later, they have won a place on the schedule.
The protesters, who want the Fed to extend its economic stimulus campaign, are scheduled to meet on Thursday with eight members of the central bank’s policy-making committee. At the start of a conference devoted to esoteric debates about monetary policy, officials will hear from people struggling to make ends meet.
The Fed’s effort to show that it is listening to its critics reflects the central bank’s broader struggle to find its footing in an era whose great challenge is not the strength of inflation, but the weakness of economic growth.
Officials are wrestling with the limits of monetary policy, the focus of the conference, even as they try to address simmering discontent among liberals who want stronger action and among conservatives who say the Fed has done too much.
The meeting also represents an unlikely victory for Ady Barkan, the 32-year-old lawyer who decided in 2012 that liberals should pay more attention to monetary policy. He now heads the “Fed Up” campaign, a national coalition of community and labor groups that plans to bring more than 100 protesters to Jackson Hole.
“We want to make sure that regular voices are being heard,” Mr. Barkan said in beginning the campaign two years ago. The American economy, he said, was not working for all Americans — particularly not for blacks and other minority groups.
Fed officials so far have chosen to accommodate the group by applauding its efforts at public education, not by seriously engaging its arguments that interest rates should be raised more slowly. Esther George, the president of the Federal Reserve Bank of Kansas City, which hosts the Jackson Hole conference, arranged Thursday’s meeting with the activists. She said in an interview earlier this year that the Fed must balance job growth with other issues, like financial stability.
“I am completely sympathetic,” she said of the group’s concerns.
But she cautioned that the Fed’s powers were limited. Pushing too hard to lower unemployment could lead to higher inflation, or speculative bubbles, that would force the Fed to raise interest rates more quickly. The resulting economic volatility could end up doing more harm than good.
“The Federal Reserve has become somehow the answer to many problems far beyond what we can actually address,” she said. “I wish I could fix all of it with a tool like monetary policy. But we can’t.”
Even Mr. Barkan’s supporters acknowledge the long odds. Fed Up’s budget has grown to $2 million this year, from $145,000 in 2014, mostly from Good Ventures, a nonprofit foundation created by the Facebook co-founder Dustin Moskovitz, which describes the campaign as “relatively unlikely to have an impact.”
Fed Up’s more visible success has come in pursuit of a longer-term goal: advocating for changes in the Fed’s governance that could eventually shift its decision-making.
In a report published earlier this year, Fed Up highlighted the Fed’s lack of diversity. There are no blacks or Hispanics among the 17 officials on the Fed’s policy-making committee of 12 regional bank presidents and five governors. No black or Hispanic has ever served as president of a regional reserve bank.
Moreover, the report said that whites composed 83 percent of the directors of the Fed’s 12 regional reserve banks, who select the regional presidents.
Narayana Kocherlakota, former president of the Federal Reserve Bank of Minneapolis, said that the absence of minorities was “quite troubling.”
“Those kinds of persistent absences of key demographic groups really suggest that the appointment process, there is something that can be fixed there,” he said.
Fed Up also argued that bank executives should not sit on regional Fed boards. Under current law, bankers hold three of the nine seats on each board. The regional reserve banks are owned by the commercial banks in each district, although they operate under the authority of the Fed’s board, a government agency whose members are nominated by the president and confirmed by the Senate.
In May, 127 congressional Democrats signed a letter to Janet L. Yellen, the Fed chairwoman, calling attention to the Fed’s lack of diversity and the influence of the banking industry.
On the same day, a spokesman for Hillary Clinton’s presidential campaign said in a statement that “Secretary Clinton believes that the Fed needs to be more representative of America as a whole and that common sense reforms — like getting bankers off the boards of regional Federal Reserve Banks — are long overdue.”
Two months later, the Democratic Party adopted a campaign platform that included similar language, the first time in recent decades it mentioned the Fed.
Andrew Levin, an economist at Dartmouth College, said Fed Up’s greatest chance for significant influence was not in framing the current debate about interest rates, but in changing the Fed itself. He co-wrote a report that the campaign published Monday detailing a proposal to make the Fed a fully public institution.
“Having a diverse set of policy makers — including African-Americans and Hispanics — will influence the Fed’s decision-making,” he said. “And it should. The public should have confidence that the public is well represented at the F.O.M.C. table.”
Mr. Barkan started the “Fed Up” campaign after joining the Center for Popular Democracy in 2012, a few years after graduating from Yale Law School. He had read a 2011 article by the journalist Matthew Yglesias, titled “Fed Up.” Unions and other advocacy groups were focused on minimum-wage laws. Mr. Barkan was compelled by the argument that they also should be focused on interest rates.
“Even if they move once less over the course of several years, that’s still massive,” he said earlier this year. “The number of people who have jobs because of that, or higher wages, that dwarves a $15-an-hour wage increase in a smaller city.”
The campaign has gained traction in part because the Fed is eager to show that it is listening. During the first protest two years ago, Mr. Barkan approached Ms. Yellen, who listened politely and invited him to bring a group of workers to Washington, where she met with them in November 2014.
Lael Brainard, a Fed governor who plans to attend the Thursday meeting, made a point last year of visiting the parallel conference Mr. Barkan staged on the sidelines of the Fed event. And Mr. Barkan’s group has now succeeded in persuading each of the regional reserve presidents to meet with groups of local workers.
Neel Kashkari, the new president of the Federal Reserve Bank of Minneapolis, met with Fed Up’s local affiliate, Neighborhoods Organizing for Change, this month, telling the group that he shared their concern about the persistence of higher rates of unemployment among blacks and other minority groups.
Mr. Kashkari also accepted an invitation to spend a day with one of the group’s members, Rosheeda Credit, a Minneapolis resident who described the struggles she and her boyfriend faced to cover the cost of rent and child care for their five children.
“Walking a day in somebody else’s shoes is actually — it makes the anecdotes that much more real,” Mr. Kashkari, who arrived at the bank in January, told reporters after the meeting. “It influences how I think about the problems we face.”
By BINYAMIN APPELBAUM
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