Fed Raises Key Interest Rate, Citing Strengthening Economy
Fed Raises Key Interest Rate, Citing Strengthening Economy
WASHINGTON — The Federal Reserve raised its benchmark interest rate Wednesday for just the second time since the financial crisis of 2008, saying the American economy is expanding at a healthy...
WASHINGTON — The Federal Reserve raised its benchmark interest rate Wednesday for just the second time since the financial crisis of 2008, saying the American economy is expanding at a healthy pace and setting itself up as a counterweight to President-elect Donald J. Trump’s push for considerably faster growth.
The Fed cited the steady growth of employment and other economic measures, and signaled that it expects to raise rates more quickly next year to prevent the economy from growing too quickly.
“My colleagues and I are recognizing the considerable progress the economy has made,” Janet L. Yellen, the Fed’s chairwoman, said at a news conference after the announcement. “We expect the economy will continue to perform well.”
The widely expected decision moves the Fed’s benchmark rate to a range of 0.5 percent to 0.75 percent, still very low by historical standards. Low rates support economic growth by encouraging borrowing and risk-taking.
The American economy has expanded by about 2 percent a year over the last six years, and the unemployment rate has fallen to 4.6 percent. The Fed’s assessment that the economy is growing at a healthy pace — not too hot, not too cold — is starkly at odds with Mr. Trump, who has promised 4 percent growth and has described job creation as “terrible” and economic growth as anemic.
Already on Wednesday, one Republican member of the House Financial Services Committee, Representative Roger Williams of Texas, criticized the Fed’s move.
“Today’s decision by the Fed to raise the interest rate is entirely premature and will be burdensome to a nation already struggling to pull itself out of this slow-growth Obama economy,” Mr. Williams said in a statement. “By making rates even higher, the Fed is effectively making our hardships even harder.”
Mr. Williams did not object when the Fed raised rates last December.
In announcing the decision after a two-day meeting of the Fed’s policy-making committee, the central bank gave little indication that Mr. Trump’s election had altered its economic outlook. The Fed said it still expected a slow economic expansion and a steady march toward higher rates. In separate forecasts also published Wednesday, Fed officials predicted three rate increases in 2017.
Rising Rate
The Federal Reserve raised its target rate for only the second time in more than a decade.
Note: Graphic shows the Federal Funds Target Rate previous to the December 2008 rate change; since then it is the upper limit of the Federal Funds Target Range.
By The New York Times | Source: Federal Reserve
For the first time in recent years, however, there is a real possibility of significant changes in fiscal policy. Republicans will control the White House and both chambers of Congress, and Mr. Trump has promised to increase economic growth and job creation through tax cuts and infrastructure spending.
Those measures could spur faster growth after a presidential campaign in which Mr. Trump regularly disparaged the economy’s performance under President Obama. But the Fed reiterated Wednesday that the economy is already expanding at roughly the maximum sustainable pace.
Fed officials also see evidence that the labor market is tightening. Several Fed districts reported labor shortages in the central bank’s most recent compilation of economic reports. In the Philadelphia district, construction workers are hard to find. Atlanta reported a shortage of nurses; Kansas City, truck drivers; Dallas, tech workers.
Faster growth, in the Fed’s judgment, would probably lead to higher inflation. As a result, if Republicans succeed in invigorating growth, the Fed is likely to raise rates more quickly. The greater the stimulus, the faster interest rates are likely to rise.
“Your expectation should depend very little on what you think that the F.O.M.C. is thinking and very much on your view of Trump policies and their macro effects,” said Jon Faust, a professor of economics at Johns Hopkins University and a former adviser to Ms. Yellen, referring to the Federal Open Market Committee. “Don’t focus on the Fed. As James Carville regularly reminded the other Clinton on the campaign trail: It’s the economy, stupid.”
Ms. Yellen emphasized that the Fed was not prejudging the likely course of events. She declined several times to comment on the merits of Mr. Trump’s plans or to predict their consequences for the economy.
“We’re operating under a cloud of uncertainty at the moment,” Ms. Yellen said.
Fed officials predicted that they would raise the Fed’s benchmark rate a little more quickly in the coming years, reaching 2.1 percent by the end of 2018. In September, they had predicted that it would reach 1.9 percent by the end of 2018. The new projections, however, reflect a significantly slower pace of increase than last December, when they expected the rate to reach 3.3 percent by 2018.
The combination of steady growth and faster rate increases indicates that some Fed officials expect the central bank to end up offsetting a modest increase in fiscal stimulus. But Ms. Yellen said most Fed officials were reserving judgment.
“Changes in fiscal policy or other economic policies could affect the economic outlook,” she said. “Of course, it is far too early to know how those changes will unfold.”
What Happens When the Fed Raises Rates, in One Rube Goldberg Machine
Exactly seven years ago, the Federal Reserve cut interest rates to almost zero in order to nurse the ailing economy back to health. Recently it changed direction. This is how it works.
The tensions between monetary and fiscal policy will develop slowly. Legislation takes time to write, and any economic impact would generally be felt in coming years. Political pressures, however, may build more quickly.
Mr. Trump has made clear in the past that he likes low interest rates — and some of his plans, like infrastructure investment, will be much easier to fund if rates remain low.
“The Fed is in a tricky place,” said Michael Feroli, chief United States economist at JPMorgan Chase. “They’re trying not to prejudge how Congress and the administration duke it out, but once they see that, I think they will respond.”
There is also uncertainty about the Fed’s leadership. Ms. Yellen’s term as chairwoman ends in February 2018, and Mr. Trump has said he would prefer a Republican.
Ms. Yellen could remain on the board, a possibility she said Wednesday she had not ruled out. But the Fed, under different leadership, might well choose a different path forward. Some conservative economists, notably John Taylor of Stanford University, argue that the bank should already have raised rates above 1 percent.
The economy, for now, keeps plodding along. Steady job growth has reduced the unemployment rate to a level the Fed considers healthy. A little unemployment is natural as people change jobs and businesses close. Ms. Yellen and other Fed officials have said they see some signs of stronger wage growth. Inflation, too, has picked up a little in recent months, although both wages and inflation continue to rise more slowly than the Fed would like to see.
Ms. Yellen described the rate increase as “a vote of confidence in the economy.”
The decision was made by a unanimous vote of the 10 members of the Federal Open Market Committee, the first time in recent months the Fed has acted by consensus.
Some economists argue that the Fed should wait until inflation strengthens before raising rates, to test whether a stronger economy would persuade some people sidelined during the downturn to start looking for jobs. That would expand the labor force. Unemployment remains particularly high among minorities.
That view, however, has found little support among Fed officials, who worry that interest rates will have to be raised more quickly if they wait too long, increasing the chances of pushing the economy into recession.
“Apparently, Fed officials think the economy is growing too quickly,” said Ady Barkan, the director of Fed Up, a coalition of liberal groups that has pressed the Fed to continue its stimulus campaign. “I doubt you can find many other Americans who share that opinion. And it’s a strange conclusion to draw in the wake of an election that was so heavily impacted by voters’ economic discontent.”
By BINYAMIN APPELBAUM
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Warren says Toys 'R' Us investors should augment worker fund
Warren says Toys 'R' Us investors should augment worker fund
The toyseller's former private-equity owners said they were forming the fund on Tuesday after months of pressure from former employees and their representatives, along with some public pension...
The toyseller's former private-equity owners said they were forming the fund on Tuesday after months of pressure from former employees and their representatives, along with some public pension funds and lawmakers including Warren, a former Harvard Law School bankruptcy expert who is considering a run for president in 2020. The groups, linked to the Center for Popular Democracy, estimate that workers are owed $75 million in severance pay, and they've also pressed Toys "R" Us creditors including Solus to pitch in.
Read the full article here.
Latino Construction Workers Continue to Die on the Job Because of Unsafe Conditions
Fox News Latino - January 16, 2015 - A new analysis of federal safety data found that while overall jobs in the construction industry are getting safer, Latino workers are still getting injured at...
Fox News Latino - January 16, 2015 - A new analysis of federal safety data found that while overall jobs in the construction industry are getting safer, Latino workers are still getting injured at alarming rates.
According to the data, between 2010 and 2013, the number of deaths among Latinos in the construction industry rose from 181 to 231. The number of deaths also rose in the industry overall, from 774 to 796, but that increase is attributed entirely to Latinos. During the same period, deaths for non-Latino construction workers fell from 593 to 565.
Each day across the country, hundreds of day laborers and migrant workers wait in street corners waiting to get hired. They are sometimes picked up by contractors or subcontractors looking to cut corners by hiring cheap labor that won’t expect benefits – most undocumented workers live in the shadows and, in general, don’t qualify for any federal benefits.
"There’s a clear correlation between low-wage jobs and unsafe jobs," said Occupational Safety and Health Administration chief David Michaels, according to the Nation. "Workers in low wage jobs are at much greater risk of conditions that will make it impossible for them to live in a healthy way, to earn money for their family, to build middle class lives."
Another reason for the spike in deaths is a rise in safety violations on job sites run by smaller, non-union contractors and an unwillingness by some undocumented workers to report violations, according to a 2013 study by the New York State Trial Lawyers Association.
"Contractors aren’t taking simple steps to protect their workers," Connie Razza, from the Center for Popular Democracy, told the New York Daily News. "They are not providing the training and the safety equipment that are required by law."
Advocacy groups are working to combat any changes to New York’s scaffolding law, which organizations like the Center for Popular Democracy say gives incentive to keep workplaces safe. The law holds owners and contractors who did not follow safety rules fully liable for workplace injuries and deaths.
Contractors argue that it has driven up insurance costs to record levels.
Lawmakers, however, have historically blocked any of the proposed changes to the law.
"All we’re looking for is the ability to have the same right as anybody else would in the American jurisprudence system," said Louis J. Coletti, president and CEO of the Building Trades Employers' Association.
In an attempt to make their work environments safer, some day laborers have joined together to seek protection through collective action. In the wake of Hurricane Sandy, some day laborers in New York City turned to one another about the dangerous conditions, and decided together how to deal with them.
The Bay Parkway Community Job Center in Brooklyn brought in safety experts for guidance; community groups and foundations rallied around the laborers, helping them buy their new trailer with several grants.
With the help of organizations such as the Worker’s Justice Project, laborers learned about wage and hour laws, the hazards of exposure to certain building materials and what kinds of actions or treatment by the people who hire them constitute abuse and violations.
"When something isn’t right, at that moment, you may not realize it or attach much significance to it," Rafael Tecpanecatl, a laborer who came from Mexico 11 years ago told Fox News Latino. "I’ve worked many jobs that I realized later were hazardous to my health. I’d get on ladders that were not steady, I’ve sanded walls and cut plywood and had debris go into my eyes and lungs."
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Steve Forbes: 'Tax-and-Spend Fever' Is Breaking Out Over Highway Fund
Steve Forbes, editor-in-chief of Forbes Media, isn't too impressed with proposals in Congress to finance transportation spending with tax hikes.
"Uh-oh! Washington is coming down with...
Steve Forbes, editor-in-chief of Forbes Media, isn't too impressed with proposals in Congress to finance transportation spending with tax hikes.
"Uh-oh! Washington is coming down with another tax-and-spend fever," he writes in Forbes magazine. "The cause this time is an old-timer: highway spending. The prospect of ladling out more money for roads even has many Republicans acting like dogs in heat."
The Highway Trust Fund, which finances most transportation programs, is broke, Forbes explains. About 90 percent of the fund's money comes from federal gasoline and diesel taxes. And that's not sufficient now to pay for existing projects.
"What to do? In Washington the answer is almost always more taxes," Forbes says. To finance the fund, politicians want to boost gasoline taxes and levy a tax on companies' foreign earnings.
So what should be done for the highway fund? "Just pump in general appropriations," Forbes recommends. "Then return the fund to its original 1950s purpose: to build and maintain the federal Interstate Highway System, period."
Elsewhere on the economic policy front, Connie Razza, director of strategic research at the Center for Popular Democracy, says that while the Great Recession officially lasted from December 2007 until June 2009, for many Americans, it's still not over.
And that's a good reason for the Federal Reserve to refrain from raising interest rates soon, she writes in The Nation.
Most economists expect the Fed to lift short-term rates off their record low in either September or December. "A Fed decision to raise rates amounts to a vote of confidence in the economy—a declaration that we have achieved the robust recovery we need," Razza says.
"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 and slow wage growth even more."
The unemployment rate fell to a seven-year low of 5.3 percent in June, but wages have averaged an annual increase of just 2 percent since the Great Recession ended.
Source: NewsMax Finance
Ford Supporters Descend on Senate Offices of Grassley and Collins to Demand GOP #CancelKavanaugh
Ford Supporters Descend on Senate Offices of Grassley and Collins to Demand GOP #CancelKavanaugh
The Women's March, NARAL Pro-Choice America, and the Center for Popular Democracy all participated in the protest, where demonstrators chanted, "We believe Christine Ford! We believe Anita Hill!"...
The Women's March, NARAL Pro-Choice America, and the Center for Popular Democracy all participated in the protest, where demonstrators chanted, "We believe Christine Ford! We believe Anita Hill!" before proceeding to senators' offices.
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Charter School Fraud Has Cost Pennsylvania at Least $30 Million
Daily Kos - October 2, 2014, by Laura Clawson - Pennsylvania's charter schools are rife with fraud and mismanagement, as anyone who reads local newspapers knows. But a new report from the Center...
Daily Kos - October 2, 2014, by Laura Clawson - Pennsylvania's charter schools are rife with fraud and mismanagement, as anyone who reads local newspapers knows. But a new report from the Center for Popular Democracy, "Integrity in Education, and Action United" details just how big the problem is. Pennsylvania charter school enrollment and funding is growing rapidly and without adequate oversight, and according to the report, there's been at least $30 million in fraud by charter school officials since 1997. For instance:
In 2012, the former CEO and founder of the New Media Technology Charter School in Philadelphia was sentenced to prison for stealing $522,000 in taxpayer money to prop up a restaurant, a health food store, and a private school. Media coverage of parent complaints of fiscal wrongdoing initially uncovered the fraud. Nicholas Tombetta, founder of the Pennsylvania Cyber Charter School, has been indicted for diverting $8 million of school funds for houses, a Florida condominium, and an airplane. In 2005, a former business associate of Tombetta surfaced allegations of fraud, which led to the investigation. Dorothy June Brown, founder of Laboratory, Ad Prima, Planet Abacus, and Agora Cyber charter schools, will be retried this year for allegedly defrauding the schools of $6.5 million and conspiring to conceal the fraud from 2007 to 2011. Two administrators plead guilty and testified against Brown in her first trial. In 2009, the Pennsylvania Department of Education conducted an audit of Agora after receiving complaints from parents of Agora students.You'll notice that in each of those cases, it was complaints from parents or a tip from a business associate that led to investigations. Pennsylvania should be doing more to uncover wrongdoing before it's so blatant that parents are screaming about it. In Philadelphia, there are 86 charter schools and only two auditors. What's more, charter school auditors in Pennsylvania don't actively look for fraud; the report calls for expanded local audit authority, fraud risk assessments for all charter schools in the state, and targeted fraud audits. The report's authors also call for a moratorium on new charter schools until these oversight goals are met.
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Wells Fargo, JP Morgan Stand to Profit from Trump’s ‘Zero Tolerance’ Policies, Report Says
Wells Fargo, JP Morgan Stand to Profit from Trump’s ‘Zero Tolerance’ Policies, Report Says
A new report released by Make the Road New York and the Center for Popular Democracy confirmed that Trump’s “zero tolerance” immigration policy can mean racking up dollars for financial...
A new report released by Make the Road New York and the Center for Popular Democracy confirmed that Trump’s “zero tolerance” immigration policy can mean racking up dollars for financial beneficiaries.
Read the full article here.
Mayor, council declare paid sick leave 'do-over'
Crain's New York Business - January 17, 2014, by Andrew Hawkins - Acting on one of his main campaign promises just three weeks into his administration, Mayor Bill de Blasio announced a bill to...
Crain's New York Business - January 17, 2014, by Andrew Hawkins - Acting on one of his main campaign promises just three weeks into his administration, Mayor Bill de Blasio announced a bill to significantly expand the city's paid sick leave law to apply to businesses with as few as five employees.
Flanked by his new partner atop city government, Council Speaker Melissa Mark-Viverito, as well as a majority of the city's new elected leaders, the mayor effectively declared a "do-over" on paid sick days. They will re-introduce the original bill, which lacks many of the current law's concessions that had been included by former Council Speaker Christine Quinn at the behest of the business community.
"Paid sick leave legislation works for everyone," Mr. de Blasio said, standing outside an Ecuadorian restaurant in Bushwick, in response to a reporter's question about concerns from small businesses. "It improves productivity, it improves the retention of workers, and it creates a better environment for customers."
The new bill would apply to every business in the city with five or more employees. There will be no phase-in period (the current law to take effect April 1 would only apply to businesses with 20 or more employees, and drop to a 15-employee threshold after one year), nor will it have "economic trigger" language that would delay the legislation if the economy slumps; Ms. Quinn had insisted on such a provision in the law that passed last year.
An exemption for the manufacturing sector will be removed, and grandparents, aunts and uncles will be added to the definition of family members allowed to take days off to care for ill children. The Department of Consumer Affairs will still be the enforcing agency, even though it currently lacks the capacity of a regulatory body, not to mention a commissioner appointed by Mr. de Blasio.
"This is basically the original legislation that for three years had a supermajority [in the council]," Mr. de Blasio said, referring to a veto-proof majority.
Ms. Mark-Viverito, fresh off her win of the speaker's race, said there would be committee hearings, but seemed to imply that there had been enough debate already.
"There was no deal struck," she said bluntly. "This is a conversation that has been going on for many years."
There was some grumbling from Republicans in the City Council. Council Minority Leader Vincent Ignizio said the bill was "well-intentioned," but questioned the timing of the announcement.
"Ultimately we're putting an additional imposition on small business," he said. "And it's just going to force small businesses to reduce their workforce."
Mr. de Blasio said that with the passage of the new bill, paid sick leave benefits will be extended to an additional 355,000 workers in the city, mostly in the retail and food-service industries.
Business groups that for years fought the bill seemed resigned in their reactions that a new progressive era had descended on city government. The Manhattan and Brooklyn chambers of commerce both released statements applauding the mayor and City Council for addressing the needs of workers in New York.
"We do continue to be concerned with the costs of doing business in New York City and the burdens placed on the backs of the small business owners," said Nancy Ploeger, president of the Manhattan chamber.
Michael Weber, co-chair of the Hospitality Practice Group at Littler Mendelson, the nation's largest labor and employment law firm, echoed that sentiment.
"It makes it even more difficult for small businesses to be profitable and to be competitive," he said of the bill.
But James Copeland, director of the Manhattan Institute's Center for Legal Policy, said the measure would still ban employees from taking private legal action against their employers.
"In other words, you're going to require that there be an administrative action, not to get private lawyers suing businesses on this stuff," he said. "That's actually better than some other cities that have this type of legislation."
Mr. de Blasio argued that other cities with similar laws experienced no negative ramifications. "What we've seen in Seattle, San Francisco, Connecticut, the District of Columbia, more recently Philadelphia—all over the country you see this consistent movement where states and localities are moving in this direction because it's been proven to work," he said.
But in San Francisco, which has a universal paid sick leave law, studies suggest the impact has strained some businesses. According to a study conducted in 2011 by the Institute for Women's Policy Research, almost one third of businesses affected by the ordinance had some difficulty administering the changes and roughly 14% saw a marked decrease in their profitability after implementation.
Still, Mr. de Blasio boasted that New York's law would be "the strongest in the nation," and said that this and other policies signaled a new direction for City Hall.
"This City Hall is going to be on the side of working families," he said.
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The Fed needs a revolution: Why America’s central bank is failing — and how we can make it work for us
The Fed needs a revolution: Why America’s central bank is failing — and how we can make it work for us
One reality hanging over the presidential election and our politics in general is this: No matter what terrific plan a politician has for creating jobs and boosting wages, it must contend with the...
One reality hanging over the presidential election and our politics in general is this: No matter what terrific plan a politician has for creating jobs and boosting wages, it must contend with the Federal Reserve’s ability to unilaterally counteract it. If the Fed decides higher wages risk inflation, they can raise interest rates and deliberately strangle economic growth, reversing the wage effect. Why come up with ways to grow the economy, then, if the Fed will react by intentionally slowing it?
The reason the Fed operates as a wet blanket on the economy has to do with who really controls the institution. If the desires of bankers and the rich outweigh the desires of laborers, then their fear of inflation (which cuts into their profits) will always take precedence over full employment. Former Fed Chair Ben Bernanke unwittingly gave a perfect example of that yesterday. Talking about how the Fed could institute “helicopter drops” of money to supplement federal spending and jump-start the economy, he stated from the outset, “no responsible government would ever literally drop money from the sky.” Who sets the boundaries of what’s “responsible” matters a great deal here.
To make the central bank work in the public interest rather than the interests of a select few, you must reform the very structure of the Federal Reserve. That’s the purpose of a new proposal from Andrew Levin, an economics professor at Dartmouth College and former advisor to Fed Chairs Ben Bernanke and Janet Yellen. In conjunction with the activist group Fed Up, which advocates for pro-worker policies at the Fed, Levin has devised a framework to make the central bank a fully public institution, with all the transparency and accountability demanded of other government entities.
It’s such an important idea that Warren Gunnels, policy director for Bernie Sanders’ presidential campaign, talked it up yesterday on a conference call with Levin. While stopping short of endorsing taking the Fed public, Gunnels did say, “Senator Sanders believes we need to made the Fed a more democratic institution, responsive to the concerns of all Americans, not a few billionaires on Wall Street.”
Right now, the Fed is a quasi-public, quasi-private hybrid, taking advantage of that status to maintain high levels of secrecy. Members of the Federal Reserve Board of Governors are nominated by the President and confirmed by the Senate, like other federal agencies. But the twelve regional Federal Reserve banks are legally owned by commercial banks in each of those regions. Banks like JPMorgan Chase and Wells Fargo hold stock in these regional banks, which happen to be one of their primary regulators.
This was how central banks worldwide operated at the time of the Fed’s founding, but that has changed. “Every other central bank around the world is fully public,” Professor Levin said, citing the Bank of Canada’s shift in the 1930s and the Bank of England in the 1940s.
Not only does having private banks own a chunk of the Fed raise questions about regulatory supervision, it implicitly privileges banker concerns over the public at large. This is particularly important because the Fed has failed as an institution consistently over the past decade.
First it failed to identify an $8 trillion housing bubble, along with increases in leverage and derivatives exposure that magnified the housing collapse into a larger crisis. Then, it failed to deploy all its policy tools and allowed a slow recovery to take hold that left millions of workers behind, as growth never caught up to its expectations. British economist Simon Wren-Lewis believes the third big mistake is happening now, through premature interest rate hikes to return to “normal” operations. “Central banks are wasting a huge amount of potential resources” by tightening too quickly, Wren-Lewis says. For everyday Americans, that translates into millions more people out of work than necessary.
So Levin’s plan would cash out the banks’ stock, and begin to remove their influence over the Fed. The board of directors of the regional Fed banks, which currently includes commercial bank executives, would be chosen through a representative process with mandates for diversity (no African-American has ever served as a regional Fed president) and a variety of viewpoints. Nobody affiliated with a financial institution overseen by the Fed could serve on any regional board.
These newly elected boards of directors would choose the regional presidents, which have a say on monetary policy decisions. That selection process would include public hearings and feedback. Under the current system, Fed presidents are re-elected through a pro forma process, with no opportunity for public engagement. Four of the 12 regional presidents were formerly executives at Goldman Sachs, and it’s hard to call that a coincidence.
In addition to breaking the conflict of interest inherent in current Fed governance, making the institution public would subject it to disclosure requirements, Freedom of Information Act requests, and external reviews that all other public agencies must submit to. Levin’s proposal calls for an annual Government Accountability Office review of Fed policies and procedures, and would allow the Fed’s inspector general new authority to investigate the regional banks.
The Levin proposal too often makes concessions to preserving central bank “independence,” like preserving the regional structure and giving Fed officials nonrenewable seven-year terms, which seems a little arbitrary. This impulse also led Democrats to reject Sen. Rand Paul’s legislation to audit the Fed earlier this year. The rhetoric of Federal Reserve “independence” conceals an institutional capture that allows it to ignore workers’ needs in favor of the wealthy. And its persistent failures and banker influence weaken the case for that independence.
Nevertheless, the heart of the proposal is to return democracy to the Fed, so the institution will edge away from its commitment to capital over labor. “The fundamental piece is that the Fed must be a public institution,” said Ady Barkan of the Fed Up Coalition.
Liberals too often ignore the Fed and the role it plays in the economy, but that’s starting to change. An obscure piece of the Federal Reserve Act statute identified by then-House staffer Matt Stoller led to a remarkable cut of billions of dollars in subsidies to big banks last year, under a Republican-majority Congress. Now the Fed Up coalition is not only rolling out this reform plan, but pushing the presidential candidates to answer whether the Fed should deliberately slow down the economy, make sure their institution looks like the general public, and reduce the power of private banks on its operations. (Bernie Sanders laid out his views on Fed reform in the New York Times last December, some of which intersect with the Fed Up proposal. Warren Gunnels, Sanders’ Policy Director, would only say that the Fed Up plan “deserves serious consideration.”)
A public, inclusive debate over Fed transparency and accountability is critical, given the importance of this institution to the economy. “These reforms would put the Fed on a path to serving the public for the next 100 years,” said Professor Levin. And that has to mean all the public, through democratic principles, not just the executives at our biggest banks.
By David Dayen
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The Real Reason Workers Can’t Get A Raise
The Real Reason Workers Can’t Get A Raise
Congress could revise the Federal Reserve’s mandate to emphasize running the economy at full employment with rising wages and moderate inflation. Progressives should follow the lead of Fed Up, the...
Congress could revise the Federal Reserve’s mandate to emphasize running the economy at full employment with rising wages and moderate inflation. Progressives should follow the lead of Fed Up, the project of the Center for Popular Democracy, and challenge appointments to Federal Reserve and its member banks, demanding greater representation of workers, consumers and poverty advocates.
Read the full article here.
4 days ago
4 days ago