The Activists Who Helped Shut Down Trump’s CEO Councils
The Activists Who Helped Shut Down Trump’s CEO Councils
The CEOs who made up two White House advisory councils have fled like rats on a sinking ship. Their exodus — a dramatic...
The CEOs who made up two White House advisory councils have fled like rats on a sinking ship. Their exodus — a dramatic rebuke of Donald Trump — came within 48 hours of the incendiary August 15 press conference where the President praised some of the participants of last week’s white supremacist rampage in Charlottesville, Virginia.
But many of the CEOs on these councils had been under heavy pressure to disavow Trump’s agenda of hate and racism even before Charlottesville. That pressure came from grassroots activists.
The Center for Popular Democracy, Make The Road New York, New York Communities for Change, and several other immigrant and worker advocates had led that activist campaign, targeting the leaders of nine major corporations affiliated with the Trump administration. The campaign, working through a web site called Corporate Backers of Hate, detailed the connections between the nine companies and the Trump administration and encouraged people to send emails to both the CEOs involved and members of their corporate boards.
Read the full article here.
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,...
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.
Read the full artilce here.
New Orleans experience a warning to Texas
Behind Frenemy Lines - May 10, 2014, by Jason Stanford - This is a typical day for Greg Abbott’s gubernatorial bid: He...
Behind Frenemy Lines - May 10, 2014, by Jason Stanford - This is a typical day for Greg Abbott’s gubernatorial bid: He goes into the office, screws up his own campaign and goes home. If it weren’t for his mistakes—Ted Nugent, thanking a supporter who called Wendy Davis “retard Barbie”, calling South Texas a “Third-World Country”, and his bungled opposition to equal pay come to mind—Abbott would seem to have no campaign at all. But it’s when you separate the wheat from the gaffe on education that Abbott’s campaign looks like a disaster waiting to happen.
The negative coverage of Abbott’s education plan—and boy howdy has there been a lot—is focused on Abbott’s mistakes. His education plan cites Charles Murray, whose retrograde views on race and gender got him called a “White Nationalist” by the Southern Poverty Law Center. On page 20, his plan calls for “standardized tests” in pre-K. As a dodge, his campaign spokesmanclaimed that was in the plan “for informational purposes only.” And then he cancels campaign events at public schools when the Davis campaign points out that the schools are suing him over funding cuts.
But behind this façade of denials, backpedaling, and obliviousness sits the luckiest man in American politics, because almost no one has bothered to discuss his idea to create “takeover districts” for low-performing schools. He has reportedly modeled his plan on the privatization reforms in New Orleans.
That last bit should scare you. Education reformers—that is, those who think private charters would do better than public schools at educating poor children—call the Recovery School District in New Orleans a success. If the RSD is a success, I’m the third baseman for the Baltimore Orioles. No matter how much I wish that to be true, the facts say otherwise. Here’s why:
No one argues that schools in New Orleans were turning out Harvard scholars by the boatload, so the legislature created the RSD, a takeover district as Abbott has conceived. Davis also supports recovery districts, but Abbott likes the New Orleans model in which “failing” schools would be run by private charters that promised to get the schools shipshape and back into the public school system within five years.
Before taking a look at the results, we must first figure out what “failure” means, because they keep moving that target. RSD used to takeover any school that failed to get a passing score of 60 on the state performance index. After Katrina, the legislature changed that to allow RSD to scoop up any school that fell short of the state’s 87.4 average. The New Orleans private charter district took over 94 schools, 26 of which met the old passing standard. The state redefined failure to mean below average so more schools could get privatized.
Almost a decade later, the takeover district in New Orleans has failed to turn around even one school, so “improvement” became the new goal. Not one school has received an “A” or even a “B” grade. In fact, RSD stopped disclosing the grades their schools received, preferring to publicize percentages of improvement without disclosing the underlying data or that they were cherry-picking the data every year, making it impossible to honestly chart progress. By their original standards, though, all the RSD schools are still failing.
Remember, Louisiana was throwing millions of tax dollars at what were essentially startup small businesses. Fraud and bankruptcy are commonplace, and if you think that’s confined to New Orleans, think again.
Integrity in Education and the Center for Popular Democracy looked at 15 states that have charter schools, one of which was Texas and found “rampant fraud, waste and abuse,” according to a report released last week. The two groups found numerous cases of embezzlement, misuse of tax dollars, child endangerment, bilking taxpayers for services not rendered, inflated enrollment numbers, and general mismanagement. Private charters are running schools like a business. Unfortunately, that business is Wall Street.
It’s never the schools in the wealthy neighborhoods that get taken over. On average, poor children score worse than their wealthier peers. We have always known that, but we cannot get poor children to achieve in school simply by insisting they act like wealthy children.
Now Abbott is using the false dogma of education reform as cover to give up on public schools. Giving up on public schools will not fix public schools, but if Abbott becomes governor, he’ll go into the office every morning, screw up public schools, and go home.
Don’t say you weren’t warned.
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Walter Isaacson to sit on City Planning Commission, and other area political news
Walter Isaacson to sit on City Planning Commission, and other area political news
Isaacson to sit on City Planning Commission Author and former CNN CEO Walter Isaacson may be only a part-time resident...
Isaacson to sit on City Planning Commission
Author and former CNN CEO Walter Isaacson may be only a part-time resident of New Orleans, but Mayor Mitch Landrieu has appointed him to the City Planning Commission.
Isaacson, 64, who now heads the Aspen Institute in Washington, D.C., will replace lawyer Alexandra Mora in January.
The City Council approved the appointment Thursday.
“I'm deeply honored and excited about the prospect of helping to protect the city and plan for its future,” said Isaacson, who splits his time between New Orleans and Washington.
Isaacson, a New Orleans native, is also a former editor of Time magazine and the author of books about Steve Jobs, Albert Einstein, Benjamin Franklin, Henry Kissinger and the "group of hackers, geniuses and geeks (who) created the digital revolution."
He was vice chairman of the Louisiana Recovery Authority, the agency that oversaw the state’s rebuilding after Hurricane Katrina. He is also on the boards of Tulane University and the New Orleans Tricentennial Commission.
Landrieu also appointed Jason Hughes to the commission to fill the unexpired term of Nolan Marshall III, who left New Orleans in October for a job in Dallas.
Hughes’ tenure will end in 2021, while Isaacson's will end in 2023.
City Council condemns anti-Muslim rhetoric
At the end of a heated election season that has included calls from Republican presidential nominee Donald Trump to ban Muslims from entering the country, the New Orleans City Council approved a resolution Thursday condemning anti-Muslim rhetoric.
The resolution is part of a national effort by the liberal group Local Progress to get similar measures passed across the country
"We have seen dangerous levels of anti-Muslim and racist rhetoric as well as a rise in hate crimes," said Councilwoman LaToya Cantrell, a board member of Local Progress. "This rhetoric and violence is not only a threat to our communities but also a direct threat to us as U.S. citizens."
The resolution passed 6-0, with Councilman Jason Williams absent.
"Love really does trump hate," Cantrell said, echoing a slogan used by Democratic presidential nominee Hillary Clinton.
The resolution says the council "condemns all hateful speech and violent action directed at Muslims, those perceived to be Muslims, immigrants and people of color," "categorically rejects political tactics that use fear to manipulate voters or to gain power or influence" and "reaffirms the value of a pluralistic society, the beauty of a culture composed of multiple cultures, and the inalienable right of every person to live and practice their faith without fear."
Clinton is expected to easily carry New Orleans in Tuesday's election.
Jeff council backtracks, OKs disputed contract
The Jefferson Parish Council on Wednesday suspended a disputed ordinance in order to keep the parish's Carnival parades rolling in 2017, hiring a company owned by a local political consultant to build the grandstands from which revelers will cheer on the annual spectacle.
The council voted 7-0 to suspend a ban passed a year ago that would prevent parish contracts from being awarded to any firm partially owned by a consultant who had represented an elected official during a prior election.
That ordinance, which was proposed by Councilman Chris Roberts last November, is under challenge in federal court.
Buisson Creative, a firm owned by political consultant Greg Buisson, was the only firm to respond to the most recent request for proposals to provide the grandstands for the upcoming Carnival season.
Because of the pending legal challenge and the fact that no other proposals for the work were submitted, the council suspended the ban and also voted 6-0 to negotiate a contract with Buisson Creative. Roberts abstained from that vote.
The ordinance was controversial because some saw it as being aimed specifically at Buisson, who had just worked for Roberts’ political opponent in the prior election cycle.
Roberts dismissed the criticism, saying the ordinance was a good-government measure designed to prevent conflicts of interest by making sure those who worked on political campaigns did not then get contracts with parish government.
BGR: Its report to save taxpayers millions
The Bureau of Governmental Research put out a release last week taking credit for uncovering an issue that it said is "expected to yield millions in savings to taxpayers."
On Oct. 27, an Orleans Parish Civil District Court judge ruled in the city's favor on how to apply the formula for calculating pension benefits for city firefighters. The BGR release said the "matter stemmed from a 2013 report in which BGR revealed that the New Orleans Firefighters' Pension and Relief Fund was applying the benefits formula on more generous terms than those spelled out in state law."
The court order directs the fund "to apply the formula as set forth in law," the research group said.
"According to a pension consultant's estimate, if the formula were properly applied to current employees alone, taxpayers would save roughly $1.3 million per year. But under the judgment, the formula is to apply to current retirees as well, increasing the potential savings," BGR said.
By Jessica Williams, Jeff Adelson, Chad Calder and Bruce Eggler
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Veepstakes: Julian Castro moves to shore up a potential weakness
Veepstakes: Julian Castro moves to shore up a potential weakness
The controversial federal program that clouded the HUD secretary's VP prospects gets a timely overhaul. Julian Castro’s...
The controversial federal program that clouded the HUD secretary's VP prospects gets a timely overhaul.
Julian Castro’s Housing and Urban Development Department announced significant changes Thursday to a federal program that sold delinquent mortgages to private investors — a move that mollified progressive critics who threatened to undermine his vice presidential prospects.
With three weeks remaining until the Democratic convention and Hillary Clinton’s campaign narrowing down its list of potential ticket mates, the U.S. housing agency said it is changing a controversial program to give delinquent homeowners a new chance to reduce the principal they owe on their mortgage. The changes also prohibit financial firms from giving up on trying to sell or recuperate decrepit properties the businesses would rather walk away from.
As HUD secretary since 2014, Castro had been under attack from by at least 11 Latino and populist groups for his oversight of the department’s “distressed asset stabilization program,” which sold struggling homeowners’ mortgages to hedge funds. Castro, they alleged, failed to deliver on a HUD promise to sell more mortgages to non-profit community groups instead of financial firms.
Started in 2012, the program’s two stated objectives are to help struggling residents while also clearing billions of dollars of bad debt off the agency’s books. But liberals have argued the program undermines homeowner protections, especially for people in low-income neighborhoods, as HUD sold mortgages to the same financial firms that exploited borrowers in the lead-up to the 2008-2009 recession.
The changes came not long after Castro surfaced on Clinton's short list of vice presidential candidates — along with Sens. Tim Kaine and Elizabeth Warren — leading to immediate speculation about the HUD secretary’s political motivations.
Warren was among those calling for major reforms to the program.
“Given that Secretary Castro has only spent a brief time on the national stage, the black mark caused by the distressed asset issue stands out prominently on his record,” said Isaac Boltansky, director of policy research for Compass Point Research & Trading in Washington. He covers housing policy.
“There is no question that the left’s attack of this program generally — and Secretary Castro specifically — lowered the odds of him being tapped,” he said.
As severely-delinquent mortgages accumulated after the recession, the Federal Housing Administration, a division of HUD, needed to reduce debt liabilities to the government.
Under the program, delinquent loans held by banks but insured by the FHA are sold to new buyers, including hedge funds, private-equity firms and non-profit community groups. Through May 2016, HUD sold more than 105,000 FHA-insured loans valued at $17 billion, according to a report by the National Consumer Law Center.
Castro has not said much publicly about the program, which in recent weeks erupted into a politically-charged issue for the Obama administration, said sources with familiar with the situation.
The program was supposed to give struggling homeowners another chance to avoid foreclosure. But researchers following the program said that financial companies have used it to circumvent homeowner safeguards.
“If you have an option of selling your loan through [the] DASP, then you don’t have to go through state foreclosure procedures that have the consumer protections in them and actually help enforce FHA rules,” said Geoff Walsh, author of NCLC’s report. He previously worked as an attorney with Vermont Legal Aid, Inc. and specialized in housing, consumer and bankruptcy areas. “A lot of damage has been done,” he said.
The liberal groups held Castro responsible for the program’s flaws, even though it started before his tenure at HUD. But the groups immediately applauded HUD’s new changes to the program that they had advocated for.
Their website attacking Castro was still live on Friday, though it will be updated to reflect HUD’s changes, said Matt Nelson, managing director of Presente.org, which claims to be the largest U.S. online Latino organizing group.
Housing experts acknowledged that pressure from advocacy groups — which used the issue to question Castro’s progressive credentials — played a role in the revisions.
“But for his potential to be vice president, these changes probably don’t get made,” said Edward Gorman, head of community development for the National Community Reinvestment Coalition, whose members include nonprofits that buy DASP loans.
“It was the specific targeting of the secretary on this issue and the gathering of liberal senators in support that caused the [Obama] administration and the secretary particularly to take another look at this issue,” he said. “This will be fodder for Republicans. This will become a political issue.”
For Castro, it had already metastasized into an issue that clouded his vice presidential prospects. Widely regarded as one of the Democratic Party’s rising Latino stars, the former San Antonio mayor was targeted by a coalition of activist groups that recognized the leverage afforded to them by a presidential primary fight colored by questions about Clinton’s ties to Wall Street and Bernie Sanders’ populist, anti-Wall Street rhetoric.
“HUD has continually enhanced the DASP program by making improvements before every sale since 2014,” an agency spokeswoman said in a statement. “As a result, tens of thousands of families have been able to remain in their home or avoid foreclosure through the program.”
Maurice Weeks, a housing staffer at the Center for Popular Democracy, one of the groups supporting the attack on Castro’s handling of the DASP, said he is grateful to see the changes HUD announced. But his group will want to make sure the changes actually result in better conditions for communities.
“It became a political problem for Castro since he’s the head of that department,” Weeks said. “We didn’t set out to determine if Castro was a good VP candidate or not. Our focus was on homeowners across the country.”
By PATRICK TEMPLE-WEST
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New York immigration activists criticize Schumer for deal to reopen government
New York immigration activists criticize Schumer for deal to reopen government
Before 81 senators, including 33 Democrats, voted on Monday to reopen the federal government, U.S. Senate Minority...
Before 81 senators, including 33 Democrats, voted on Monday to reopen the federal government, U.S. Senate Minority Leader Charles Schumer blamed President Donald Trump in a speech on the Senate floor for his refusal to compromise on an immigration deal.
For many liberals in his home state, however, Schumer is to blame for being too willing to compromise, since he agreed to reopen the government without a permanent solution for recipients of the Deferred Action for Childhood Arrivals program.
Read the full article here.
Group Blasts Fed for Lack of Diversity in Leadership
Source:...
Source: Wall Street Journal
Federal Reserve leadership is overly male, almost entirely white and drawn too frequently from the banking community, according to a group critical of the central bank.
A new report from the Center for Popular Democracy’s Fed Up campaign analyzes the types of people populating the Fed’s Washington-based board of governors, the regional bank presidencies and the regional bank boards of directors.
The report notes that all voting members of the central bank’s rate-setting Federal Open Market Committee and nearly all the regional bank presidents are white. Just two of the 12 presidents and two of the five governors are women.
“These key decision-making bodies remain dramatically unbalanced and unrepresentative of the vast majority of people who participate in the economy,” said the group, which has called for more public input into the selection of regional bank presidents and their performance evaluations.
The center said the composition of the Fed’s leadership bodies violates the spirit of the law that created the central bank, which calls for membership drawn from many different industries and interests.
A Fed spokesman responded to the criticism about the regional bank boards by saying the central bank has “focused considerable attention” to finding directors “with diverse backgrounds and experiences” that represent agriculture, commerce, industry, services, labor and consumers, as the law requires.
“We also are striving to increase ethnic and gender diversity,” the spokesman said, noting a rise in minority representation on the boards from 16% in 2010 to 24% today. Female representation has risen from 23% to 30% over the same period, and all told, 46% of regional directors now are either a woman or a member of a racial minority, the spokesman added.
Fed Chairwoman Janet Yellen is the central bank’s first female leader.
The Fed Up group, with a membership drawing heavily from labor unions and community organizations, is a regular critic of the central bank. It has argued in recent months that the Fed shouldn’t raise short-term interest rates and has pressed its case in private meetings with Fed officials. Several of its members appeared outside the central bank’s research conference in Jackson Hole, Wyo., last year to call attention to their views.
The group’s concern about a dearth of diversity at the Fed has been echoed by former Minneapolis Fed chief Narayana Kocherlakota. He argued in a blog post last month the central bank has appeared to give short shrift to racial concerns in part because there have been almost no African-Americans in its policy-making ranks. He wrote that the concerns of racial minorities have been “underemphasized” at the Fed.
The last African-American to serve on the Fed board was Roger W. Ferguson Jr., who served as a governor between 1997 and 2006 and as vice chairman from 1999 to 2006. The first African-American to serve as a Fed governor was Andrew Brimmer, from 1966 to 1974.
The report showed particular concern about the directors on the regional Fed bank boards, which are drawn from the private sector. It said 83% are white, compared with around two-thirds of the total U.S. population.
“The diversity of regional board members is meant to inform the bank presidents, who in turn, participate in discussions and vote at the FOMC,” the report said. “However, the boards, the presidents, and the FOMC fail to represent their region’s racial diversity.”
The report also said its analysis found that representatives of banking and what it calls commercial interests have increased their share of regional Fed board seats in recent years. Representatives of community groups and labor unions account for fewer than 5% of the available board seats, according to the center.
Among the regional Fed bank boards’ most high-profile roles is selecting their bank presidents. Recent regulatory changes now bar directors from participating in that process if their firms are regulated by the bank.
The directors also provide information to bank officials about local economic conditions and give advice on running the banks.
The Week Ahead in New York Politics, May 21
The Week Ahead in New York Politics, May 21
On Monday at 11 a.m. at City Hall Park, “Representative Adriano Espaillat (NY-13), joined by New York State Assemblyman...
On Monday at 11 a.m. at City Hall Park, “Representative Adriano Espaillat (NY-13), joined by New York State Assemblyman Marco Crespo and community leaders, will hold a press conference calling for secure housing for residents of Puerto Rico in support of the Housing Victims of Major Disasters Act, introduced by Rep. Espaillat earlier this Congress.” Other participants will include former City Council Speaker Melissa Mark Viverito, Frankie Miranda of Hispanic Federation, and Ana María Archila of Center for Popular Democracy, among others.
Read the full article here.
City to help immigrants seeking deportation reprieves
New York Times - July 17, 2013, by Kirk Semple - New York City plans to spend $18 million over the next two years to...
New York Times - July 17, 2013, by Kirk Semple - New York City plans to spend $18 million over the next two years to help young unauthorized immigrants qualify for a federal program that grants a temporary reprieve from deportation, officials announced on Wednesday.
The money will add 16,000 seats to adult education classes throughout the city, and priority for those slots will be given to immigrants who might qualify for the reprieve.
While more than 20,500 immigrants in New York State have already been granted the reprieve, known as deferred action, city officials have estimated that about 16,000 others in New York City alone would satisfy all the conditions save for the requirement that they have a high school diploma or General Educational Development certificate, or be currently enrolled in school.
The project — the largest investment made by any municipality in the nation to help immigrants obtain the deferral, city officials said — is one of two new immigrant-assistance initiatives that will receive significant injections of public money in the current fiscal year, which began July 1.
The other budget allocation, which the city plans to announce formally on Friday, will pay for a pilot program that will create what immigrants’ advocates say will be the nation’s first public defender system for immigrants facing deportation.
Together, the two programs further cement New York’s reputation as one of the most immigrant-friendly cities in the nation. They also come at a time when a push for comprehensive immigration reform that would include a path to citizenship for unauthorized immigrants has met stiff resistance among Republicans in the House of Representatives.
In a news conference in City Hall on Wednesday, Christine C. Quinn, the City Council speaker, seemed to allude to sclerotic politics on Capitol Hill, saying the Council’s budget decisions send a message to the rest of the nation “that local government can take action while we wait for comprehensive immigration reform.”
The federal deportation reprieve was announced by the Obama administration in June 2012. To qualify, an applicant must have arrived in the United States before reaching his or her 16th birthday and been younger than 31 as of June 15, 2012, among other requirements. Recipients of the reprieve, which is subject to renewal after two years, are legally allowed to work and, in many states, obtain a driver’s license.
More than 400,500 people across the nation have been granted the deferral; for many others, the educational requirement has been a major hurdle.
For years, adult education programs in the city have been swamped by huge demand yet been hamstrung by financial shortfalls.
Of the $18 million allocation, $13.7 million will be provided to community-based organizations through the Youth and Community Development Department and used for outreach and the increase in seats. The remaining $4.3 million will help expand related education programs offered through the City University of New York, like English for Speakers of Other Languages and General Educational Development.
In recent days, immigrants’ advocates have also been celebrating the City Council’s decision to help pay for another initiative: the allocation of $500,000 in its current budget for a network of legal service providers to represent immigrants facing deportation.
Defendants in immigration court, unlike those in criminal court, have no constitutional right to a court-appointed lawyer. Hampered by language barriers, lack of money or ignorance, most end up trying to fight their deportation alone — almost always with poor outcomes.
According to a recent study, 60 percent of detained immigrants in the New York region did not have counsel at the time their cases were completed. Of those without counsel, only 3 percent won their cases, compared with 18 percent of those with counsel.
Proponents of the program, called the New York Immigrant Family Unity Project, said it would cost about $8.7 million to provide legal representation for the 2,800 or so immigrants living in New York State who are detained and face deportation every year. The city allocation, however, will help cover the cost of a pilot program to represent just 135 immigrants. Advocates said that despite its limited reach, the pilot program would give them a chance to test their theories and demonstrate the potential impact of a broader plan.
The program will not only help keep families together, argued Andrew Friedman, executive director of the Center for Popular Democracy, an advocacy group that helped to lobby for the financing, but will also create “an innovative model program” for other municipalities to replicate.
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Fed official explains why he stopped trying to predict the future
Fed official explains why he stopped trying to predict the future
JACKSON HOLE, WYO. -- The world's economic elite gathered here for an annual symposium sponsored by the Federal Reserve...
JACKSON HOLE, WYO. -- The world's economic elite gathered here for an annual symposium sponsored by the Federal Reserve Bank of Kansas City last week to debate the strategies central banks should employ to safeguard the global economy. We sat down with St. Louis Fed President James Bullard to chat about when he might be ready for a rate hike, the limits of his powers and why predicting the future is futile.
The transcript below has been edited for length and clarity.
Wonkblog: Let’s start with the question of the day: Which month looks good to you for a rate hike?
Bullard: Actually, I’m agnostic on this. Our new framework calls for one, and only one, and then we go on pause for a bit. It’s not critical to me exactly when we make that move, so we wouldn’t have to go at any particular meeting.
I do like to move on good news, so if we have good information, and we’re at a meeting, it might be a good opportunity to go ahead and make that move. But what’s different about what I’m saying is I’ve got a real flat interest rate path — much closer to the markets’ interest rate path. I don’t have this march upward of 200 or 250 basis points.
If only one more rate hike is really needed to get to the Fed’s neutral stance, why does it matter if you move in September, December or next year? You would be willing to wait until 2017?
Certainly, I just don’t feel that there’s any urgency when you’ve got the framework I’m talking about.
[The Federal Reserve is debating how to fight the next recession]
So explain your framework for us.
What we wanted to do is break down this idea that we’re really certain about where the economy is going in the medium- and long-run. What most models do is they have something called a steady state, which is really an average of all the variables in the past: You look at the unemployment rate, and you take the average unemployment rate. You look at interest rates and take the average past interest rate. You look at inflation, growth — you take averages of the past, and you call those your normal values.
As you go along, you expect all your variables to go back to their normal values. That’s what we’ve been doing. That’s the old framework. And what we’re saying is we don’t like that framework anymore because it suggests we have a lot more certainty about where the economy is going than we really do.
These averages of these variables from the past — they can sometimes be high and sometime be low. You can be in a configuration where these things are low, and then you can switch to another configuration when they’re high. Then they’re high for a while, and you switch back to low. What you have to do is make policy given whatever regime you’re in.
We think that the regime that is dominant right now is a slow-growth regime that is characterized by low productivity growth and very low real returns on short-term government debt around the world. We think these regimes are persistent. These things aren’t changing any time soon. And because of that, we just have to take them as given, for now anyway.
Given that in this framework, it’s difficult to tell when the regime is shifted, how do you know that you’re not setting monetary policy for a regime that’s already expired?
You’re gonna know when the regime switches. These very low real rates of return on government debt, if you look at the ex-post return on one-year Treasurys, it’s about -135 basis points right now. If that starts to go up rapidly, we’re gonna know and we’re going to take note of it. We’re gonna say, “Aha! Our regime has changed, and we’re going to have to change monetary policy accordingly.”
But for forecasting purposes, I wouldn’t say that I’m expecting that to happen all of a sudden. It’s been that way for at least the last three years, and if you look at real rates of return, they’ve declined for the last 30 years. It’s also very clear that we’re in a very low productivity environment.
It’s not that you go to sleep. You stay alert to the possibility that the regime can change in the future, and probably will change at some point in the future. It’s just not good to be predicting that it’s going to change.
Federal Reserve Chair Janet Yellen's speech here laid out the argument that the Fed is not out of ammunition to fight the next recession. Do you agree with that?
I loved the speech. She made the case that we still have quite a bit of bandwidth to handle problems if they arise in the next couple of years, and I very much agree with that. But at the same time, it’s always good to be studying other possibilities. I actually have papers on nominal GDP targeting, so I think that’s an interesting topic. It's probably not ready for prime time, but I’m a believer in research.
What led you to the support for this regime-based framework. Can you talk about the evolution of your thinking?
Maybe some frustration with the dot plot. We were saying we were going to have to raise rates fairly aggressively over the forecast horizon in order to keep the economy on track, and that wasn’t materializing. We had that forecast for several years, and it wasn’t really working. For that reason, I wanted to get a different way to think about what we were doing.
We’ve only moved once on the policy rate, and markets are saying maybe one more move this year. That would only be one move per year — that’s really not normalization. If you’re going to say it’s going to take 10 years to get back to a normal value, you’re really saying we’re not going back there. That’s way longer than any sort of business cycle than you can reasonably talk about.
How do you feel about the division between monetary and fiscal policy currently? Do you feel it’s time to pass the baton here?
I do think that. And I think the regime framework is good for laying that out for people. Part of the story is that the recession has been over for seven years. The unemployment rate has gone down below 5 percent. Inflation is low, but we don’t think it’s that low, and it’s kind of coming up to target.
So the cyclical dynamics are all done. The dust has settled, I guess is the way I would put it.
You might say the dust has settled, and I don’t like what I see. But for that, you can’t solve that with monetary policy. You’ve got to have things that are going to increase productivity in the economy. You’ve got to make the economy more efficient. New ideas, better technology, better diffusion of technology, better human capital, better skills match — I think it’s a lot of small things that you have to do right to get an economy humming. The story of let’s keep interest rates low and that will help us, that’s kind of over for now.
Related to that are the demonstrations by Fed Up and the Center for Popular Democracy that were held Thursday. Any additional thoughts on their point of view, that there’s still more that the Fed can do?
I love the people that come here. I think they’re a really great slice of the American workforce. It’s really nice that they’re willing to take time out of their lives to come out here and talk to us boring central bankers.
They want to talk about low nominal interest rates as solving difficult problems of how our labor markets operate and how our labor markets are unfair to many people. I would like them to think about the German labor market reforms that were done over the last decade. Germany had very high unemployment for a long time. It was an endemic problem, and then they did these reforms and got their unemployment rate cut in half — even though Europe went through a double-dip recession during that period.
It showed to me that there are ways to attack these problems, and I think we could do that in the U.S. I think they should refocus their efforts on the labor secretary, so we could get those kinds of reforms going. People aren’t even talking about that.
By Ylan Q. Mui
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4 days ago
4 days ago