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02/23/2021 | Building a National Campaign for a Strong Economy: Fed Up

The Case Against Reappointing Jay Powell

Two cheers for Jay Powell. There is a lot to respect in Federal Reserve Chair Jerome Powell’s record, but is that enough for progressives to support his reappointment for the next four years?

    Led by Powell, the Fed played an essential role in the response to the COVID economic crisis. Expanded its standing lending facilities at the start, the Fed then managed the multi-trillion-dollar emergency lending programs authorized by the CARES Act. Responding aggressively and creatively, the Fed is rightly seen as helping to keep the financial system from seizing up.

    Powell also played a role in Congress’ response to the crisis by making repeated public statements that Congress should, alongside the Fed’s monetary stimulus, step up with ample direct fiscal stimulus to avert an even harsher recession. This was unusually direct language for a Fed Chair, and Powell’s bipartisan credibility helped to correctly center the policy debate on increasing spending.

    Outside of his crisis role, Powell nudged the Fed towards an important new direction in its core monetary framework. Powell questioned the value of the standard formulas that the Fed used to balance its all-important “dual mandate” of stabilizing prices and maximizing employment. The result was a rebalancing of policy with a greater emphasis on maximizing employment, especially for Black, Brown and economically marginalized communities where unemployment is historically much higher than the national average, and a commitment by the Fed to run the economy hot until we get there. Download the brief to learn more.