Rep. Ayanna Pressley On How The Fed Can Fight Racial Inequality

seem like they were materializing. Yeah, by a lot of measures. I guess we were at well nearly at full employment. But I'm not sure it's tragic. Um, maybe ironic. I like, you wouldn't have wanted to go into the crisis with

the economy already fragile, right, True, that's well put. But I do think there was just a lot of frustration at you know, how slow was so we had, you know, we had the crisis in two thousand and eight, two thousand nine, and then it just took years and years and years to get back to something that you know, economists would have called full employment. Yeah, I think that's right.

And I think you've pointed out before that the danger with sudden increases in mass unemployment is that it does really take a long time to normalize, that it takes a long time to train people for new jobs, and meanwhile, the economy loses that expertise, loses that additional output, and it's just a bad situation. Right. I think there is this view that if you know, as we embark on this recovery, if it takes similarly long to return to

something resembling normal, that'd be unacceptable. I think that's why there's probably a lot of rethinking about the role of monetary policy and the role of fiscal policy in accelerating this recession, because the length of time of recovery last time was pretty pretty unacceptable, not good. Yeah, it's that, and to me, it's also the nature of the current crisis. This is basically, in some ways a government mandated economic crisis. People need to stay home in order to stop the

spread of the coronavirus. You don't really have a choice when it comes to shutting down your business, and so I think people are looking to the government more than they might be otherwise and asking for help with that. Right. Another aspect, And another sort of disappointing factor is that prior to the crisis, for a long time, there's been this big gap between black and white unemployment rates. You look at the headline unemployment rate, the unemployment rate for

whites is below that. The unemployment rate for Black Americans has been significantly above that. That was starting to compress prior to the crisis, and then once again it looks like the status quo is that, you know, we just suffered another major setback on that gap. Yeah, I've seen a number of statistics on this, not only for racial inequality, but it's showing up in men versus women as well. The female unemployment rate is a lot higher right now

than the male unemployment rate. So it feels like the crisis is accelerating a lot of the inequality trends that we saw in previous years. Right So there are a lot of different issues for the Federal Reserve and other policy makers to think about as they bark on accelerating this recovery. I want to bring in our guests very excited to talk to her. We're going to be speaking

with Congresswoman Ayana Pressley. She represents the seventh District in Massachusetts, and she's, among other things, the recent co author of a op ed at CNBC about the need for the FED to focus specifically and think more about the black unemployment rate, talking about how monetary policy in the past has contributed to inequality along race, and so we think of monetary policy is being this sort of neutral thing, where we think of monetary policy is just affecting the

economy in general, and the need for other policies to address race specific issues. But perhaps there is more that the FED could do. So without further ado, I want to bring in a Congresswoman Pressley, Thank you very much for joining us. Good to be with you, thank you

for your interest. Absolutely so to start off, in your view, racial inequality in this country has numerous causes, but when it comes to monetary policy and the Federal Reserve, how in your view has UH monetary policy contributed to the gap between the success of whites in the labor market and the success of blacks and other non white minorities.

Sure well, first let me just you know, um acknowledge that we find ourselves in a moment of national reckoning on racial justice, and every institution needs to address his role in perpetuating systemic racism and what it can do to be a part of the solution. And the FED should be no exception in that regard. You know, perhaps Donald Trump does not want to acknowledge the contributions of John Lewis and what I would consider our other founding fathers,

but they've given us the blueprint on this. You know. Dr Martin Luther King Jr. Spoke about the fact that when Black Americans are unemployed, it's considered a social problem, but when white Americans are unemployed, it's considered a depression. That's what he said in nineteen and addressing the Memphis sanitation workers, and of course um he also went on in that same speech to say, what does it profit a man to sit at an integrated lunch counter if

he cannot even afford to purchase a hamburger? And while we're speaking about the King's CORRECTI Scott King in nineteen seventy six let over twenty five thousand protesters to the Atlanta Federal Reserve Bank. Rashi declared that outside of Congress, the Federal Reserve has, for apps more power to correct

our economic ills than any other agency or institution. And so UM I recently author this opped laying out three steps that the FED could take to center racial equity in its response um And they have to respond, you know, not only because it is the federal government's role uh in a period of unprecedented hurt managing a crisis within

a crisis, but they have a responsibility. Only the federal government can meet the scale and scope of this crisis and play a role in ensuring an equitable economic recovery. And so the three things that we've laid out is that the FED must expand and modify the terms of its municipal liquid facility to ensure the big corporations aren't

getting a better deal than our community. And secondly, and this is what correctit Scott King was organized went around, the FED must comply with the Humphrey Hawkins Act, this provision that requires efforts to reduce unemployment disparities by directly targeting the black unemployment rate, which is really a much better indicator of the country's true economic health. That will also prevent misguided action like raising interest rates too soon.

You know, the FEDS have prioritized price stability and low inflation over full employment. And then finally, the federal reserve must not stand in the way of a federal jobs guarantee. This is a really fascinating topic and you lay it out very clearly. I guess my first question is what would you say to critics who will automatically respond with, well, this isn't the FEDS role and why should the Fed?

You know, it's a group of unelected officials, lots of people describe them as economist sitting in an ivory tower. Why should they be the ones to take this on? Yeah, because they're the only ones that can. The federal government were the only ones that can play the sort of role necessary to meet the scale and scope of this crisis.

And it's unprecedented, hurt. And uh, I'm gonna bring into the room another uh um civil rights leader, because I've been doing a great deal of reading and looking for fortifying and uh, you know, inspiration and direction at this moment. And Reverend William Barber, you know, said that we find ourselves in the midst of a reckoning, which requires a

third reconstruction. And I think that, um, that reconstruction does mean everything from healthcare to ensuring that every individual that is able to work, UM is working, and also housing you know adults and policy makers don't make mistakes. They

make choices, and poverty is a policy choice. In the midst of this national reckoning, this is the time for a reconstructing and to be bold, and we'll have to be in order to meet the scale and scope of the hurt um managing this crisis within a crisis, both a public health crisis and the economic hardship that it's wrought. And of course, the crisis of black unemployment did not

begin with this pandemic. It's only been exacerbated. I mean, I represent one of the most diverse, vibrant, dynamic districts in the country, has previously helped by John F. Kennedy himself, one of the most progressive seats in the country and one of the most unequal, and the Commonwealth of Massachusetts also has the highest unemployment rate in the country at

seventeen point four. I want to go back to something you said that I thought it was really interesting, and you said, not only should the FED target black unemployment directly, you said you also thought it was probably the best proxy that we could have for the state of the economy.

Why do you think it's the best proxy? And also just sort of flush it out a little bit in terms of how sort of specifically looking at the black unemployment rate could be incorporated into the FED mandate or just the fence thinking in general, we'll just say the bottom line for me is we can't afford to deny the Federal reserves role here as a potential equalizer. But we also have to confer the fact that they've been

an exacerbator a racial and economic inequality. And so again this is the tipping point in the moment where we confront that past while we also chart a new path. And so rooting out systemic racism and inequity in our economy can't happen without a key piece of that system. And it just it requires a government wide approach, and

that has to include the Federal Reserve. And and just picking up all my earlier comments regarding the Humphrey Hawkins Act, again, that provision requires the FED to reduce disparities and unemployment between marginalized groups. And so at this moment, it really is about exacting every every level, every tool available to you,

and they've not done that. M H. You mentioned this idea of a reconstruction in response to a great reckoning I'm curious how do policymakers, such as yourself balance the need to respond quickly to what is quite a serious economic situation with the need potentially to to design or use the crisis as a jumping off point to redesign big picture ideas like how the federal works, like how the federal government should be funding states and municipalities. How

do you balance those two things. I think in this moment, it's not a matter of or, it's a matter of and UM and so UM. I seek to do both because the moment demands that I do both. And I think I'm emboldened in that advocacy UM and in that

legislating because we have a mandate from the people. There's a decisive mandate from the people of this country, UM to move with the strength of conviction, to be bold and our legislative responses to address the inequities and disparities and the racial injustices that not only persist, but we're created by policy. Public sentiment around issues lack of federal jobs guarantee and medicare for all, and affirming housing as

a human right has only grown. Do you think that the left or progressives have underappreciated the role of monetary policy or the Federal Reserve in advancing priorities. During the Obama administration, there or long periods where seats on the FMC were left unfilled. It wasn't a priority to replace departing members. Should this be more? Should Do you think there's a lack of awareness um in terms of what

monetary policy can do on the left? Yes, And that's exactly why I wrote the up ed you know, acknowledging that I do have this platform and I want to be an effective steward of it, especially in this moment. It's one of the reasons why I was so excited to serve on via Financial Services Committee to address these issues specifically. And you know, I think the role of the Federal Reserve for some maybe only really came into view on the left in the role that it played

and stabilizing the world economy. In two thousand and eight, more people started to think about it in that way.

But you know, I'm again, I'm appreciative of the opportunity to serve with the Final Services Committee so that I can can lift up the role that it can play and and it really should go without saying that all of this, you know that I'm looking for them to do must be in addition to the FED acknowledging their abysmal record on diversity, and that can't just fall on the back of the only black Federal Reserve Bank president and Raphael Bosti to name it and to call it out.

So I'm also trying to provide some backup there. UM. I wanted to talk a little bit about what's going on in d C right at this moment. So I think we have the second round of potential stimulus relief currently log jammed in the Senate. I should just mention that we're recording this on let's see August five, so things could change. So looking back at the original CARES Act, how is that able to get bipartisan support? And what

has changed between then and now? Why is it so difficult to get a second relief package off the ground? You know, Well, this Democratic majority House has been able to move you know, something like four relief packages, um, and they were bipartisan and I think, UM a lot of that had to do with public outcry and sentiment, which is why we need people to continue to be vigilant and their advocacy. UM. In that regard. You know,

it's very frustrating. I um, you know, day feel that we are besieged by a dog whistles and uh and in tropes and sort of a cruelty and a callousness. Um. That proves that many people serving are completely removed and disconnected from the hardship and the heart that their constituents are experiencing. In terms of what parties are I mean, what do you think are this sort of absolute must

have in this bill? Yeah? Well, I mean, thirty million people are still unemployed, and as I said, the Commonwealth of Massachusetts is the highest unemployment rate in the nation. Um. And so yet this Senate GOP they want to cut unemployment benefits, and they want to once again exclude our immigrant neighbors from the economic stimulus checks. And they're forcing K through twelve schools to reopen. It's shameful, it's reckless, and it's just cruel. And so I think we have

to extend unemployment benefits, not cut them. Um. We need reoccurring economics to list payments for everyone. We need to extend the eviction moratoriums. We need to cancel rent and mortgage payments. We have were on the precipice of an eviction tsunami. We're talking about the disproportionate impact on marginalized groups. Um, you know, we find ourselves what is this the early

in the month of August. By August, one of Americans said that they would not be able to pay their rent for the month, and that's thirty percent of Americans. Forty percent of Black Americans said they would not be able to pay their rent. So economic time stops, but financial time does not. And even in the worst downturns, people's bills will always still be due. And it's just really past time that the Senate acts and that they move with the urgency that reflects that economic time stops

but financial time does not. Is a really good way of putting it. But just on that note, and going back to the idea of debt forgiveness, how would that work exactly? Because a lot of critics of that proposal would immediately point to the fact that, you know, landlords, as much as many people dislike them, also require income, and if they're not getting payments from their renters, that has knock on effects to the financial system. It could lead to losses for banks and things like that. How

would you, Uh, how would you deal with that? Yeah, I mean the point is though people are hurting, they need real relief now and again, just I could have too many examples to enumerate in terms of the disconnect and the cruelty and the councils of this administration. One of the other issues that I've continued to push in terms of a robust economic recovery is the canceling of

student debt. This Department of Education garnish wages and benefits fifty four thousand borrowers in the midst of a pandemic. People are hurting, they need real relief now, and and might I also add that our greatest wealth as a nation is the health of our people. So the reason why these other choices are being made is to prioritize and then the best interest of the public health. And

so that has to be the priority right now. And if that means that we are paying people to stay home, then that's what that means, because we have to stave off the rate of transmission and we have to get this pandemic under control. That's number one. There's no economy without workers or consumers. And so our greatest wealth as a nation is the health of its people. I want to look forward a little bit. I know, you just

have a few more minutes. Um you know, suppose thinking about long term economic agenda, and suppose U Biden were to win the White House and Democrats were to control both houses of Congress, as is possible, thinking about where economic policy should go. I'm looking at Biden's Racial Economic Equity Plan on his website and the first two things one is something about first bullet points about public private investments.

The next one is opportunity zones and performing them. And I'm curious, do you think these are smart tools or would your vision for what racio economic equity would it look different from this? I just think that it's um it needs to be bolder, and it's about guaranteeing those most basic human rights, which certainly is is not a radical notion, but a lack of political will and leadership, and I think a deficit of empathy and an urgency has us where we are. And so, you know, I

think we do need a federal jobs guarantee. I think we need Medicare for all, housing affirming the right to housing, um so housing justice, and then on the economic justice front, a federal Jobs Guarantee, and when it comes to healthcare justice Medicare for all. In addition to all the other things, I continue to fight for modernizing the Community Reinvestment Act.

You know, the fact that ercent of financial institutions continue to pass CR exams, but the practice of redlining persists the Fair Housing Act, which they seek to you know, undermine and roll back those protections. Canceling student debt UM, which I see as a racial justice issue because black students borrow more than any other borrower and default more. And that has everything to do with policies which has obstructed black family's ability UM to equitably build generational wealth.

And that is also you know, one way to your your question tries around UM cancelation and and and people's negative characterizations of that. That's also one way to jump start the economy. UM. The average of borrower is saddled with about thirty dollars worth of student loan debt, and so by canceling that, then those are other those funds can be used in other ways to jump starting to invest in our economy. So those are some of my priorities.

So I have one more question, just just leading off from that, Why do you think so many people seem to be instinctively opposed to bailouts and instinctively opposed to policy that on the surface would appear to be good for everyone and for the overall economy. And how do

you overcome that obstacle? That's sure, Maybe we've been, uh, we're so used to the way things have been done for so long that perhaps it's a greater expectation, and people are just used to corporations being been held out and not the American people and our families and the American worker and our communities. Um, you know. But again, this is the moment we need to be disruptive and we need to build something new that is intentional about

equity and justice. Reiterating my earlier point in terms of the mandate from the people, I mean, the reason why people still continue to protest, to demonstrate, to mobilize, to organize. Yes, the tipping point was about the fact um that we had been in the midst of a pandemic, besieged by these images of unarmed black Americans being brutalized and murdered

by police. But that's not the only reason why people are in the streets, and and that's and the reason that movement is one that is multigenerational and multi racial. There's unrest in the streets because there's unrest in the lives of Americans, and that has everything to do with the role that policy has played and creating these inequities and these disparities, and in particular these racial injustices. And so this is the reckoning and that's why the movement

is not waying. It is a sustained one. And I was speaking earlier about Cretis Scott King and and and Dr King, and you know, they gave us the blueprint. It is to more organize, it is to mobilize, and it is to legislate. That's what all that marching was about. So you know, you can't say black lives matter and affirm that in this moment of culture shift, but then not see that reflected in our laws and in our budgets. Those are the only receipts that matter in this moment.

So if black lives matter, we need to lead like it, and we need to legislate like it, and we need to act like it. And that includes the FED. Congresswoman, I did one last question. You mentioned the FED because I wanted to bring it back there. Looking again at um Uh Biden's platform, he mentions also having the FED focus more on racial economic gaps. Do you feel that Powell gets this? There's gonna be a lot of questions at some point in the theoretical Biden administration about whether

he should be reappointed. In your communications conversations, do you feel that Powell understands this and what it makes sense to reappoint him as recently I've been disappointed. I'm not sure that he understands um the gravity of the impact of the lack of action by the FED and fully appreciates the power that they have and the role that they can play and addressing these racial injustice is and in particular black unemployment and the racial wealth at Congressman Presley,

thank you so much for your time. Incredibly important topic and I appreciate you coming out. Thank you, Thank you so much. Tracy. I feel like so many of these conversations keeps coming back to the question of can we really go back to the status coo epidus. Yeah, I think that's right, and I think the way the congresswoman put it, the idea of a reckoning that will now lead to a reconstruction. That's a good way of thinking

about it. It seems pretty clear that policymakers have a mandate to do something differently now, I guess, I guess the question is how do they do it under time

pressure and how do they actually constructed and maintain that momentum. Yeah. Absolutely, I think it's also really important and really interesting her continued citation of the Humphrey Hawkins Act, because people have this idea that it's like, okay, target full employment or target maximum employment and price stability without really realizing well, and then and then full employment gets redefined as just sort of like, oh, this is like what a model

says employment should be before inflation takes off. And as we saw during you know, the post crisis era, whether it was the FED started high grades, I think in you know, they really have no idea. And that's not even an insult per se to the Fed. It's like,

these are really hard things. And so the idea of taking full employment more seriously and not hiking rage just because some model says, you know, pretty soon inflation might pick up to two point one percent if we don't, I think is going to be one of the big changes and we already see that with you know, some of the commentary out of the FED about not trying

to preemptively fight inflation this time. But if you, you know, looking back at that experience, looking back at the cyclical aspect of the black white unemployment gap, perhaps this time around actually taking full employment uh and getting the unemployment rate down to as low as possible, it seems like it might be taken more seriously this time. Yeah, I think it would. One thing that we didn't really discuss though,

is the role of the FED on asset prices. And if you think that, you know, low interest rates are going to boost asset prices in general, and but if you if you agree to that, then the vast majority of financial assets, you know, are held by rich people who are generally well off, lots of white people. And I guess there's a question around financial inclusion there as well, like how do you get more people to participate in

a financialized economy? Yeah, no, I mean I think that's I thought you had a really good question about the sort of public cynicism around bailouts, and you know, these are all slightly different things. In the word bailout gets used, Um, you know, some people think, you know, stimulus and bailout and cutting rates, etcetera. But there is just a lot of cynicism towards the potential for policy to make things

better for the public. And I feel like, you know you every time the Fed does something, people point to exactly that and they're like, well, not everyone has assets in the stock market. Not everyone benefits from a booming housing market, particularly in cities, or particularly in places where a lot of people are renting, and not um not participating in that upside. And so I do think that obviously monetary policy, interest rate policy as a role to play.

But I think congress Woman Congresswoman pointed out, it's really a sort of it's a crisis, it's and it's an issue that needs to be addressed at all different levels of government. Uh. To me, it almost gets to these big philosophical questions like whether people care more about absolute gains versus relative gains, because you can argue that everyone

will benefit in some way from whatever policy. But I guess in reality, if people see their neighbor, for instance, benefit more on a relative basis, I guess people still get angry that that feels like the essence of the problem. To me, like whether or not you believe relative gains are more important or absolute gains. But again, big questions, Yeah, big questions and potentially a moment of a big change.

But yeah, it'll be really interesting to have similar conversations, hopefully not exactly the same, but more conversations on this topic next year and see how much has actually like shaken out in terms of change. Yeah. Absolutely, Okay, all right, well this has been another episode of the All Thoughts podcast. I'm Trucy Alloway. You can follow me on Twitter at Trucy Alloway and I'm Joe Wasn't All. You can follow me on Twitter at the Stalwart and follow our guest

on Twitter, Congresswoman Ianna Pressley. Her handle is at Ianna Pressley. Follow our producer on Twitter, Laura Carlson at Laura M Carlson. Follow the Bloomberg head of podcasts, Francesco Levi at Francesco Today, and check out all of our podcasts under the handle at podcast. Thanks for listening. A