Despite the expiration of enhanced $600 federal unemployment checks and the end of a moratorium on tenant evictions, Congress remains deadlocked on negotiating a coronavirus rescue package. While the House passed a $3.4 trillion pandemic stimulus bill in mid-May, the Republicans who control the U.S. Senate are unwilling or unable to negotiate desperately needed funding legislation.
Into this void President Trump launched a series of symbolic executive actions that give the appearance of a White House taking charge, but in reality, will likely provide little or no help to ordinary Americans.
While the Trump regime and Republicans fight to limit government spending in the next round of emergency COVID assistance, the Federal Reserve is deregulating the banking industry and spending $4 trillion to $6 trillion to prop up financial markets by buying up corporate bonds. These trillions of dollars are being spent by the Fed without any public debate or oversight. Between The Lines’ Scott Harris spoke with Hadas Thier, an activist and author based in New York City, who talks about the failure of Congress to pass a pandemic rescue package, and the trillions being spent by the federal reserve – no questions asked.
HADAS THIER: We’re at the precipice of a major housing crisis of evictions and homelessness around the corner and all the rest of it. And in that context, the deadlock that’s happening in D.C. right now is just infuriating. It’s basically the whole stimulus package is being used as a political football and, you know, in an election year, it’s absolutely infuriating and absurd that they haven’t gotten further in all the time that they’ve had. And obviously the lion’s share of fault lies with the Republican party because they, you know, they’ve had months to come up with a counteroffer to the Democrats’ proposal and they didn’t. And they’re refusing to budge on the major issues and then how much is allocated. But I think that the overall kind of theatrics that are being played out right now are coming at our expense.
SCOTT HARRIS: Hadas, in your article, you wrote about the Federal Reserve and the literally trillions of dollars being pumped in to certain sectors of the economy. We often hear the saying that Wall Street is not the U.S. economy. But you have people like Donald Trump who don’t seem all to conversant in economics, looking at Wall Street as a barometer of the U.S. economy. And while we’re at record unemployment, and certainly for many people across the country in a very stressful situation with no job and no reliable source of income, the stock market is doing quite well. Tell us about the connection with the Federal Reserve and what they’re up to.
HADAS THIER: Yeah, I mean, that’s a great question. And I think, you know, a lot of what’s shady about that whole situation is that it’s completely undemocratic. I mean, all of these debates happening in Congress – for all their faults, they’re out in the open and the people that are debating this out are open, are facing re-election prospects and have some semblance of accountability to somebody.
The Federal Reserve is able to just essentially print out money. It’s not physical money that they’re printing, but they’re creating money. They’re pumping it into financial markets. There’s zero oversight. You know, some of it is necessary. If we had a situation where the financial markets completely froze up and there wasn’t credit flowing to businesses, you know, that would be a very big shock to the system and would be very destructive to regular people’s lives in addition to those companies.
But there’s basically no strings attached to any of this stuff. They’re now lending money, putting money through banks, into the financial markets, but they’re actually lending money directly to corporations for the first time. That’s something that’s always been seen as the purview of Congress and the kind of fiscal spending is built into the stimulus bills that are being debated. But right now the Federal Reserve is kind of doing a runaround and is able to lend money directly to corporations. And part of what that means is that they can get away with doing things like bailing out the oil industry. Whereas when it happens in Congress, again, there’s a little bit more oversight and a little bit more transparency there. Not that doesn’t mean there isn’t plenty of corporate slush funds that are being pumped in through the stimulus bills because there are, and there were, there was nearly $60 billion that went to the airline industry, which is in, you know, an industry not known for particularly protecting its workforce.
They’re debating out in Congress right now, $1 trillion versus $3.4 trillion. Democrats have already said that they were willing to go down to $2 trillion. The Republicans are saying that’s absurd. But meanwhile, like the Federal Reserve, no one’s debating these numbers. They’ve already said that $4 trillion (is) allocated to these various facilities. Most estimates say that it’s more like $6 trillion. It’s going to be spent, you know, in the pretty near future. That’s huge sums of money. And that is money that actually could be going to certainly enhance the unemployment benefits, but also very many other things that are desperately needed for states, hospitals, for vaccines, etc. It’s money that’s completely unaccountable.
SCOTT HARRIS: Is there any move in Congress to attempt to hold the Federal Reserve accountable for what they’re doing and to reprioritize those large numbers of dollars that are going to financial institutions right now?
HADAS THIER: I don’t think so. I mean, I certainly haven’t heard of anything like that. I think it would be a very good idea. I think, you know, one of the things that I mentioned in my article was that as a left in this country broadly, you know, that we need to pay a lot more attention to the Federal Reserve and we need to start making demands around it. I think right now there’s a very small subsection of the left that really pays attention to what’s happening with the Federal Reserve. And so there’s a lot of attention being paid, and rightly so, to the question of extending unemployment benefits, you know, those are the things that are most immediately felt in our day-to-day lives. But we need to be able to have a little bit of a bigger picture about what the priorities are of our federal government in terms of how money is being allocated. And I think the Federal Reserve needs to be a key part of that. I think there needs to be a lot more of us kind of following and tracking what’s happening and coming up with demands that we can then bring to our representatives to try to make movement on.