The Trump Administration Abandons Borrowers, Why We Don’t Need a Social Wealth Fund, and the GOP Tax Law Hurts Workers…Again

August 31, 2018

The Roosevelt Rundown is an email series featuring the Roosevelt Institute’s top 5 stories of the week.

1. Trump Administration Abandons Student Loan Borrowers

On Monday, Seth Frotman stepped down as the top student-loan watchdog at the Consumer Financial Protection Bureau (CFPB). In a letter, he said that the agency, and ultimately the Trump administration, prioritized companies over students. Roosevelt Fellow Julie Margetta Morgan spoke with BBC News about Frotman’s resignation, as well as the state of the student loan system in the U.S. “When the agency is very obviously catering to the needs of those who are the most powerful and wealthy in the industry, it’s hard to see how the needs of average Americans are going to get represented adequately,” she said.

2. Trump’s Trade Talk Is Cheap

On Monday, Roosevelt Fellow Todd N. Tucker responded to a preliminary trade deal between Mexico and the United States. “Today’s North American Free Trade Agreement (NAFTA) announcement by the U.S. and Mexico tells us little about the ultimate shape of any renegotiation, as many issues are not yet resolved and neither Canada nor Congress have agreed to any new deal,” he said. “Wait many more days, and Mexico’s new incoming progressive government may veto the deal; wait many more weeks, and a new class of Democrats in the House might do the same.”

3. Why We Don’t Need a Social Wealth Fund

For The Intercept, contributing writer Rachel M. Cohen suggests that a “social wealth fund”—a publicly owned fund that the government would invest (in the stock market or real estate) and then allocate profits to citizens—may be the next big idea. Roosevelt Fellow Mike Konczal shared his concerns with Cohen, later penning a blog post on why a social wealth fund won’t secure the progressive agenda we need“By tying citizenship and economic security directly to the power of shareholders, we are working in exactly the wrong direction. It isn’t necessary, and it isn’t even an effective way of accomplishing our goals.”

4. GOP Tax Law Hurts Workers…Again

Blaming budgetary constraints, President Donald Trump canceled pay increases for over 2 million federal employees this week—raises that were supposed to take effect in January. Following the passage of the Republican tax law, Roosevelt Fellows Darrick Hamilton and Michael Linden warned about this specifically in an issue brief on the hidden rules of the new tax code. “The cost of Trump’s tax cuts for the rich will be borne by public sector workers and therefore by Black communities who have historically used public sector jobs as a pathway to the middle class,” said Linden.

5. Are Mega Corps Running the Economy?

We know that consolidation in the U.S. determines who holds corporate power, but such forces may also be stripping the ability of agencies like the Federal Reserve to maintain a healthy economy. “The biggest companies may be influencing things like inflation and wage growth, possibly at the expense of central bankers’ power to do so,” writes Neil Irwin for The New York Times. Irwin spoke with Roosevelt Research Director and Fellow Marshall Steinbaum, who pointed to inadequate analysis and lax enforcement within government: “Cutting-edge research tells us exactly what’s going on, and yet the Fed seems to be considering this for the first time.”

What We’re Reading

For Project Syndicate, Roosevelt Chief Economist Joseph E. Stiglitz debunks the myth of secular stagnation, or the view that the economy is prone to sluggish growth. Ultimately, Stiglitz underscores why the rules of our economy and democracy, not natural law, decide who wins and who loses in the 21st century: “There are many lessons to be learned as we reflect on the 2008 crisis, but the most important is that the challenge was—and remains—political, not economic: There is nothing that inherently prevents our economy from being run in a way that ensures full employment and shared prosperity.