AOC’s Advice for the Fed
July 16, 2021
By Matt Hughes
Don’t Fight the Boom
Rep. Alexandria Ocasio-Cortez (D-NY) had a clear message for Federal Reserve Chair Jerome Powell this week: Don’t worry about inflation yet.
“My concern, to be frank, is that a misplaced diagnosis playing out with inflation could cause the Federal Reserve to prematurely raise rates and constrain wage and employment gains that have been beneficial to millions of Americans,” she said at a House Financial Services Committee hearing on Wednesday.
It’s a concern Roosevelt experts share: that overly cautious policymaking could weaken a recovery that’s poised to create millions of jobs and flatten racial and gender employment gaps.
As Mike Konczal and J.W. Mason wrote for the New York Times, “. . . having the Federal Reserve ‘pump the brakes’ on the economy by raising interest rates—does little, if anything, to solve supply and demand dynamics outside of depressing demand via potentially sparking a recession.
“It also ignores the possibility of great news about economic potential: Demand running ahead of what we’re used to could mean we’re finally in the early innings of another boom.”
With increased public investment, like the American Jobs Plan and American Families Plan proposals now included in Senate Democrats’ $3.5 trillion budget outline, we can own that boom rather than fight it—and create a stronger, more equitable labor market than we’ve ever seen.
Next week, watch this space for a new Roosevelt issue brief by Mason, Konczal, and Lauren Melodia—“Reimagining Full Employment: 28 Million More Jobs and a More Equal Economy.”
The Child Tax Credit
Beginning this month, about 39 million families will receive cash payments as part of the American Rescue Plan’s expanded child tax credit policies—among the most significant anti-poverty measures in decades.
The now-recurring, fully refundable child tax credit is a model for effective policy structure. High in impact and visibility, it’s likely to activate a passionate base of defenders, as programs like Social Security and Medicare have in the past.
That’ll come in handy for the next frontier: making the expansion permanent.
Learn more about successful policy design in Alexander Hertel-Fernandez’s “How Policymakers Can Craft Measures That Endure and Build Political Power.”
What We’re Reading
Are US Corporations above the Law? [co-authored by Roosevelt’s Joseph Stiglitz] – Project Syndicate
We Can’t Afford to Shrink the Infrastructure Bill [feat. Stiglitz] – New York Times
The Biden Antitrust Revolution – The New Yorker