Readers know I’ve been following the Fed’s municipal lending facility as a possible route to liquidity support in school funding. I’m using this space to track as many possible angles on this as I can, specifically oriented towards a campaign to get better terms on MLF loans so state and local governments can the provisions they need. I’m particularly interested in improving school infrastructure given my home city Philadelphia’s struggles with infrastructure.
In the last couple weeks there have been a ton of interesting tidbits in the news on this front. I haven’t pulled these together into an essay. Not sure if it’s because Thisbe’s not sleeping well, I’m applying for tenure, or the presidential election is threatening to crack open an already faltering US social structure—whatever it is, my brain is scrambled. So I rounded up some links and images. Enjoy!
Adam Tooze notes that the IMF is coming out in favor of debt-financed public investment, particularly when it comes to maintenance. That’s exactly what we’re fighting for in the MLF strategy.
Anton Jager and Noam Maggor have an interesting piece about the populist history of the Federal Reserve. They emphasize the fact that rural populists, largely farmers, fought hard for monetary policy that helps everyone. We owe the populists for the fact that the Fed isn’t a central bank but rather a system of regional reserves. Really interesting to consider given that what we’re calling for in the MLF strategy is to leverage the Fed for the people. That is in its history.
Along similar lines, Robert Hockett had a great historical piece in the Financial Times going over a legal and juridical history of the Fed. Hockett makes the case that helping state and local governments are clearly in its remit.
Bruce D. Baker—progressive school funding guru—posted a good thread with some updated school funding data, including per pupil spending differences across family income with labor cost adjustments.
Apparently Nancy Pelosi contacted Jerome Powell as part of the ongoing negotiations for more fiscal support. Funding for local and state governments has been a sticking point in those negotiations. I think it’s interesting that she consulted Powell: it shows that the Fed is a partner in helping state and local governments. Sam Bell tweeted a great meme on this front:
Speaking of which, Fed Up reports that the HEROES Act that congress is getting ready to vote on (again) pressures the Fed to get rid of pointless penalties in the terms on MLF loans.
And speaking of Fed Up, their 2014 campaign against the Fed was badass. Their demand was for Yellen to keep interest rates low to help reduce unemployment. A bunch of organizers went to Jackson Hole, made a big stink, and they won. An important precedent for us to study now (and one I just found out about).
The Bureau of Economic Analysis had a great chart showing the disparities in GDP slides in every state for quarter 2. These numbers are huge. Remember that state and local funding relies on taxing production and that GDP is a measure of that production. That’s why the Center for Budget and Policy Priorities estimate $291 billion on average in terms of state budget shortfalls in FY20-21.
ACRE is getting ready to launch an amazing campaign taking on the Fed and Wall Street. Keep your eyes peeled.
Philadelphia’s treasurer is in hot water for allegedly embezzling money while working for Wells Fargo. This is a strange coincidence given that the city’s most recent bond issuance went to WF at the high rate of 4%. I thought there was something fishy going on here and looks like there maybe was.
The American Prospect continues their solid coverage of pandemic public finance, this time focusing in on the corruption of municipal markets as a key site of ruling class power.