The U.S. government can borrow money at a historically cheap rate, after the Fed cut interest rates to zero in March and signaled low rates are likely to remain in place through 2022. San Francisco Fed President Mary C. Daly was one of several top officials who called on Congress to invest soon in education, health care and digital infrastructure to create a stronger — and more inclusive — U.S. economy for years to come.
“We can’t wait 10 years for an economic recovery to reach everyone,” Daly said at a National Press Club event. “Inclusive growth is faster growth — and it will pay for itself in the long run.”
Fed leaders are making two big requests of Congress: First, to be prepared to deliver more emergency aid this summer if there’s a second wave of coronavirus cases and deaths. And second, to make long-term investments that can help the nation grow faster after the covid-19 threat passes.
“If we are going to get to the other side of this crisis, we have to be thinking about the longer-term changes that will enable our economy to recover — and give more people a shot at participating when it does,” Richmond Fed President Thomas Barkin wrote in a blog post Monday.
Barkin called for more spending on community colleges, digital workforce training, child care and elderly care to make it easier for the 21 million people currently out of work to find jobs again. The job losses have been the most severe for low-income black and Hispanic Americans, especially women who are the most likely to hold many of the restaurant, retail and hospitality jobs that were affected by stay-at-home orders.
The U.S. economy is facing its worst crisis since the Great Depression, and many workers may not return to the jobs they had before the pandemic. Meanwhile, the Fed has been criticized for rushing to aid Wall Street and large companies. Fed Chair Jerome H. Powell has pushed back, arguing that the jobs losses and permanent business closures would probably have been worse without the Fed’s aggressive action.
Powell and other top Fed officials have also said the central bank’s tools are best suited to boosting the overall economy and stabilizing markets. They say Congress has to play a role in making a more equitable economy and ensuring black and Hispanic workers are not permanently scarred by this crisis.
“The fastest-growing demographics in this country are blacks and Hispanics. If they don’t grow equally then we’re going to grow more slowly,” Dallas Fed President Robert Kaplan said in an interview Sunday on CBS News’ “Face the Nation.” Kaplan added, “Fiscal policy is going to be critical from here.”
The central bank has pumped close to $3 trillion into markets since mid-March, and slashing interest rates to zero helped provide financial lifelines to businesses, families and state and local governments.
Wall Street investors…