Thread by @BharatRamamurti

The Fed continues to offer contradictory rationales for treating state and local governments worse than private companies. The truth is that nothing is stopping the Fed from offering more help and saving jobs -- it’s just choosing not to. 1/

nytimes.com/2020/10/21/bus…

Fed: All programs that use CARES Act money must include a penalty rate, which is why we charge state and local governments so much in interest.

Also Fed: Our CARES Act facility for corporate bonds purchases them at market price. 2/

Fed: Under the CARES Act, we can only act as a lender of last resort for state and local governments. We are a backstop, and just want private markets to function.

Also Fed: Our CARES Act program for midsize companies actively encourages banks to make loans to businesses. 3/

The Fed’s lending programs are an exercise of its monetary policy authority, and as such, are supposed to support “full employment.” That's a clear justification for more support to state/local governments, who have already fired 1M+ people because of budget shortfalls. 4/

The Fed also said its full employment goal is “broad-based and inclusive” -- meaning it should reflect that Black and female employment can lag overall rates. Black and female workers are disproportionately hurt by state/local cuts. The Fed's actions don't match its rhetoric. 5/

Rather than hiding behind conflicting legal rationales, the Fed should just provide the same type of support to state and local governments that it is providing to private companies. State and local officials have outlined what they need here 6/

https://twitter.com/BharatRamamurti/status/1316831547815800833?s=20