Living together in a productive society can be hard, so we count on a set of common sense rules to help us all do better together. Whether it's sports rules, tax rules or the rule of law, rules are important to help maintain a functioning society. Rules are an agreement we've made with each other so all of us have a shot at living productive, healthy, and happy lives.
But rules can also be manipulated. That’s why it’s important to know who is making them and how their decisions affect our jobs, mortgages, credit card bills, and daily lives.
Last week the AFL-CIO hosted a conference to discuss our country’s monetary policy – decisions on lending rates, interest rates, and the availability of money circulated by banks – and how it should promote shared prosperity. The panelists and participants also discussed trade deals, employment, wages, and the role of policy makers. AFGE Public Policy Director Jacque Simon served as the moderator on one of the panels.
There are all kinds of policy makers in Washington, but there are three groups of policy makers that have tremendous power over decisions and rules that directly affect everyone in the country. And they are not necessarily focused on advancing the interests of working Americans.
Read on to find out who they are and how their actions affect us all:
The "Fed," as it's often called, is basically the country’s central bank. It controls the total amount of money circulated in the country. It decides when to raise or lower interest rates and thus the terms and availability of money circulated by banks that people and businesses can borrow. If the interest rates are high, buying a home or a car will be more expensive. Your credit card interest rates can go up, too.
Don’t be fooled by the word “federal” in its name. It has been said that the Fed is about as “federal” as the for-profit mail service Federal Express. Even though it’s supposed to be a government entity – its chairman is appointed by the President – the Fed is mostly comprised of bankers. It's a pretty straight-forward explanation of why its monetary policies are often catered to the benefits of the banking industry.
The Fed, for example, had the authority to prevent irresponsible lending practices that led to the crash of the real estate market. But, it opted to not use that authority. The Fed also opposed tougher regulations on financial institutions’ risky financial ventures, (called derivatives) which, coupled with the burst of the housing bubble, led to the 2008 financial crisis in which people lost their homes and jobs. The crisis also resulted in taxpayers bailing out big banks that were considered 'too big to fail.'
Although there were some projects aimed at growing the economy, overall the federal government tightened its belt and stopped investments in schools, roads, bridges, transportation, and other services to the American people. The Fed's inadequate actions failed to counter the damage done by austerity measures. The Fed essentially failed to help prevent the crisis and then was not able to do enough to help it end quickly.
“Financial regulations have been bought by Wall Street,” said Laurence Ball, professor of Economics at John Hopkins University, one of the speakers at the AFL-CIO event.
The USTR recommends trade policy to the President and negotiates trade deals with other countries on behalf of the United States. But from what we’ve seen, the agency mostly negotiates trade deals on behalf of U.S. multinational corporations, not U.S. workers. The Transpacific Partnership Trade Agreement (TPP) repeats too many failed rules from prior trade deals like the North American Free Trade Agreement (NAFTA). Should it be put in place, it would lead to loss of countless jobs for America’s workers as U.S. manufacturers move factories overseas and export their products back into the U.S.
TPP would also increase corporate influence in the United States and overseas. It would NOT protect workers’ rights as labor provisions are included as a side agreement whose provisions are nearly impossible to enforce.
“USTR doesn’t advance the advantage of U.S. workers, just U.S. firms,” said AFL-CIO Trade Policy Specialist Celeste Drake.
The House and Senate have committees that handle various issues like the armed services, veterans' affairs, finance, governmental affairs, and foreign relations. The committees on financial services oversee the entire financial service industry, including bank regulation.
Above, we mentioned how unregulated high-risk derivative trading led to the financial collapse - resulting in the bailout of big banks and leading to policies that hurt most working Americans.
Well, it could happen again if the chairman of the House Committee on Financial Services has his way. Earlier this month, Chairman Jeb Hensarling of Texas unveiled a plan to repeal major Wall Street reforms under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The law was enacted in 2010 to prevent the excessive risk-taking that led to the financial crisis and to protect American families from being exploited by mortgage companies and pay-day lenders.
The chairman’s plan would “deregulate just about every corner of the financial sector,” said Congresswoman Maxine Waters of California, who was a keynote speaker at the event.
These three groups of policy makers have the power to write rules that can benefit anybody, but historically, the rules they make are tilted in favor of the powerful special interests, which in turn harms the rest of us.
What can we do?
Organize. Join a union. Join AFGE. Stand together to fight reckless greed on Wall Street and bankers' allies in Congress. The success of the Fight for $15 campaign proved that when we join together we can win victories that once looked improbable. Take our voice back and organize!
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