Prominent Democrats press Fed, Treasury to aid states,
citing racial inequality
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[July 14, 2020] (Reuters)
- With the Republican-controlled U.S.
Congress far from agreement on how or even whether to give more aid to
states and cities reeling from revenue losses during the coronavirus
crisis, three U.S. Senate Democrats are appealing to the U.S. Treasury
and the Federal Reserve to do more to help.
Citing the particularly sharp impact that cuts to government jobs and
services would have on Black Americans, senators Elizabeth Warren, Chris
Van Hollen and Catherine Cortez Masto called on Treasury Secretary
Steven Mnuchin and Fed Chair Jerome Powell to ease the terms of the
Fed's lending facility for state and local governments to allow more to
tap it.
So far only one state, Illinois, has borrowed from the facility,
launched in May as one of nearly a dozen Fed programs aimed at nursing
hard-hit segments of the financial markets and the economy during the
crisis.
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Lockdowns, high unemployment, and a drop in consumer confidence has
decimated household spending and reduced states' revenue from sales and
other taxes, forcing many to lay off staff, trim services, and plan for
more cuts in the coming year.
"Communities of color are already bearing the economic burden of this
pandemic," the senators wrote in a letter dated July 10, a copy of which
was provided to Reuters.
"Failing to provide necessary aid to state and local governments not
only threatens the stability of communities across the country, it would
also have a disproportionate impact on women, Black, and Hispanic
workers, who are overrepresented in public sector jobs."
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![](../images/071420PICS/busine43.jpg)
Democratic 2020 U.S. presidential candidate Senator Elizabeth Warren
speaks to supporters in Monterey Park, California, U.S., March 2,
2020. REUTERS/Kyle Grillot
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Data from many states shows that Blacks and Hispanics are more likely to get
COVID-19, and to die from it, than their white counterparts.
They have also been harder hit economically, with unemployment among African
Americans at 15.4% and among Hispanic workers at 14.5% in June, compared with
10.1% among whites.
Among their demands: to give city and state borrowers more time for repayment
and to reduce the interest rate "to at least match the generosity you have
provided through the facilities that lend to businesses that are of even poorer
credit quality than the municipal borrowers," they wrote.
The facility should also allow smaller cities to tap it if needed, the senators
said.
"To be clear, these solutions are not a substitute for Congress stepping up to
provide the needed aid," they wrote. Fed policymakers have repeatedly urged
Congress to do so.
(Reporting by Ann Saphir; Editing by Kim Coghill)
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