Powell, Former Fed Chiefs Make the Case for More Government Aid

Fed Chairman Jerome Powell. (Photo: Christophe Morin / Bloomberg)

More than 100 economists, including former Federal Reserve chairs Ben Bernanke and Janet Yellen, have written the four top congressional leaders, urging Congress to pass another economic recovery package before most benefits from the CARES Act expire this summer.

The letter stresses the needs of lower income households — almost 40% of those earning less than $40,000 a year lost a job in March — and highlights the deeper economic and health crises suffered by minority communities compared to white communities. 

“Black Americans have consistently faced unemployment rates twice that of White Americans” and black, Latino and Native American households account for a greater share of COVID-19 deaths, according to the letter sent to Sens. Mitch McConnell, R-Ky., and Charles Schumer, D-N.Y., and to Representatives Nancy Pelosi, D-Calif., and Kevin McCarthy, R-Calif.

A recent analysis by the Brookings Institution, based on data from the Census and the Centers for Disease Control, found that the age-adjusted COVID-19 death rate for black Americans is 3.6 times that of whites and for the Hispanic/Latino population 2.5 times that of whites.

“Policymakers in Congress and the Federal Reserve responded to this crisis with unprecedented levels of economic support for those affected but more needs to be done,” the economists’ letter states.

It calls for a multifaceted economic relief bill that will provide continued support for the unemployed — the federal benefit of $600 a month is set to expire at the end of July — new assistance to state and local governments, investments in programs to preserve the employer-employee relationship and additional aid to stabilize aggregate demand.

Congress should not repeat the mistake it made during the Great Recession when “insufficiently bold policy policy responses … unnecessarily prolonged suffering and stunted economic growth,” the letter states.

Powell’s Testimony at the Senate Banking Committee

In his testimony before the Senate Banking Committee on Tuesday, Fed Chairman Jerome Powell, noted that during the current downturn “low-income households have experienced by far the sharpest drop in employment, while job losses of African Americans, Hispanics and women have been greater than that of other groups. If not contained and reversed, the downturn could further widen gaps in economic well-being that the long expansion had made some progress in closing.”

In the last jobs report, which showed a surprising drop in the unemployment rate to 13.3% overall, the jobless rate for African Americans actually rose, to 16.8%, while the rate for white Americans fell to 12.4% “Minorities are substantially overrepresented in the unemployed,” Powell said.