This report was written by David Sirota and Walker Bragman.
Every now and again, you can see public officials’ true priorities by watching the difference between what they aggressively advocate for and what they don’t. A good example is on display right now in the escalating fight over stimulus legislation in Congress.
For weeks, Joe Biden’s team has tiptoed around the bill, and avoided strongly and consistently pushing for direct aid to Americans, even as the country faces mass starvation and rising poverty. But yesterday, Biden’s designee to run federal economic policy suddenly weighed in in an uncharacteristically forceful way — to demand Congress protect a program that has provided little relief to ordinary Americans, but has significantly benefited his Wall Street firm.
In a formal statement from Biden’s transition team, the president-elect’s designee to run the National Economic Council Brian Deese demanded Congress reject Republican-backed legislative language designed to curtail special Federal Reserve lending programs created in the first pandemic legislation passed earlier this year.
“It is in the interests of the American people to maintain the Fed’s ability to respond quickly and forcefully,” Deese said. “Undermining that authority could mean less lending to Main Street businesses, higher unemployment and greater economic pain across the nation.”
While the Fed programs have been criticized for being underutilized, they have significantly boosted BlackRock, the firm that was hired to advise the Fed and that has been employing Deese as a managing director.
The Fed programs in question could be making a big positive impact on the economy, but so far they have been stingy with small businesses and state and local governments. The programs, though, have boosted the fossil fuel industry, and the Wall Street Journal reported in September that they have been a particular “boon for the company the Fed hired to help execute its plan: BlackRock.”
The firm has primarily benefited from the Fed’s decision to purchase BlackRock’s exchange traded funds, which prompted other investors to put money in the same vehicles.
“The funds the Fed ultimately did buy became even more popular with investors, who put $48 billion into them in the first half of 2020, nearly twice the amount that went in the year before,” the Journal reported. “BlackRock funds were especially popular: They took in $34 billion, about 160 percent more than in the first half of 2019.”
The Financial Times concluded that the Fed programs have “helped BlackRock emerge as one of the biggest winners in finance from the COVID-19 crisis.”
For his part, Biden has been all over the place when it comes to the stimulus legislation.
At one point, he seemed to signal vague support for direct aid, but at another point when the House and Senate seemed close to reaching a deal that included state and local aid and a corporate liability shield, but no stimulus checks, he seemed to signal his support for such an agreement.
Asked about Sen. Bernie Sanders’ opposition over the lack of checks, Biden acknowledged that the deal would be better with checks and that those may still be “in play.” However, he said, “This is a democracy and you’ve got to find a sweet spot where you have enough people willing to move in a direction that gets us a long way down the road, but isn’t the whole answer.”
That rhetoric is a lot more squishy and noncommittal than the assertive demands to protect the program helping BlackRock — which tells us a lot about priorities.
To be sure, Democrats are right to argue that the Fed lending programs have enormous potential to help local economies, and that the GOP’s effort to curtail them seems designed to sabotage that potential. The story here is less the programs themselves — which probably should be preserved — and more the difference between what the party seems willing to truly fight for, and what it seems willing to surrender on.
In much the same way a Wall Street-friendly Obama administration prioritized bank bailouts over direct aid to homeowners, Biden’s team has refrained from using significant political capital to push for direct aid to Americans — but it is aggressively going to bat for a program benefiting Wall Street. And the specific Biden appointee going to bat for the program literally works at the financial firm that has been benefiting more than any other.
The dichotomy says a lot about priorities — and whom the Biden team believes it ultimately answers to.
Photo credit: Alex Wong / Getty Images
This newsletter relies on readers pitching in to support it. If you like what you just read and want to help expand this kind of journalism, consider becoming a paid subscriber by clicking this link.