MNE commenter "Laura" brought the existence of this Law to our attention in a recent comment and I thought it may be a good idea to post a link to the Act's wiki page to help familiarize or re-familiarize ourselves with this Act in light of recent discussions concerning the employment aspects of MMT.
Some excerpts from the wiki page:
...the Act provides for measures to create temporary government jobs to reduce unemployment,...
...If private enterprise appears not to be meeting these goals, the Act expressly allows the government to create a "reservoir of public employment."...Here is a link to the actual US Government H.R. 50 Legal Summary.
Declares the purpose of this Act to achieve a balanced Federal budget consistent with the achievement of the medium-term economic goals specified in this Act.......... Requires that the President's Budget recommend levels of outlays and receipts which are consistent with the short-term economic goals for employment and unemployment, production, real income, productivity, and prices and provide five-year projections of outlays and receipts consistent with the medium-term goals of reducing the rate of unemployment and inflation.
14 comments:
Not like Acts of Congress mean anything anymore. Like the 14th Amendment and the validity of the public debt. That was trampled upon earlier this year. Or the right to peaceful protest...bludgeoned as well. Why should this clause in Humphrey Hawkins mean anything? It inconveniently flies in the face of a brutal dogma that has, unfortunately, become the current reality. There's no interest in creating jobs. Jobs hurt profits. Profits are what corporations need to maintain ownership of the government and get a greater share of the public wealth.
We need to push congress and the executive to obey their own laws. They pass these laws to get votes but there is no intention of really following the prescription. The temporary holiday workers are being laid off this week and next and the rosy unemployment figures are about to get ugly unless someone in government takes action. But they won't because unemployment is a huge election year tool to motivate voters to vote for their party and vote against the other misguided party. The beauty of the system is that it is always your party that is helping and the other party is always wrong and you are getting screwed no matter which party you vote for. Win-Win for Demo-Repubs.
"The Act explicitly instructs the nation to strive toward four ultimate goals: full employment, growth in production, price stability, and balance of trade and budget."
If the budget is balanced and trade is balanced, then net private sector saving must be zero, by the sectoral balance equation. With all the incentives in place for private sector saving (pension plans, 401(k), IRA,) in addition to normal impulses, this law is not only unwise and contradictory, but mathematically unachievable.
It does seem to authorize JG, though.
Occupy Humphrey-Hawkins !!!
Anon,
Yes looks like it needs some tweaking....
But imo, it would not preclude a President to for instance look at the CAD and say: "ok the CAD is skyrocketing so in the spirit of full employment I'm going to propose an increase in the EITC and direct hiring programs in order to counteract the CADs effect on employment...." etc..
Resp,
In terms of govt operations, this carries all the economic firepower of Congress renaming a post office after a really nice person.
Congress can loosen fiscal policy by one of two ways:
1. Cutting taxes (tax bills are always amendments to "the Internal Revenue Code of 1986" aka "Title 26"); or
2. Appropriating new spending (there'll always be clause like this: "There is appropriated, out of any money in the Treasury not otherwise appropriated, the sum of..."). If a law doesn't explicitly do one of those two things then Congress is operating in "its the thought that counts" mode.
Now Humphrey-Hawkins does do something very important that EVERYONE (ex Dean Baker) forgets:
it sets the full employment target rate as not more than 4% unemployment rate and the stable price inflation rate as not more than 3% inflation rate.
Once full employment is achieved, the target inflation rate becomes 0%. However both before and after full employment is reached, as a matter of national policy, the stable prices goal is always subordinate to full employment goal.
Provided, That policies and programs for reducing
the rate of inflation shall be designed so as not to impede
achievement of the goals and timetables specified in clause (1) of this subsection for the reduction of unemployment.
http://codes.lp.findlaw.com/uscode/15/21/1022a
Beo,
In addition to the targets, there should have been penalty clauses for not meeting the targets. For example, "If unemployment exceeds 4%, the President and the congress shall be 'tarred and feathered'" or some such thing like that!
Beo,
Right it sets some high level goal.. makes these goals official...
But I come back to Bush/Cheney doing a lightning strike $650 tax rebate in May/June 2008 when things started to roll over and the CAD was shooting up with the crude prices and China ... a quick, surgical fiscal adjustment in mid-FY that can then even be followed up with another if the first one doesnt have the required effects wrt employment.
In the spirit of the H-H Act the President can always quickly shoot something like this over to Congress for quick approval and the balances start to be transferred immediately.
The GOP just does stuff like this routinely when they are in the Executive Office, Obama is just a really weak President...
Resp,
MMT insights could be used to update Humphrey-Hawkins. But what is the main obstacle? Only the private sector can create jobs.
Giving the private sector ten years might be asking too much.
"there should have been penalty clauses for not meeting the targets"
What was going on here was the opponents of the bill were willing to let full employment supporters say whatever they want but refused to allow in the bill the necessary automatic fiscal policy (tax cuts or appropriations). Now another way to tackle it would be to back the Federal Reserve into adjusting fiscal policy.
Congress could order the Fed to do two things in a single "fire and forget" bill.
1. levy a flat percentage fee on every bank or securities market transaction that moves through FRS (so same percentage for wire transfers as for personal checks) at any rate between 0.001% and 1.0% that the Fed governors deem advisable to achieve their dual mandate of full employment and stable prices.
2. Mandate that Fed's annual refund earnings to Tsy must be no less than sum of CAD and debt service on publicly held debt (i.e. inclusive of the Fed-held debt whose interest is already refunded). So intead of this year's on-budget rebate of $80 billion, the Fed would refund appro. $800 billion.
The $800B (or so) would be transferred in any event; the only question for the Fed governors would be how much of that should be offset with a transaction fee. Whatever rate they set would generate $800B to 0 (or even a negative amount) in fiscal stimulus.
Beo,
Post that on the OWS Alternative Banking Discussion group. Put the modification of the Humphrey Hawkins on the OWS agenda. You have posted there earlier. Please do this again. I think this one could have legs!
Didn't one of the Galbraiths work on the H-H Act?
If not, I'm certain Jamie commented on it in the last 12 months - I seem to recall watching/listening to him.
And as an aside I never know whether to call him Jamie Galbraith or James K. Galbraith - I've seen both.
"Put the modification of the Humphrey Hawkins on the OWS agenda."
Thanks for the kind words Clonal but its not coming within a country mile of Humphrey Hawkins.
Rather, it would amend the Federal Reserve Act in two ways; 1. To mandate a minimum earnings rebate and stipulate that it could be paid out of earnings, fee revenue, Fed Certificate of Deposit proceeds or "negative capital" (Fedtalk for attributing its losses to Tsy and then forgetting about forever). 2. Mandate the Fed levy a payment transaction fee no more than 1.0% and not less than 0.001% to be set and adjusted at discretion of Fed governors.
Actually step 2 is optional, if Congress mandated 1, the Fed can handle 2 on its own (but nudging them into action wouldn't hurt).
"The services which shall be covered by the schedule of fees under subsection (a) of this section are—
(1) currency and coin services;
(2) check clearing and collection services;
(3) wire transfer services;
(4) automated clearinghouse services;
(5) settlement services;
(6) securities safekeeping services;
(7) Federal Reserve float; and
(8) any new services which the Federal Reserve System offers, including but not limited to payment services to effectuate the electronic transfer of funds.
http://www.law.cornell.edu/uscode/usc_sec_12_00000248---a000-.html
Beo,
Put the post up on the OWS Alternative Banking site
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