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budget cuts
The Fed Can Give States and Cities Money Power to Fund Essential Social Programs
Just as it offers credit to banks at policy-dictated interest rates, the Fed can create credit facilities for states and cities at a policy rate that will further its mandate of price stability and maximum employment.
Jun 22, 2025
In the face of President Donald Trump’s efforts to reduce the size of the federal government and the slashing of the federal budget, states, cities, and universities can target the Federal Reserve to demand access to 0% lines of credit.
Here are the central talking points of this article:
- States and cities are not helpless. The money for what we need is there if we demand it.
- The money is there for banks and corporations; it’s time we make it available for us.
- Jerome Powell doesn’t need to go along with Trump and create a recession. He can give us the same money power he gives banks to prevent an economic disaster.
- In 2020, the Fed opened up the money power to states and cities. We need them to do it again, before it’s too late.
States, cities, and universities are facing a potentially catastrophic level of austerity from Republicans in Congress and the White House. The massive budget cuts to healthcare, education, transit, and any discretionary program related to “equity” (alongside tax cuts and deregulation) would intensely constrain the possibilities for expanding social services and benefits for workers at the local level.
The federal government is the legal authority of the U.S. monetary system and faces different constraints on its power to mobilize resources than states, cities, and universities do. While the former brings money into existence through spending and “deletes” money through taxation, the latter do not have access to this “money power” and must tax and borrow in order to spend. The dollars created through federal spending can be called “government money.”
However, the federal government is not the only entity with the money power. Banks create money through loans. When a borrower gets a mortgage, for example, a deposit is created that introduces new dollars into the system, and repayment of the loan “deletes” that money out of circulation. Banks are delegated access to the money power from their legal charter, which grants them rights and responsibilities with the Federal Reserve, federal deposit insurance, and other regulations. The dollars created through bank lending can be called “bank money,” which makes up more than 95% of money in circulation.
States, cities, and universities fiscal policy exists downstream from government money and bank money. Their lack of access to money power is a fundamental political problem by design. The federal government retaining the sole power to create government money keeps states and cities subordinate to Washington as a power center; the Federal Reserve granting access only to privately owned banks means our society prioritizes private wealth accumulation first above social needs. As Congress and the president push to stop the flow of new government money, states and cities can use this as an opportunity to refocus on bank money and the discrepancy between giving private banks the money power instead of the public.
The Federal Reserve can resolve this unjust dynamic by opening up the money power to states, cities, and universities directly. Just as it offers credit to banks at policy-dictated interest rates, the Fed can create credit facilities for states and cities at a policy rate that will further its mandate of price stability and maximum employment. Toward that end, the best default interest rate would be permanently at 0%.
The Fed did open credit access to states and cities during the Covid-19 pandemic via the Municipal Liquidity Facility (MLF). However, they set a policy rate at a premium to the prevailing interest rate on offer by the municipal securities market. This backstop facility stabilized the municipal debt market in the immediate wake of lockdowns and their economic impacts but was only used by the state of Illinois and New York City’s Metropolitan Transit Authority (MTA). While the MLF was created using the Fed’s “emergency powers” under section 13(3) of the Federal Reserve Act, analysts such as Nathan Tankus affirm that ongoing credit lines to states and cities are plainly legal under the Fed’s normal statutory authority.
The upshot of an unlimited 0% line of credit from the Fed would be a profound expansion of the potential fiscal space for states, cities, and universities. In economic downturns, they would be able to “monetize” similarly to the federal government: expand public spending to lower unemployment and increase economic activity, while increasing taxes and fees to pay back the 0% loan over time. They would also save a significant amount on the interest paid to bondholders and debt servicing costs. This is why in 2021, the Philadelphia City Council unanimously passed a resolution calling on the Fed to do just this proposal, which states and cities could build upon today.
It is important to note that this would not be the same unrestricted capacity for mobilizing resources as the federal government. While an unrestricted 0% line of credit would be the ideal, the practical negotiation around implementation would be around constraints to address “moral hazard” concerns, which may include restrictions on the budget priorities or decisions made by states and cities. But just as with the Payroll Protection Program, which was a forgivable loan program provided to businesses during the Covid-19 pandemic, or as proposed by proponents of student debt cancellation, loans to states and cities could be de facto converted into grants through cancellation as needed. Over the long term, a public bank would be the ideal coordinating mechanism for a state, city, or university interfacing with the Federal Reserve, rather than their comptroller or treasurer’s office.
The economic crisis created by the Trump administration’s policies will likely initiate a next wave of “disaster capitalism,” gutting public services and outsourcing jobs to the private sector (and “AI”). The Fed has a duty to act to prevent the price instability and unemployment rise we can anticipate from this willful negligence and malice. It will only do so if the public recognizes the money power where it exists and makes clear that we will not accept inaction in the face of economic catastrophe.
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Those Who Would Be King
Trump’s June 14 spectacle isn’t just a parade; it is a flagrant exploitation of the military for personal and political gain, something we, who fought in America’s unnecessary and immoral wars, know so well.
Jun 13, 2025
After implementing significant budget cuts across various federal programs, including eliminating some 83,000 jobs at the Department of Veterans Affairs, 20,000 of which were filled by veterans, President Donald J. Trump plans to spend an estimated $45-96 million for a parade on June 14 to celebrate the 250th anniversary of the United States Army, and concurrently his 79th birthday. With a massive display of America’s military might, this event, according to the parade’s official website,“is designed not only to showcase the Army’s modern capabilities but also to inspire a new generation to embrace the spirit of service, resilience, and leadership that defines the United States.”
Trump has yearned to immerse himself in such a display of military extravagance no matter the expense and inconvenience to the public ($16 million additional in damage to Washington’s streets, the closure of two major airports, etc.) since witnessing France’s impressive Bastille Day celebrations during his first term. Much to his dismay, however, his plans were abandoned after pushback over cost and logistics from D.C. officials and opposition from then-Secretary of Defense James Mattis. Not unexpectedly, the current Defense Secretary Pete Hegseth, never one to thwart Trump’s wishes and illusions of grandeur, enthusiastically supports the parade.
It is a waste of money that could better be used to restore much needed funds for healthcare, housing, pensions, and giving our troops and their families the best care possible.
Interestingly, for whatever the reason, in hyping the parade, Trump fails to acknowledge, nor does he have similar plans to showcase, the modern capabilities and the “spirit of service, resilience, and leadership” of America’s other military branches that also celebrate their 250th Anniversary later in the year, the Navy in October and the Marine Corps in November. One may speculate that this omission may have something to do with their anniversaries not coinciding with Trump’s birthday.
Despite the optics of this parade falling on Trump’s birthday, event organizers insist that there is no connection between the two events. However, one must consider this claim in tandem with other measures that have characterized Trump’s reign of terror in the White House. His flurry of presidential orders is clearly intended to reinvent the presidency by vastly expanding his authority, powers, and the deference accorded to the Office he holds. Basically, he is attempting to reinvent the presidency as something that resembles a dictatorship rather than the democracy it has traditionally been in American history. And what better to accomplish this than a parade to celebrate the military and the weapons of war, an event befitting other megalomaniacal world leaders and dictators like Kim Jong Un, Vladimir Putin, Joseph Stalin, and Adolf Hitler.
Further, given the myriad incidents of flagrant animosity and disrespect Trump has exhibited toward the military in the past, i.e., his disparaging the parents of Humayun Khan, an army captain killed during the Iraq War; his characterizing soldiers who died defending this Country as losers and suckers; his refusing to visit, while in France, the graves of American service members killed during World War I because it was raining; his not wanting to be seen with wounded veterans because “it doesn’t look good for me;” his mocking of the late Arizona Sen. John McCain for being shot down and captured during the Vietnam War; his calling the military officials with whom he had worked “some of the dumbest people I’ve ever met in my life,” etc., one can understand why many veterans (and nonveterans alike) are skeptical of the organizers claim that this parade is intended to honor soldiers and veterans and celebrate America’s Army.
Many of us who served in the military, who shed our blood and sanity for this country, certainly remember. War never goes away and is with us for the remainder of our lives. But we who know the truth about war do not celebrate its horror and tragedy. Those of us who can, labor to live with it. Tragically, as indicated by the 18 veterans who commit suicide each day, many could not.
Many march to remember, others to forget.
But for those who truly know war
and suffer its consequences,
no ceremony or parade is necessary
as the memories,
the images of war,
and the faces of our comrades wasted in battle
visit us each night in our dreams.
Nor do the ceremonies and parades
help us to put to rest
the turmoil of a life interrupted
and devastated by war,
or to forget the killing and the dying.
Such ceremonies and parades accomplish nothing,
save to allow those who make war easily
or distance themselves from its insanity and horror
to feign support and appreciation
and to relieve their collective guilt
for immoral war and crimes against humanity.
Nor do ceremonies and parades
honor, educate, inform, or lessen the burden of loss.
Rather they celebrate and perpetuate
the myth of honor and glory,
and “The old Lie: Dulce et decorum est pro patria mori.”
I shall march no more—Camillo Mac Bica
This isn’t just a parade, therefore, it is a flagrant exploitation of the military for personal and political gain, something we, who fought in America’s unnecessary and immoral wars, know so well. It is an authoritarian display of power, and another means for Trump to celebrate himself and to expand his authority. It is a waste of money that could better be used to restore much needed funds for healthcare, housing, pensions, and giving our troops and their families the best care possible. Therefore, we must not remain silent. We must act, raise our voices in outrage, defy the ambitions of those who would be king, speak the truth about war, and not allow others, especially pretenders and posers, to misrepresent and mythologize that which they know nothing about.
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When Trump Lies, Democracy Dies
Trump’s lies are no longer just words; they have deadly and costly effects and can soon produce calamitous consequences.
May 26, 2025
The chronic lies of Der Führer Trump, hour by hour, day after day, are having deadly and costly impacts on the American people, with many more casualties in the pipeline of wreckage he and his henchman Elon Musk have wrought since January 20.
President Donald Trump’s lies, threats, and fake promises come from what dozens of psychologists who in 2017 perceived Trump as possessing an “unstable, dangerous personality.” Trump, a serial megalomaniac, announced recently: “I RUN THE COUNTRY AND THE WORLD.”
Confident that he can violate any law, any constitutional restraint, any international treaty, Dangerous Donald says he is “having fun,” flipping out one illegal executive order after another with cruel and vicious hammer blows against:
- Dedicated civil servants performing crucial tasks for Americans he has fired or replaced;
- Recent immigrants, paying taxes and working essential jobs at low wages (harvesting our food, cleaning up after us, caring for our children and elderly, for example); and
- Law enforcers and courts who worked to bring him to justice. The list of Trump’s wreckage is endless.
The torrent of Trumpian falsehoods have their own mass media—his own social media—and the mainstream media which still reports them out, including repeating his CAPITAL LETTERS, without giving his victims any right of reply, even when they are named. True, the mass media now tells us when some of his wild and crazy concoctions are “false” like his shameless false claim that a picture of graves was purportedly of slain white South African farmers.
But fact-checking doesn’t reach most of the people who receive Trump’s lies. For these people, his carve outs of reality are unrebutted. Unfathomably, reporters do not demand that he, Donald Trump, provide the evidence and the legal basis for his prevarications every single time they impact policy. Rarely, when they do, as in the case of Trump alleging widespread fraud by Social Security recipients, he backed off.
Mostly, however, starting with his endless assertion that he won the 2020 election “in a landslide,” eye-rolling reporters and editors don’t seem to see any point in routinely saying to him: “Prove it or admit you are mistaken.” In the vernacular—“put up or shut up.”
It doesn’t matter that Know-it-all Trump never admits any wrongdoing, any mistake, any failure, or any broken promises to his believing MAGA supporters. What matters is after a while, more and more people begin to see that he’s a fake, a delusionary con man and turn against him and proclaim “YOU’RE FIRED!”
For now, ensconced in the White House, Trump’s lies are no longer just words; they have deadly and costly effects and can soon produce calamitous consequences.
Here are some samples. Trump falsely dismisses with repeated disbelief the violent climate crises—notwithstanding record wildfires, floods, hurricanes, sea-level rise, and droughts. His response to these problems: Push to abolish FEMA, already firing thousands of staff. He is also dismissing scientists who study, document, and predict approaching climate disasters, from federal agencies, including the National Weather Service and the EPA, and cutting grants to scientific organizations and universities.
He continues to scoff at expert predictions of emerging pandemics, as he did in early 2020, mocking and dillydallying, while Covid-19 spread, resulting in hundreds of thousands of preventable deaths. His response to these perils: Strip-mine the Centers for Disease Control and Prevention and the National Institutes of Health expert staff and their grants to outside scientists.
He falsely asserts that overregulation of widespread corporate crookery is harming the economy and costing jobs. His response to these falsehoods: Close down agencies like the Consumer Financial Protection Bureau, firing regulators illegally, taking the federal cops off the corporate crime beat and, recently, just openly failing to enforce the law at all and dropping existing criminal cases against over 100 companies, including the Boeing crimes crashing two 737 Max aircraft.
He absurdly and cravenly asserts the super-rich and giant corporations are overtaxed. His response to this ridiculous allegation: Push through Congress super-rich tax cuts, ballooning the deficit, forcing cuts in Medicaid and even Medicare, afflicting people with disabilities, and closing many rural hospitals (See, New York Times: What’s in Trump’s Tax Bill?) He grotesquely describes this legislation as a “big, beautiful bill” even though it will cut critical feeding programs for poor children, severely weaken “Meals on Wheels,” “Head Start,” and federal food inspection programs.
Millions of people would lose health insurance and other life-saving and life-sustaining social safety nets. Savagely, Trump is increasing the bloated, wasteful military budget far beyond what the generals asked for and loading tens of billions of dollars onto the Department of Homeland Security to police a relatively quiet Southern Border and contract for more private prisons to hold immigrants or asylum seekers whom they round up.
If the Senate doesn’t throw out this House-passed bill (by one vote) and only tweaks it on its way to the enriching Trump and his bloody pen, consider this the beginning of the end for the Republican Party in the coming elections. For Trump is ruthlessly skewering both red and blue state voters and families, breaking contracts with small businesses, rescinding popular clean energy programs, reducing student loans, and roiling the stock markets holding the savings and pensions of tens of millions of conservative and liberal families. He is going berserk against the American people while shielding massive corporate crime and corporate welfare from law and order.
It would help this growing movement of street protests against Trump if, to take two institutions, banding together as labor unions and universities they stop cowering before the Tyrant and roar back with all their unused, formidable influence and members. Bully Donald has come a long way using intimidation to pick off his victims because they do not push back in an organized fashion.
Moreover, the feeble Democratic Party just doesn’t fire its corporate-conflicted consultants, and retire its serial losers controlling its leadership, which lost elections to the worst most vulnerable GOP in history. They should patriotically quit and welcome younger, progressive leaders, some already challenging corporate Democrats in the coming primaries, to take over and replace decay and despair with dynamism and dexterity. These challengers know they are in a race against time and have no time for the lumbering, bureaucratic, disarrayed entrenched Democratic apparatchiks to lose our Republic to a fascistic dictatorship wrecking our country at warp speed.
This younger generation should connect with older, seasoned progressive Democrats who for decades have been fighting for real reforms in our country and are eager to lend their experience and advice. They include former Labor Secretary Robert Reich, who in 2001 penned an op-ed in The Washington Post declaring “…The Democratic Party. It’s Dead.” Other stalwarts include Jim Hightower (Texas), Joel Rogers (Wisconsin), Robert Kuttner (Boston), Bishop William Barber (North Carolina), Joan Claybrook (D.C.), Mark Green, co-author with me of the book on Trump titled WRECKING AMERICA (2020), and many others.
These people and others (see winningamerica.net) do not have marbles in their mouths; they know how to communicate with people on forward directions supported by a megamajority of liberal and conservative voters. (See my 2014 book, Unstoppable: The Emerging Left-Right Alliance To Dismantle The Corporate State).
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