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"The Fed must continue to cut rates aggressively in the coming months to prevent a slowing labor market and provide much-needed relief to people who are bearing the brunt of high interest rates," said one economist.
Economists and working-class people across the United States on Wednesday welcomed the Federal Reserve's decision to cut its benchmark interest rate by half a percentage point as an incredibly overdue and necessary move.
In line with signals from Fed Chair Jerome Powell's speech last month, the Federal Open Market Committee lowered the federal funds rate by half a percentage point to 4.74-5%, the first cut "since March 2020 when Covid-19 was hammering the economy," as The Associated Pressnoted. Additional cuts are expected over the next two years.
"Finally," wrote Kenny Stancil, a senior researcher at the Revolving Door Project and former Common Dreams staff writer, in a blog post. "The Fed should have provided interest rate relief months ago. While this overdue move is welcome, we must reiterate that Powell's deferral of interest rate cuts has hurt the clean energy transition and inflicted other economic harms."
Lawmakers and experts, including Groundwork Collaborative chief economist Rakeen Mabud, have long called for rate cuts and highlighted the harms of refusing to pursue them.
"Today's rate cut is a step in the right direction, but only a first step," said Mabud in a statement Wednesday. "The Fed must continue to cut rates aggressively in the coming months to prevent a slowing labor market and provide much-needed relief to people who are bearing the brunt of high interest rates."
Center for Economic and Policy Research senior economist Dean Baker also welcomed that the Fed is changing course, saying: "This is a belated recognition that the battle against inflation has been won. Contrary to the predictions of almost all economists, including those at the Fed, this victory was won without a major uptick in unemployment."
"Unfortunately, the Fed waited too long to make this turn," Baker continued. "As a result, the unemployment rate has drifted higher. While there is little basis for concerns about a recession, if the unemployment rate is 0.5 percentage points higher than it needs to be, that translates into 800,000 people out of work who want jobs."
"It is good that the Fed has now recognized the weakening of the labor market and responded with an aggressive cut," he added. "Given there is almost no risk of rekindling inflation, the greater boost to the labor market is largely costless. Also, it will help to spur the housing market where millions of people have put off selling homes because of high mortgage rates."
Liz Zelnick of Accountable.US similarly stressed the benefits, saying that "while it should have come sooner, the Fed's interest rate cut will ease some burden for many Americans that found it simply too expensive to buy new homes or cars."
"Fortunately, the Fed's aggressive interest rate strategy defied odds and did not spur a recession as the economy continues to grow hundreds of thousands of jobs every month while wages are rising," she said. "Persistently high interest rates were never going to get at the root of the corporate price gouging epidemic that has needlessly kept prices high on many necessities—a problem that is on Congress to fix."
Some members of Congress who have been pushing for rate cuts also applauded the belated action—including Sen. Martin Heinrich (D-N.M.), chair of the Joint Economic Committee.
"Let's be clear: Today's decision is a big win for families across the country," he declared. "Lower rates mean that more families will be able to buy a home or a car without high interest payments looming over them, and their credit card bills will go down."
"But there is still work to be done," he said. "I will continue to work with my colleagues to fight for policies that raise wages, strengthen our economy, create new jobs, and lower prices for families in New Mexico and across the country."
Congressman Brendan Boyle (D-Pa.), ranking member of the House Budget Committee, has also criticized the central bank's refusal to cut rates and praised the Wednesday reversal.
"We've made significant progress on inflation, but House Democrats know there is more to be done to bring down the cost of everyday goods and take on corporate price gouging," Boyle said, nodding to the November election in which former Republican President Donald Trump is facing Democratic Vice President Kamala Harris.
"While House Republicans continue trying to inflict higher costs and higher taxes on the middle class with Trump's Project 2025 agenda," he added, "House Democrats will never stop fighting to deliver an economy that works for working families."
Harris similarly applauded the "welcome news for Americans who have borne the brunt of high prices" while acknowledging that more must be done and vowing that "my focus is on the work ahead to keep bringing prices down."
"I know prices are still too high for many middle-class and working families, and my top priority as president will be to lower the costs of everyday needs like healthcare, housing, and groceries. That is why I am proposing plans to cut taxes for more than 100 million working and middle-class Americans, pass the first-ever federal ban on corporate price gouging on food and groceries, and make housing more affordable by building 3 million new homes and giving more Americans down payment assistance," she said.
The Democrat also took aim at Trump's intentions, warning that "while proposing more tax cuts for billionaires and big corporations, his plan would increase costs on families by nearly $4,000 a year by slapping a Trump Tax on goods families rely on, like gas, food, and clothing. He wants to repeal the law I cast the tie-breaking vote to pass that caps the costs of prescription drugs for seniors, including insulin at $35. He would end the Affordable Care Act and erase the progress we have made to lower premiums for millions of Americans by hundreds of dollars a year."
"Sixteen Nobel Prize-winning economists say his plan would increase inflation, and a Moody's report found it would cause a recession by the middle of next year," she noted. "This election is about whether we are going to finally build an opportunity economy that gives every American a shot not just to get by, but to get ahead. As president, that will be my priority every day."
"If Republicans get their way, low-income children will go hungry, seniors will be forced to choose between lifesaving medication and putting food on the table, and the planet our kids inherit will be in jeopardy."
A congressional committee on Tuesday released an annotated report exposing how the far-right Project 2025 "would undercut working families by making healthcare and higher education less affordable; providing less support to families; and rolling back climate enforcement and research."
The Joint Economic Committee (JEC) Democrats' publication is just two pages, but it highlights attacks on healthcare, education, and the climate found throughout the "radical" policy agenda for the next Republican president, which is over 900 pages long.
Along with the lengthy policy agenda, the 2025 Presidential Transition Project includes personnel recruitment, training, and a 180-day playbook. The project is led by the Heritage Foundation, backed by over 100 other groups.
The Republican nominee, former President Donald Trump, has tried to distance himself from Project 2025, but at least 140 people who worked in his first administration, including six former Cabinet secretaries, have been involved with it. Also, his running mate, Sen. JD Vance (R-Ohio)—a JEC member—wrote the foreword to Heritage Foundation president Kevin Roberts' new book.
"This Republican plan would concentrate power within the executive branch, make life harder for working people, and cede power to Big Pharma and other corporations."
As the JEC Democrats report details, on the healthcare front, Project 2025 calls for "reversing Democrats' efforts to lower prescription drug costs (see page 465)" and "putting lifetime limits or caps on Medicaid coverage (see page 468)."
The agenda also calls for overruling the Food and Drug Administration's "approval for medication abortion (see page 457), making it increasingly difficult to access these vital medicines by mail (see pages 458-459), and prohibiting the use of federal funding to cover the travel needed to obtain an abortion (see page 471)," the publication continues.
In terms of education, the report adds, Project 2025 advocates "gutting public school funding by creating a school voucher program (see page 347) and cutting Title I funding that supports low-income schools (see page 325)," as well as "rolling back free school meals programs for low-income children (see page 303)."
The impacts would be felt at all levels of education. It calls for "eliminating Head Start (see page 482)," an early childhood education program serving nearly 800,000 kids, along with "ending the Public Service Loan Forgiveness Program (PSLF) (see page 354) and creating a new, less generous income-driven repayment (IDR) plan (see page 337)."
The report notes that Project 2025's plans for wrecking the global climate include "directing the Federal Energy Regulatory Commission (FERC) to favor fossil fuels over renewables and raise market prices received by fossil fuel companies (see page 400)" and "gutting Environmental Protection Agency (EPA) enforcement (see page 425)."
It also recommends "rolling back Democrats' investments in clean energy production that are cutting pollution and lowering emissions (see page 365)," "removing key protections for public lands (see page 532)," and "dismantling the National Oceanic and Atmospheric Administration (NOAA), a hub for climate research and the primary source of weather data (see page 674)."
Overall, "this Republican plan would concentrate power within the executive branch, make life harder for working people, and
cede power to Big Pharma and other corporations," the report says, blasting the agenda as "an assault on the rule of law and a host of other core American freedoms."
In a statement announcing the new report—which follows JEC Democrats' analysis of Project 2025's anti-worker economic policies—committee Chair Martin Heinrich (D-N.M.) stressed the importance of thwarting efforts to enact the far-right agenda.
"Republican's Project 2025 is a radical agenda that rolls back decades of progress we've made toward a better future for everyone," he said. "If Republicans get their way, low-income children will go hungry, seniors will be forced to choose between lifesaving medication and putting food on the table, and the planet our kids inherit will be in jeopardy. We can't let that happen."
"Republicans would rather protect their billionaire friends at the expense of everyone else," said the chair of the Joint Economic Committee.
Budget proposals released by congressional Republicans in recent months lay bare the party's desire to slash taxes for wealthy Americans and large corporations at the expense of key government programs and services, including nutrition assistance, environmental protection, and Medicaid.
That's according to an analysis released Wednesday by Democrats on the Joint Economic Committee (JEC), which examined budget plans the GOP has released as Congress works to craft and pass government funding bills for the coming fiscal year.
The JEC specifically cites a Fiscal Year 2025 budget proposal published in March by the Republican Study Committee, a panel comprised of three-quarters of the House GOP caucus.
The plan, the JEC Democrats noted Wednesday, "claims to balance the budget by cutting Medicare spending, raising the retirement age for Social Security, capping funding for Medicaid and CHIP, and cutting the rest of non-defense discretionary spending by 31% across the board."
"This would drive up health costs for American families by increasing premiums for [Affordable Care Act] healthcare plans and getting rid of protections for people with pre-existing conditions," the new analysis says. "It would also prohibit Medicare from negotiating down prescription drug costs."
A separate proposal from Republicans on the House Budget Committee claims it would finance "large tax cuts for the wealthy by both slashing key services and assuming that their tax giveaways lead to unrealistic levels of economic growth," the Democratic report says.
"Analyzing this budget with more reasonable economic assumptions instead shows that budget would likely require the government to eliminate most federal services within a decade," the report adds.
Sen. Martin Heinrich (D-N.M.), the chair of the JEC, said in a statement Wednesday that "Republicans' extreme proposals are dangerous for America."
"While Democrats are fighting to invest in families, Republicans would rather protect their billionaire friends at the expense of everyone else," said Heinrich. "Kicking 42 million kids off of health insurance, gutting federal investments in public safety, denying veterans hospital care, and getting rid of [Supplemental Nutrition Assistance Program] benefits that help people afford groceries is unconscionable. Americans deserve better."
The analysis from JEC Democrats comes as Republican nominee Donald Trump attempts to posture as an ally of the working class despite his history of assailing labor protections and backing tax cuts for the rich.
Trump has called for an extension of the tax cuts he signed into law in 2017—changes that overwhelmingly benefited wealthy Americans. An extension of the tax cuts would add $4.6 trillion to the deficit of the next decade, according to the Congressional Budget Office.
The former president's advisers have also reportedly discussed reducing the corporate tax rate from 21% to 15%, a change that would give the largest 100 U.S. companies a tax cut of $48 billion per year.
Trump has floated proposals that are ostensibly geared toward helping working-class Americans, including exempting tips from taxation—a proposal specifically aimed at hospitality workers—and eliminating taxes on Social Security benefits.
But earlier this week, UNITE HERE—a union that represents hospitality workers—endorsed Democratic nominee Kamala Harris over the Republican candidate, warning that "another Trump presidency would mean four chaotic years of defending against his attacks on unions, working people, immigrants, women, and others."
As for Trump's proposal to eliminate taxes on Social Security benefits, an analysis by the Tax Policy Center's Howard Gleckman found that the move would reduce "Social Security and Medicare hospital insurance (HI) revenues by $1.5 trillion over the next decade," harming the programs' finances while providing "little or no benefit" to lower-income households in 2025.
"Less than 1% of the lowest-income households (those making about $33,000 or less, would get any tax cut at all," Gleckman observed. "But about 28% of middle-income households would get a tax cut. Among the top 0.1 percent, about 20 percent of households would get a tax cut."
Gleckman found that "in dollar terms, the biggest winners would be those in the top 0.1% of income, who make nearly $5 million or more."