Lisa Cook, the Fed and Full Employment. CBs Pt 3

The Real Reason for Trumpist Attacks on a Black Fed Governor

Coretta Scott King: With acknowledgements to feliciaray.com

Why the ferocious Trumpist attack on a specific governor of the Federal Reserve - the economist, Lisa Deneil Cook? And what has that to do with the decision of Republican chair of the House Financial Services Committee, to simultaneously attack the Fed’s maximum employment mandate?

The immediate and most widespread answer to the first question is that the Trump administration is avowedly racist - and unashamedly pursues attacks on black and brown people as this New York Times story (08/10/2025) shows:

But I believe the actions of Republicans in Congress reveal another, profound truth behind the attack on Governor Lisa Cook - one that has serious implications for both white and black Americans. It is the Federal Reserve’s dual mandate - or what economists describe as the “macroeconomic mission” of the Federal Reserve System.

The dual mandate - “to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates” - was originally specified by the Federal Reserve Act of 1913 and was most recently clarified by an important amendment to the Federal Reserve Act in 1977.

What happened in 1977 that caused the Fed’s mandate on employment to be strengthened?

The answer to that question can be found in a post on the Federal Reserve’s website: a speech delivered on the 25th March, 2024 at Harvard University and headed: The Dual Mandate and the Balance of Risks.

The author is: Governor Lisa D. Cook¹

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Ms Cook’s speech explains both the changes made in 1977, and helps us understand why that mandate - for maximum employment - is now challenged both by Republicans in Congress, but also by big names on Wall Street (see below)- and their followers in the Trump administration.

Why the Fed’s mandate was amended in 1977

It is generally agreed the roots of the Fed Reserve’s goal of maximum employment lies in the Employment Act of 1946, inspired by President Roosevelt’s 1944 State of the Union speech, in which he called for “a second bill of rights” i.e. “a bill of economic rights” that would include “the right to a useful and remunerative job in the industries or shops or farms or mines of the Nation”. The subsequent 1946 Act required all of the federal government to “promote maximum employment, production, and purchasing power.”

But as Ms Cook explained in her speech, it was rare for the Federal Reserve to refer to this statutory mandate when explaining monetary policy decisions. For example, the Federal Reserve Board’s annual report for 1975 noted that in public statements on monetary policy given during the year by the Federal Reserve Chair, he had pointed to the “the very high rates of unemployment and of idle industrial capacity then prevailing” as a factor bearing on the Federal Open Market Committee’s (FOMC) decisions. But the same annual report made no reference to the Employment Act.

For the black civil rights movement there wasn’t any question of whether the Employment Act of 1946 should be a top priority. As Ms Cook explains, from its earliest days, the civil rights movement included full employment on a list of economic objectives deemed necessary to achieve the goals of freedom and political equality for all.

One of the most dedicated advocates of economic rights was a civil rights activist who since attending the 1948 Progressive National Convention, where economic rights were discussed alongside other issues, remained committed to the goal of full employment.

That activist was Coretta Scott King, wife of Martin Luther King.

After her husband’s assassination in 1968, Coretta King carried on his work for nonviolence, civil rights, and peace, but she was particularly focused on his economic justice agenda. Four days after MLK’s death, in a speech at Memphis City Hall, she said that the right to employment had been on his mind: “Every man deserves a right to a job or an income,” she said. “Our great nation … has the resources, but his question,” (she means Dr. King’s question) “was: Do we have the will?”

A month later, she led a long-planned march in Washington known as the Poor People’s Campaign, to push for bringing troops home and creating jobs and economic opportunity, with full employment prominent on the list of demands.

In 1974, Mrs. King joined with elements of the labor movement to create the National Committee for Full Employment/Full Employment Action Council. She testified and walked the halls of Congress, doing just the kind of arm-twisting and coalition-building that civil-rights activist and advisor to three presidents, Louis E. Martin was known for, writes Lisa Cook. That work culminated in 1975, with early versions of what would become the Humphrey-Hawkins Act. In general terms, the law set economic priorities for the federal government centered on promoting good-paying jobs for all Americans. Humphrey-Hawkins established the objectives of maximum employment, stable prices, a balanced budget, and a balance of foreign trade, and it defined them by setting numerical goals. Coretta Scott King testified in favor of the legislation and its mandate of maximum employment.

In practice, across the government, the numerical targets and goals in the Humphrey-Hawkins Act were not treated as legally binding. But one of Humphrey-Hawkins’ undeniable legacies is how, as it headed toward likely passage, its employment and inflation objectives were enshrined in the 1977 amendments to the Federal Reserve Act, establishing the dual mandate of maximum employment and stable prices.

Trumpist Attacks on the Mandate for Maximum Employment

Right-wing, conservative economists and politicians have long chafed against the maximum employment mandate. Today, as Jennifer Schonberger reports the Republican-led Congress has renewed attacks on the Fed’s maximum employment mandate:

House Financial Services Committee Chair French Hill (R-Ark.) has introduced a new bill that would seek to end the Fed’s dual mandate so that central bank policymakers could focus exclusively on one goal: controlling inflation.

“For too long, the Federal Reserve has been stretched between competing objectives. It’s time to return to a clear, singular focus: protecting the wallets of American families by keeping inflation in check,” Hill said in a statement.

In the Financial Times, Ed Yardeni, described by Wikipedia as:

an Israeli-born American economist and the president of Yardeni Research, which offers economic research and recommendations to clients.

writes that

Maybe it’s time to get rid of the Fed’s dual mandate, which requires the central bank to achieve maximum employment and price stability.

Thus is revealed the real motivation behind the increasingly personal attacks on Governor Lisa D. Cook.

It is easy to see why financiers - and Silicon Valley tech billionaires - would want to remove the full employment mandate. Robots and Ai are expected to displace human labour and increase profits.

It is less easy to understand why American unions and Democrat party representatives are not fighting this attack on the rights of all American workers - valiantly defended by a black governor of the Federal Reserve.

1. I am obliged to Jeremy J.R. Smith for alerting me to the governor’s paper.