A Political Venture at the Fed

Given the Covid-era explosion of federal spending and money creation, one might hope that the presidents of regional Federal Reserve banks would be focused on studying inflation in their districts and evaluating the safety and soundness of the financial institutions they oversee. But at least one of them has been making time for a contentious political fight.

Government power without political accountability is always dangerous. Now the president of the Federal Reserve Bank of Minneapolis is breaking tradition to support a controversial proposal to amend the state constitution.

“Journey toward equity must begin at school” is the headline on an op-ed co-authored by Minneapolis Fed President Neel Kashkari and retired state supreme court justice Alan Page. They write:

A little more than a year ago, we proposed amending Minnesota’s constitution to make a quality public education a civil right for all children and to make fulfilling that right the state’s highest priority. Since then, George Floyd was murdered, and the nation learned about Minnesota’s unjust racial disparities across virtually every dimension. We are now well-known as a “great place to live, except if you are Black.”

We can only change this reality by enacting bold, systemic change to achieve true equity, and that starts with education.

We believe a constitutional amendment is necessary to put children first and break through the political gridlock that has prevented the state from eliminating its terrible education disparities, among the worst in the nation. Children of color, Indigenous children, and low-income White children are being left behind in Minnesota by our failing education system. Some states have made significant progress in helping these children succeed. Why haven’t we?

Perhaps inspired by the example of former Fed Chair and now Treasury Secretary Janet Yellen, who while running the ostensibly independent Fed liked to offer an accompanying tune to Obama talking points on inequality, Mr. Kashkari is venturing well beyond the responsibilities of his office. To be clear, the regional Fed chief is not simply speaking as a resident of Minnesota, but using the bank to promote his message.

Contacted by this column, Charles Plosser, a former president of the Federal Reserve Bank of Philadelphia, responds to the Kashkari op-ed via email:

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