In a document that flew under the radar, the Joe Biden Department of Treasury has issued a plan that doubles down on the racial justice movement by declaring the agency in charge of the nation’s fiscal infrastructure must now consider race when crafting federal policies.
The declaration came in the form of response to Executive Order 13985, issued on January 20, 2021, titled “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.” The announcement said:
The Department of the Treasury’s mission is to maintain a strong economy and create economic and job opportunities by promoting the conditions that enable economic growth and stability at home and abroad, strengthen national security by combating threats and protecting the integrity of the financial system, and manage the U.S. Government’s finances and resources effectively.
The American Rescue Plan (ARP) is a $1.9 trillion package of which more than $1 trillion is managed by Treasury to jumpstart the nation’s economic recovery. Through its ARP investments, Treasury is working to ensure that families, businesses, and neighborhoods that have been historically excluded from economic opportunities or experienced persistent poverty are fully included in the nation’s economic recovery and future growth.
The announcement includes “new strategies to advance equity,” including:
Prioritizing fiscal rewards based on race:
• Foster an equitable recovery that helps ensure all Americans rebound from the economic consequences of a global pandemic
Disadvantaged communities carried a double burden in this pandemic: both more likely to work in essential, frontline roles with a higher risk of exposure and more likely to lose those jobs as the pandemic caused the economy to contract. For example, leading into the pandemic, black and Hispanic households experienced a disproportionate risk of eviction. Over half of black (54 percent) and Hispanic (52 percent) renter households were rent burdened (paying more than 30 percent of their income toward rent) in 2019, as compared with 42 percent for Asian and White households. In response, Treasury is enabling more than $25 billion, through the ARP, to be distributed or obligated, through flexible guidance to renters and landlords, with over 80 percent of funds going to the lowest-income.
Funnels money to states to “mitigate financial hardships” from coronavirus:
- Treasury’s Homeownership Assistance Fund (HAF) provides up to $9.961 billion for the Department to make payments to states, U.S. territories, Indian Tribes or Tribally Designated Housing Entities (TDHEs), and the Department of Hawaiian Home Lands (DHHL) to mitigate financial hardships associated with the coronavirus pandemic. Treasury has made modifications to the Homeownership Assistance Fund (HAF) such that participants must structure their programs to effectively identify eligible homeowners based on data-driven assessments of homeowner needs. Finally, Treasury stewards Coronavirus State and Local Fiscal Recovery Funds (SLFRF). The final rule for the SLFRF program has strong equity provisions, including allowing broader funding uses specifically for communities that were disproportionately impacted by the public health and negative economic impacts of the pandemic, including to address preexisting disparities that amplified the pandemic’s impact on underserved communities.
Another “strategy” is “providing credit, capital, and financial services to low- and moderate-income and minority communities in urban and rural areas that have been historically underserved by mainstream banks.” The announcement says:
While CDFIs and MDIs often serve as critical community partners both in everyday financial services and during disaster recovery, they often lack the capacity and capital to scale their efforts. To address this barrier, Treasury issued program guidance to eligible states, Tribes, and territories to present plans for expanding access to capital for underserved communities and to expend funds for Socially and Economically Disadvantaged Individuals (SEDI)-owned businesses.
The order also calls for:
• An analysis of how the tax code affects different race and ethnic groups is central to understanding the consequences, both intended and unintended, of the nation’s tax laws. A detailed analysis of taxation equity requires reliable data on the race, ethnicity, gender, and other demographic characteristics of individual taxpayers.
• Treasury will, along with the Department of Justice, work with federal agencies to examine potential reforms in debt collection practices and seek to determine the extent to which regulatory changes could be made to help promote more equitable outcomes. Treasury will also examine whether there are ways to improve communication with debtors once they are referred for collection, including by determining whether to expand language options, present information more clearly and better educate debtors about their rights to dispute or resolve debts when they disagree with or have an inability to pay their debts.
• Expand opportunity through contracting and procurement. Treasury seeks to increase opportunities for small businesses and underserved communities to have access to Treasury contracting opportunities. However, an internal analysis suggests that elements of the Government-wide use of category management contracts may impact opportunities for members of underserved and disadvantaged.
The announcement said that an unnamed person was appointed by Chairman Janet Yellen as Counselor for Racial Equity:
This Counselor will coordinate all offices and workstreams intended to advance equity and advise the Treasury Department on all racial equity policy issues and programs.
“This equity action plan builds on Treasury’s progress delivering on equity and racial justice in the first year of the Biden-Harris administration,” the announcement said.
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