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Public banking’s appearance in the Green New Deal resolution drafted by Ocasio-Cortez and Markey in February further cemented its potential as a tool to create a more stable and just economy—and one that can center concerns of the public, like environmental matters, in its operations. The success of a Green New Deal, Ocasio-Cortez and Markey wrote, will require: Providing and leveraging, in a way that ensures that the public receives appropriate ownership stakes and returns on investment, adequate capital (including through community grants, public banks, and other public financing), technical expertise, supporting policies, and other forms of assistance to communities, organizations, federal, state, and local government agencies, and businesses working on the Green New Deal mobilization. The Green New Deal calls for an aggressive decarbonization of the economy through investment in green infrastructure, innovation, and overall systems change coupled with equity aims including access to education, work opportunities, and affordable housing for all. And one of the concerns that’s attached to the proposal is how to pay for it. Estimates put the total cost of the sweeping proposal at over $12 trillion. Both levying a carbon tax (and potentially others on wealth and inheritance) and rolling back existing fossil fuel subsidies could free up funds. ADVERTISEMENT But in order for this revenue to flow efficiently toward funding projects under the Green New Deal (for example: a high-speed rail network, or a revamped energy grid to accommodate an influx of wind and solar), it would need publicly responsive and flexible system to manage it. Brown has studied this extensively. She points to the fact that Franklin Delano Roosevelt’s New Deal (the obvious antecedent to the Green New Deal) was financed largely by the Reconstruction Finance Corporation, a publicly owned credit-lending agency, which backed thousands of projects ranging from national infrastructure to small-business enterprises. The New Deal was transformative for both the economy and the infrastructure of the United States, and its scale is one that the Green New Deal aims to emulate and surpass, with the added layer of urgency due to climate change. And “it would be very difficult to come up for the money for a Green New Deal without a public banking system,” Brown says. So many of the initiatives the Green New Deal resolution calls for—from radically expanded public transportation, to affordable housing, to local efforts to boost access to clean energy—are, quite simply, things that would struggle to attract mainstream capital from big banks. Or if they could, California’s debt-riddled infrastructure projects show that they could sink cities and states into financial holes. Brown believes that a robust network of public banks could unlock the low-interest capital needed to fund these diverse projects at the state, local, and federal levels. And it could do so in a way that keeps the money flowing through those economies, instead of up and away toward private shareholders and executives. [Source Images: maystra/iStock, coolkengzz/iStock, medesulda/iStock] HOW WOULD A PUBLIC BANK HELP DECARBONIZE THE ECONOMY? In an economy shaped by the principles of the Green New Deal, a network of publicly owned banks would make loans to governments and the private sector alike to finance decarbonization efforts, including carbon-neutral manufacturing and clean energy initiatives. People could help shape how public banks invest funds through a participatory process to draw up the bank’s charter. For cities and states, public banks present an opportunity to avoid the high interest fees on loans that big banks impose. Consequently, they could pursue more projects, like public transportation and affordable housing, that benefit people in their backyards. A public banking system in the U.S. to support decarbonization efforts could function as a network. A national public bank could access initial capital from the federal government, and make loans to state banks, which in turn offer funding to a network of local institutions, much like North Dakota already does. “We need to harness the power of the Federal Reserve to do something other than bail out big private banks,” Brown says. It’s well within the entity’s capability to seed large amounts of capital, and it could provide the backing to a potential network of public banks via a central, public finance institution like the Reconstruction Finance Corporation (Brown has been advocating for the use of a public bank for the U.S. since the recession in 2008). This would not, Brown says, mean that the existing big, private banks like Wells Fargo and J.P. Morgan would go away entirely; they play an important role in international trade. Rather, their role would be diminished, particularly for the purposes of financing public projects. Wolff believes they could be nationalized and brought under the control the federal government, as was proposed but ultimately not carried through after the 2008 financial crisis, and as was done in Europe after the Great Depression. Furthermore, public banking institutions, Wolff says, could present an opportunity to change up their governance structures: Rather than a hierarchical leadership model, decision making for banks at every level could be carried out by a diverse board of representatives comprising public and private sectors, and, especially in the context of the Green New Deal, the interests of the environmental and equity movements.

What federal deficits do increase is the federal debt; and while the debt itself can be rolled over from year to year (as it virtually always is), the exponentially growing interest tab is one of those mandatory budget items that taxpayers must pay. Predictions are that in the next decade, interest alone could add $1 trillion to the annual bill, an unsustainable tax burden. To fund a project as massive as the Green New Deal, we need a mechanism that involves neither raising taxes nor adding to the federal debt; and such a mechanism is proposed in the U.S. Green New Deal itself—a network of public banks. While little discussed in the U.S. media, that alternative is being debated in Europe, where Green New Deal proposals have been on the table since 2008. European economists have had more time to think these initiatives through, and they are less hampered by labels like “socialist” and “capitalist,” which have long been integrated into their multi-party systems. A Decade of Gestation in Europe The first Green New Deal proposal was published in 2008 by the New Economics Foundation on behalf of the Green New Deal Group in the U.K. The latest debate is between proponents of the Democracy in Europe Movement 2025 (DiEM25), led by former Greek finance minister Yanis Varoufakis, and French economist Thomas Piketty, author of the best-selling “Capital in the 21st Century.” Piketty recommends funding a European Green New Deal by raising taxes, while Varoufakis favors a system of public green banks. Varoufakis explains that Europe needs a new source of investment money that does not involve higher taxes or government deficits. For this purpose, DiEM25 proposes “an investment-led recovery, or New Deal, program … to be financed via public bonds issued by Europe’s public investment banks (e.g., the new investment vehicle foreshadowed in countries like Britain, the European Investment Bank and the European Investment Fund in the European Union, etc.).” To ensure that these bonds do not lose their value, the central banks would stand ready to buy them above a certain yield. “In summary, DiEM25 is proposing a re-calibrated real-green investment version of Quantitative Easing that utilizes the central bank.” Public development banks already have a successful track record in Europe, and their debts are not considered government debts. They are financed not through taxes but by the borrowers when they repay the loans. Like other banks, development banks are money-making institutions that not only don’t cost the government money but actually generate a profit for it. DiEM25 collaborator Stuart Holland observes: While Piketty is concerned to highlight differences between his proposals and those for a Green New Deal, the real difference between them is that his—however well-intentioned—are a wish list for a new treaty, a new institution and taxation of wealth and income. A Green New Deal needs neither treaty revisions nor new institutions and would generate both income and direct and indirect taxation from a recovery of employment. It is grounded in the precedent of the success of the bond-funded, Roosevelt New Deal which, from 1933 to 1941, reduced unemployment from over a fifth to less than a tenth, with an average annual fiscal deficit of only 3 percent. Roosevelt’s New Deal was largely funded through the Reconstruction Finance Corporation (RFC), a public financial institution set up earlier by President Hoover. Its funding source was the sale of bonds, but proceeds from the loans repaid the bonds, leaving the RFC with a net profit. The RFC financed roads, bridges, dams, post offices, universities, electrical power, mortgages, farms and much more; and it funded all this while generating income for the government. A System of Public Banks and “Green QE” The U.S. Green New Deal envisions funding with “a combination of the Federal Reserve [and] a new public bank or system of regional and specialized public banks,” which could include banks owned locally by cities and states. As Sylvia Chi, chair of the legislative committee of the California Public Banking Alliance, explains: The Green New Deal relies on a network of public banks — like a decentralized version of the RFC — as part of the plan to help finance the contemplated public investments. This approach has worked in Germany, where public banks have been integral in financing renewable energy installations and energy efficiency retrofits. Local or regional public banks, Chi says, could help pay for the Green New Deal by making “low-interest loans for building and upgrading infrastructure, deploying clean energy resources, transforming our food and transportation systems to be more sustainable and accessible, and other projects. The federal government can help by, for example, capitalizing public banks, setting environmental or social responsibility standards for loan programs, or tying tax incentives to participating in public bank loans.” U.K. professor Richard Murphy adds another role for the central bank—as the issuer of new money in the form of “Green Infrastructure Quantitative Easing.” Murphy, who was a member of the original 2008 U.K. Green New Deal Group, explains: All QE works by the [central bank] buying debt issued by the government or other bodies using money that it, quite literally, creates out of thin air. … [T]his money creation process is … what happens every time a bank makes a loan. All that is unusual is that we are suggesting that the funds created by the [central bank] using this process be used to buy back debt that is due by the government in one of its many forms, meaning that it is effectively canceled. The invariable objection to that solution is that it would act as an inflationary force driving up prices, but as argued in an earlier article of mine, this need not be the case. There is a chronic gap between debt and the money available to repay it that needs to be filled with new money every year to avoid a “balance sheet recession.” As U.K. professor Mary Mellor formulates the problem in her book “Debt or Democracy” (2016): A major contradiction of tying money supply to debt is that the creators of the money always want more money back than they have issued. Debt-based money must be continually repaid with interest. As money is continually being repaid, new debt must be being generated if the money supply is to be maintained. … This builds a growth dynamic into the money supply that would frustrate the aims of those who seek to achieve a more socially and ecologically sustainable economy. In addition to interest, says Mellor, there is the problem that bankers and other rich people generally do not return their profits to local economies. Unlike public banks, which must use their profits for local needs, the wealthy mostly hoard their money, invest it in the speculative markets, hide it in offshore tax havens or send it abroad. To avoid the cyclical booms and busts that have routinely devastated the U.S. economy, this missing money needs to be replaced; and if the new money is used to pay down debt, it will be extinguished along with the debt, leaving the overall money supply and the inflation rate unchanged. If too much money is added to the economy, it can always be taxed back; but as MMTers note, we are a long way from the full productive capacity that would “overheat” the economy today. Murphy writes of his Green QE proposal: The QE program that was put in place between 2009 and 2012 had just one central purpose, which was to refinance the City of London and its banks. … What we are suggesting is a smaller programme … to kickstart the UK economy by investing in all those things that we would wish our children to inherit whilst creating the opportunities for everyone in every city, town, village and hamlet in the UK to undertake meaningful and appropriately paid work. A network of public banks, including a central bank operated as a public utility, could similarly fund a U.S. Green New Deal—without raising taxes, driving up the federal debt or inflating prices.

Public banks are increasingly regarded by the international development community not as corrosive but as catalytic for investing in low-carbon infrastructure. The overarching ‘new’ neoliberal narrative is that only by using public resources to mobilize private finance can we begin to raise the financial resources needed to tackle climate change. Yet figures produced by the World Bank and the Organisation for Economic Co-operation and Development have misrepresented the value of public finance by suggesting that public banks have only US$2–5 trillion in assets. This chapter shows that there are in fact 693 public banks worldwide that own assets worth as much as US$37.72 trillion. When you include multilaterals, pension and sovereign funds, and central banks, public finances amount to almost US$74 trillion, equivalent to 93 per cent of global gross domestic product. Public banks have sufficient resources to lead the way in raising the required US$90 trillion in total and $6 trillion annually in climate infrastructure investments needed – without having to turn to private financiers. Public banks can operate indefinitely without a profit-maximization imperative if given a public mandate to do so. They are better equipped than their private counterparts to finance priority economic sectors and geographic regions; to fill the gaps left open by the private sector; to promote economic stability by lending at times of economic instability; and to improve financial standards by insisting on social, environmental or human rights safeguards. But the potential of public banking ultimately depends on the social struggle to reclaim public banks in the public interest. This will define their future viability.

The Public Banking Act, first shared with Vox, wouldn’t create those options by itself, but would foster the creation of public banks across the country by providing them a pathway to getting started, establishing an infrastructure for liquidity and credit facilities for them via the Federal Reserve, and setting up federal guidelines for them to be regulated. Essentially, it would make it easier for public banks to exist, and it would give some of them grant money to get started. While it sounds a little wonky, the basic idea is to make it possible for state and local governments, local businesses, and people to do business with public banks, which theoretically would be more motivated to do public good and invest in their communities than private institutions, which are out for profit. One public bank exists in North Dakota, and there is a growing movement to create more of them across the country. California recently passed a law allowing cities and counties to create and sponsor public banks. “Economic stability is really, truly tied in with access to this type of banking,” Tlaib said in an interview with Vox. “It’s to try to create stable neighborhoods and communities.” The proposal lands in the midst of the Covid-19 pandemic, which has shed light on many inefficiencies in the American system, including banking. Take the Paycheck Protection Program, for example: It used the regular banking system as an intermediary, which ultimately meant that bigger businesses and those with preexisting relationships with those banks were prioritized over others. Some smaller businesses missed out, with many owners saying they were denied loans for even a few thousand dollars. The discrepancy hit Black-owned businesses particularly hard. “ECONOMIC STABILITY IS REALLY, TRULY TIED IN WITH ACCESS TO THIS TYPE OF BANKING” The intent of the proposal is to try to guarantee a more equitable recovery by providing an alternative to Wall Street banks for state and local governments, businesses, and ordinary people, and by ensuring such banks provide services to historically excluded and marginalized groups. The public banking bill also does double duty as a climate bill: It would prohibit public banks from investing in or doing business with the fossil fuel industry. “Public banks are uniquely able to address the economic inequality and structural racism exacerbated by the banking industry’s discriminatory policies and predatory practices,” Ocasio-Cortez said in a statement. She said that she also believes public banks could facilitate the use of public resources to construct “a myriad of public goods,” including affordable housing and local renewable energy projects. “Public banks empower states and municipalities to establish new channels of public investment to help solve systemic crises.” Other countries have various forms of public banking in operation and have different regulatory schemes set up for them than commercial banks do, said Rohan Grey, a law professor at Willamette University. But, he said, this proposal is particularly comprehensive and supportive. Getting the bill passed, the regulatory scheme and grant program set up, and public banks chartered and operational in time to actually shape America’s recovery from the pandemic may not be possible on a broad scale, timing-wise. But the bill is a signal of what’s possibly to come. If Democrats keep control of the House come 2021 and manage to flip the Senate and win the White House, they’ll be able to take some big legislative swings, including and perhaps especially on issues related to the economy. It is worth noting that both Tlaib and Ocasio-Cortez sit on the powerful House Financial Services Committee, which is chaired by Rep. Maxine Waters (D-CA). “I look at economic justice and the issues around economy right now, that many of our working families, from farmers to the middle class to front-line essential workers, all of them know that, with the corporate bailouts, at some point it’s just hitting a wall where it doesn’t carry them along and they’re looking for options,” said Tlaib, who represents Michigan’s 13th Congressional District, the third-poorest congressional district in the country. “So I’m putting this on the table as an option.” The Public Banking Act, briefly explained To be clear, the Public Banking Act isn’t creating a federal public bank. Instead, what it does is encourage and enable the creation of public banks across the US. It provides legitimacy to those who are pushing for more public banking, and it also includes regulators as key stakeholders who can support and provide guidance for how those banks should operate. “It’s not that tomorrow you’re going to see 1,000 of these across the country; it’s still going to be a hill-by-hill, city-by-city battle,” Grey said. There is a spectrum of services public banks would offer; many would be a lot like what commercial banks do, though different public banks would likely have different areas of emphasis. At least at the outset, some banks could serve as depository institutions for state and local governments, meaning those governments would put their money in the local public bank, not JPMorgan. Or they might partner with community banks or other institutions to help boost lending capacity and offer lower debt costs to the businesses and cities they lend to. They could also facilitate easier access to funds for state and local governments from the federal government or Federal Reserve. “It’s basically a way to finance state and local investment that doesn’t go through Wall Street and doesn’t leave the community and turn into a windfall for shareholders,” said Porter McConnell, the campaign director of advocacy group Take On Wall Street. “This is more about community development.” They could engage in retail banking as well. The legislation creates a framework for public banks to interact with postal banking, where the Postal Service serves as a bank, or FedAccounts, where everyone gets an account with the Federal Reserve through which they could receive direct payments from the government, for example, during an economic crisis. “This bill is saying whatever you come up with, there’s a place for that to be recognized and be plugged in at the federal level,” Grey said. Tlaib recalled hearing from her constituents when the $1,200 coronavirus stimulus checks went out this spring — people waiting days and weeks for direct deposits, or getting a check in the mail only to lose a substantial portion of it cashing it at the store down the street. “I’d rather them have access to a bank that’s for them, that’s not focused on for-profit schemes,” she said. The Public Banking Act allows the Federal Reserve to charter and grant membership to public banks and creates a grant program for the Treasury secretary to provide seed money for public banks to be formed, capitalized, and developed. It also instructs the Fed to establish an incubator program for those who want to create a public bank, and it instructs the Securities and Exchange Commission (SEC) and Federal Deposit Insurance Corporation (FDIC) to establish regulatory schemes around them. One other important element, McConnell explained, is how the legislation would change the FDIC’s reticent approach to public banks. Public banks need the FDIC to provide assurances that it will recognize them in accordance with the bond rating of the city or state they represent. For example, Los Angeles is a large municipality and has typically maintained a strong bond rating. McConnell said the FDIC issuing guidance that it recognizes the city’s — and the state’s — public banks as an AAA rating would send a clear direction to the state financial regulators that the public bank is considered low risk. “The FDIC needs to be convinced not to discriminate against public banks, and they need to be convinced legislatively that they should be given the same facilities, the same rights, as private banks,” she said. The bill would also provide a road map for the FDIC, which insures bank deposits of up to $250,000, to insure deposits for public banks, so people feel assured they won’t lose all their money by choosing to open an account with their state bank instead of, say, Wells Fargo. The legislation has multiple co-sponsors in the House, including Reps. Chuy Garcia (D-IL), Pramila Jayapal (D-WA), Ayanna Pressley (D-MA), Bennie Thompson (D-MS), and Ilhan Omar (D-MN). This isn’t a panacea for fixing banking in America, and whether this is the right approach can be debated. The government isn’t always perfect at providing services (see: the unemployment system, or Flint, Michigan). Columbia University law professor Katharina Pistor noted for Worth in 2019 that “the global and historical experience with public banking suggests that, just as in the private sector some public banks will achieve most of their goals most of the time, while others will underperform or even fail.” She also points out that there is a question of whether in the long run, public banks will be able to stay on mission. Aaron Klein, an economic fellow at the Brookings Institution and former Treasury Department aide in the Obama administration, noted in an email to Vox that the Office of the Comptroller of the Currency (OCC) has historically been charged with chartering national banks in the US, not the Fed, meaning this is a fairly novel idea. He also noted what he saw as a potentially thorny part of the bill: It prohibits the Fed and Treasury from considering the financial health of an entity that controls or owns a bank in grant-making decisions. “The lack of matching funds for federal grants and the specific prohibition against considering the financial health of the bank owner are also major changes. It has been a bad idea to give money or regulatory forbearance to failing banks,” he said. Still, he commended the message at the heart of the proposal: “The problem that the bill responds to is sound — banking is too expensive for working people.” Tlaib’s office clarified that the goal of the bill is to prevent the Fed and Treasury from discriminating against or rejecting public bank applications because the controlling entity — say a city or a state — has budget problems, not to force them to prop up banks that are failing. It is also worth noting that part of the point of proposal is to reach communities, specifically, that might not have the resources for matching funds, which would act as a barrier to entry. When the public sector competes with the private sector, it’s a good thing So here is the thing about private companies, including, yes, banks: The point of them is to make money, and that drives their decisions. It’s not necessarily evil (though sometimes it kind of is), but it’s just how they work. For example, many people in America don’t have access to affordable internet because it’s not lucrative for telecom companies to get it to them. The idea behind public banking isn’t that Goldman Sachs, Wells Fargo, and Morgan Stanley go away; it’s that they have to compete with a government-owned entity — and one that’s a little fairer and more ethical in how it does business. “The potential around taking private ownership out of banking, even just a little bit, is huge considering that we are depositors and we deposit $15 trillion in the commercial banking industry, and we get what? Redlined? Ethical violations in Malaysia? Fraud? Coal? Fossil fuels? All of these things that are driving us toward catastrophe,” said Emma Guttman-Slater, director of policy advocacy and field building at the Beneficial State Foundation, a nonprofit focused on making the banking system more equitable. Public banks, as imagined in the Tlaib/Ocasio-Cortez proposal, would provide loans to small businesses and governments with lower interest rates and lower fees. They would potentially be better at avoiding the short-term thinking private institutions tend toward and be more willing to lend to projects with a slightly longer time horizon. “There’s a disinclination to believe you can make money without making money hand over fist,” McConnell said. “A lot of this gets at market failures.” In the US, North Dakota is the only state to have a public bank, which it established more than a century ago. And it works pretty well, as Will Peischel explained for Vox in 2019. The bank — which isn’t FDIC-insured — initially was supposed to protect the state’s farmers, but now it’s good for a lot of people: Student loans are facilitated directly with BND, but other loans, called participation loans, go through a local financial institution — often with BND support. For example, if someone wants to take out a business loan for $20,000 with a local bank, BND would lend half of the money, $10,000, and minimize the risk for that bank. The result: The individual and local bank or credit union are supported by BND through a single transaction. According to a study on public banks, BND had some $2 billion in active participation loans in 2014. BND can grant larger loans at a lower risk, which fosters a healthy financial ecosystem populated by a cluster of small North Dakota banks. The benefits of these loans are kept local, and the banks are protected from risk with BND support. If this bill were to become law, it would open up a lot of doorways in public banking. It would make life a lot easier for those working on forming public banks in California after the state gave the rubber stamp allowing it in late 2019. In New York City, advocates have long been pushing for a public bank that would make equitable investments, foster growth and prosperity in the local community, and be more transparent about where money is going. If Democrats take power, there could be a lot more where this came from Beyond the ins and outs of this specific piece of legislation, there is a broader message: Democrats have a lot of ideas, and if they take power come January 2021, there’s a lot they can do. DEMOCRATS HAVE A LOT OF IDEAS, AND IF THEY TAKE POWER COME JANUARY 2021, THERE’S A LOT THEY CAN DO Tlaib, for example, is a proponent of universal basic income and has proposed multiple pieces of related legislation. In response to the pandemic, she and Rep. Pramila Jayapal (D-WA) proposed the Automatic BOOST to Communities (ABC Act), which would provide a $2,000 payment to every American during the Covid-19 crisis, plus $1,000 monthly payments for a year after the outbreak ends.

For decades there has been a concerted effort to try to convince us that the public is dependent on the private sector and that there is very little public finance left to invest in public services and infrastructure. Figures produced by the World Bank and the Organisation for Economic Cooperation and Development (OECD), for instance, misrepresent the value of public finance by evaluating that public banks have only US$2–5 trillion in assets. Given the many trillions needed to finance climate infrastructure alone, this amount would be a drop in the ocean. However, research undertaken by Thomas Marois at the University of London shows that there are 693 public banks worldwide with assets worth US$37.72 trillion. Public finances amount to over US$73 trillion, once you include central banks and multilaterals such as the Asian Development Bank, as well as pension and sovereign wealth funds. This equals 93 per cent of global gross domestic product. All this public money is urgently needed to directly finance the fight for renewable energy systems in order to avoid the catastrophic consequences of runaway climate change. US$6 trillion need to be raised annually, up to a total of US$90 trillion, for climate infrastructure investments, and the above figures show that public finance institutions have the resources to drive this. Most governments, however, limit themselves and their public finance institutions to incentivizing private companies to invest in the transition to renewable energy by supporting privatization and public-private partnerships (PPPs). Irrespective of countless tax incentives, subsidies and government guarantees, the private sector has shown little 4 | Public Finance for the Future We Want interest in financing a transition away from fossil fuels. Due to over-reliance on the private sector, investments in renewables even dropped by 7 per cent in 2017, according to the International Energy Agency. This trend is likely to worsen as long as we underestimate the potential of public finance and continue to depend on private finance and market mechanisms. The unfolding climate crisis, however, cannot wait for halfmeasures. As the recent Intergovernmental Panel on Climate Change report makes clear, ‘all pathways begin now and involve rapid and unprecedented societal transformation’. By contrast, public systems and services have greater success with public investment, leading not only to lower costs but also to better social and environmental results. In Bangladesh, for example, the publicly owned Infrastructure Development Company Limited (IDCOL) provided the capital to install more than three million solar panels in rural areas between 2003 and 2014. This brought electricity to the homes of thirteen million people. A 2017 study by the Transnational Institute recorded 835 reclaimed public services by over 1,600 cities around the world. The report showed that privatized corporations neither guarantee better service quality nor lower prices and increased investments. When municipalities end privatization and re-municipalize a public service, such as water, energy or transportation, they usually prove to be better equipped to provide good services for all than a profit-making private provider.

The potential for public banking—or managing taxpayer funds through publicly controlled financial institutions rather than private banks—first became real to me in the office of my city council member in the spring of 2019. A group of us had fanned out through City Hall to speak with every member of the council about the benefits of establishing a Philadelphia Public Bank. The staffer we were chatting with was new to the idea, and grew more and more interested. “The council person would really like this idea,” he said. “It’s good for the common people. It’s good for the city budget. I’m going to talk with her about it. I think she’ll want to support it.” In that moment, the concept of public banking, which I found compelling and had been promoting informally for years, became not just another good idea but an attainable goal. It’s been a puzzle to know how to best organize around economic issues. Once we’ve identified our economic system—and, more particularly, the financial system—as the root of so many of our problems, what do we do next? Transforming the economy is too big to easily build campaigns around, and the number of people who can be mobilized purely on ideological grounds is small. While Occupy Wall Street was a great national teach-in on wealth inequality, including a critical understanding of the importance of democracy, it didn’t offer enough focus or program to keep people in motion. With an eye open to possibilities, I jumped at the opportunity to attend the founding conference of the national public banking movement, conveniently held in Philadelphia in 2012. The idea that our public money should be kept under the control of the public and used for the public good, rather than deposited in private banks to be used for private gain, was compelling. The reality that we have our own public banking model—in the 100-year-old state Bank of North Dakota—was grounding. We were all blown away by a 12-year-old from Canada who told their country’s story: how the creation of a national bank in the 1930s allowed them to build critical social, health, and economic infrastructure; how a political change in the early 1970s moved control of that wealth to the private sector; and how billions of dollars that could otherwise have been used for public good have since been siphoned off to private banks. This is the situation we face in the United States. Currently, private banks create all the money in circulation—except for the bills and coins issued by the Treasury—by making loans. The Federal Reserve is a network of private banks with a special relationship to the Treasury. Interest on our growing federal deficit is paid to banks that hold Treasury notes. When banks become “too big to fail,” it is our tax dollars that bail them out. It’s clear that we have to address control of the money supply in order to solve a host of social, equity, and climate issues. Yet, where can we get the leverage to make such a massive transformation? The distinction between revolutionary and reformist reforms can help us here. Revolution could be framed as transformation of our money system from one that is privately managed for profit to a democratically managed public utility. Visionary federal legislation to do this has been proposed, but the frame is too abstract to attract popular support. We can’t get from here to there without some steps in between. There are many things we can do to make our current economic system more bearable and fair within the context of the current system: raise the minimum wage, oppose predatory lending, strengthen the social safety net. These “reformist reforms” are all important and totally worth doing. And any reform that builds grassroots solidarity and momentum helps create the conditions for demanding more. But in and of themselves, they don’t challenge the power dynamics that are built into a system that privileges the accumulation of private wealth at the expense of all other life on the planet. A “revolutionary reform” is like a wedge into the power status quo, and I see public bank campaigns as playing this role. They provide a tangible local hook around which to organize, while calling into question the root issue around power and control. They get people thinking about the big questions: Why should our taxpayer dollars be held by private banks to be invested in their own interests when we have pressing needs at home? Why should half the cost of long-term public borrowing go to paying back interest to private bondholders? Why don’t we have control over our common wealth? A public banking campaign doesn’t go all the way. It doesn’t directly challenge the rights of private banks to essentially own our nation’s money supply. But it’s a clear step in that direction, and one that ordinary people can get excited about taking. The potential of public banking as a popular issue was made clear in Los Angeles in 2018. That story started with an earlier activist campaign to get the city to divest from fossil fuels. Voters approved this measure, but the city discovered that all the banks that were big enough to handle its money were complicit in fossil fuel investment. There was no place they could move the money to. The City Council president acted that summer to put a referendum on the fall ballot to establish a public bank. With only a few months in which to organize, the divestment group pivoted to an all-out campaign to support the referendum. They did an outreach and social media blitz and got endorsements from hundreds of civic, labor, and other community groups. Measure B received over 44% of the votes, with 430,488 Angelenos voting yes to a public bank. This was not enough for a win, but it was an astonishing achievement from a grassroots, volunteer-run campaign with minimal funding—and it laid the foundation for a series of advances in the establishment of a structure for creating public banks throughout California. As I became involved in the Philadelphia Public Banking Coalition and started talking with people around the city about the potential of a public bank, I had the same experience of people catching on immediately. They had just never considered that there might be an alternative. We led an information session with the Philadelphia Urban Coalition, a group of mostly Black church leaders who resonated strongly with the message that it’s just not right for big banks to use our public money to maximize their profits when great needs in the city are unmet for lack of financial resources. Several of us went to our local farmers market on a series of Saturdays through the next summer, gathering petitions for a public bank. Everyone who was willing to talk not only got the logic of the concept right away, but was grateful to know about the campaign and eager to support it. Later, when we reached out to local community organizations to offer information sessions, the concept always made intuitive sense. Fortunately, our coalition has not only engaged in community outreach efforts, but worked the inside track in City Hall. From the beginning, we have had a strong ally in City Councilmember Derek Green, and have worked closely with him over the years. One of our members, who used to work as legal counsel for City Council, actually drafted the legislation that Green introduced in January 2021 with a veto-proof majority—the result of a vigorous lobbying campaign on our part. Since then, we have continued our dual strategy of gathering more community support and working with the legal and financial departments in City Hall to hash out the details. We are working particularly hard on building in a democratic governance structure to ensure that the bank is not only insulated from political influence, but rooted in the communities it is meant to serve. The public banking movement all across the country has experienced a groundswell since 2019, and it continues to rise. The question now is not whether there will be another U.S. bank to join the Bank of North Dakota, but when. Philadelphia is joined by the California Bay Area and Los Angeles in a race to establish our first municipal public bank. After years of dreaming and hard work, the goal of having legislation in place before the end of 2021 seems like a real possibility. Of course, that’s not the end of the story. A reform, revolutionary or not, is still a reform. But it’s more than just an improvement in the conditions of those who suffer under our current deeply inequitable and unjust economic system. It’s an opening wedge, a beginning of a transfer from private to public control of our financial system, a shift in the story line about who rightfully owns and controls our common wealth

The term “new annual revenues” means the net increase in annual revenues produced by the total of all tax or fee increases enacted by the general assembly in a fiscal year, less applicable refunds and less all contemporaneously occurring tax or fee reductions in that same fiscal year, and shall not include interest earnings on the proceeds of the tax or fee increase. For purposes of this calculation, “enacted by the general assembly” shall include any and all bills that are truly agreed to and finally passed within that fiscal year, except bills vetoed by the governor and not overridden by the general assembly. Each individual tax or fee increase shall be measured by the estimated new annual revenues collected during the first fiscal year that it is fully effective. The term “increase taxes or fees” means any law or laws passed by the general assembly after May 2, 1996, that increase the rate of an existing tax or fee, impose a new tax or fee, or broaden the scope of a tax or fee to include additional class of property, activity, or income, but shall not include the extension of an existing tax or fee which was set to expire.

Thus, even in Petitioners' chosen examples, how an "increase" is calculated depends on the purpose of the calculation. A meteorologist interested in long-term trends will calculate an increase differently than one interested in day-to-day events. The owner of a classic car will calculate appreciation differently than if the car is just basic transportation. The term "increase" has no fixed unambiguous meaning in normal discourse, and there is no basis for the Court to read one into the Clean Air Act. To the contrary, EPA must exercise its discretion to determine how an increase is determined, and EPA has done so here in a way that maximizes facilities' flexibility to implement efficiency-enhancing projects while also requiring NSR permitting for projects that result in an increase of emissions above a facility's normal range of operations.

James Wright 78, judge of the United States Court of Appeals for the District of Columbia Circuit, 1/27/1928, “ASARCO, Inc. v. EPA,” 578 F.2d 319, NSPS = New Source Performance Standards

The basic controversy in the cases before us concerns the determination of the units to which the NSPSs apply. Under the Act the NSPSs apply to "new sources." A "new source" is defined as " any stationary source, the construction or modification of which" begins after the NSPS covering that type of source is published. Section 111(a)(2), 42 U.S.C. § 1857c-6(a)(2) (1970) (emphasis added). Further statutory definitions explain the terms used in this one. A "`stationary source' means any building, structure, facility, or installation which emits or may emit any air pollutant." Section 111(a)(3), 42 U.S.C. § 1857c-6(a)(3) (1970). A ‘modification' means any physical change in, or change in the method of operation of, a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted." Section 111(a)(4), 42 U.S.C. § 1857c-6(a)(4) (1970). The statute thus directs that the NSPSs are to apply to any building, structure, facility, or installation which emits or may emit any air pollutant and which is either (1) newly constructed or (2) physically or operationally changed in such a way that its emission of any air pollutant increases.

The term “new annual revenues” means the net increase in annual revenues produced by the total of all tax or fee increases enacted by the general assembly in a fiscal year, less applicable refunds and less all contemporaneously occurring tax or fee reductions in that same fiscal year, and shall not include interest earnings on the proceeds of the tax or fee increase. For purposes of this calculation, “enacted by the general assembly” shall include any and all bills that are truly agreed to and finally passed within that fiscal year, except bills vetoed by the governor and not overridden by the general assembly. Each individual tax or fee increase shall be measured by the estimated new annual revenues collected during the first fiscal year that it is fully effective. The term “increase taxes or fees” means any law or laws passed by the general assembly after May 2, 1996, that increase the rate of an existing tax or fee, impose a new tax or fee, or broaden the scope of a tax or fee to include additional class of property, activity, or income, but shall not include the extension of an existing tax or fee which was set to expire.

Finally, as noted above, the PSD and NSR provisions of the statute reference the definition of "modification" in the NSPS provision. 42 U.S.C. § § 7479(2)(C), 7501(4). That provision defines "modification" as "any physical [*33] change in, or change in the method of operation of a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted." 42 U.S.C. § 7411(a)(4). The 1978 PSD regulations defined "modification" as a "major modification," that is, a change that resulted in an emissions increase of 100 or 250 tons per year (depending on the pollutant). This threshold was incorporated from the statutory definition of "major emitting facility." This Court rejected that approach. 606 F.2d at 1081. Instead, the Court said that a "modification" occurs whenever there is an increase "in Any amount" [sic] of the pollutants emitted. Id. 5Link to the text of the note The Court also held that any emissions increase that is entirely offset by contemporaneous emission reductions at the source would not be considered a modification. Id.

The term “increase in value” refers the net increase in value, which has to be calculated for the whole consolidation area.25 This is dependent on the consolidation area being precisely defined and having clear boundaries in accordance with Section 2526. The increase in value is calculated by adding up the net contributions of all of the individual properties. Individual properties shall receive a share of the overall benefit proportionate to their contributions.27

“(2) The term ‘increase’ includes the emission of a significant amount of any air pollutant which was not emitted before the physical change referred to in paragraph (1). The terms ‘significant net increase’ and ‘significant amount’ shall have such meaning as provided in regulations of the Administrator. Such regulations shall include within the meaning of such terms any increase in emission of an air pollutant (or new emissions of the pollutant) which, when combined with other generally contemporaneous increases and decreases in emissions (or new emissions) of that pollutant, result in an aggregate increase in emissions of that air pollutant in excess of a de minimus amount determined by the Administrator by rule.

Notably missing was reference to functional finance. In fact, the core of MMT was developed before Lerner was brought into it (by Mat Forstater and Stephanie Kelton in the late 1990s). Most importantly, we ALREADY had our full employment policy: the Job Guarantee (also called employer of last resort, public service employment and buffer stock employment). It was from the very beginning THE central stabilizing component of MMT. Many of our neoliberal critics (who HATE full employment) have always tried to separate the JG from MMT. Josh follows in that tradition. We have always insisted that the JG is inseparable from MMT.

(2) JOB GUARANTEE PROGRAM.—The term “job guarantee program” means a program that meets the requirements of subsection (c).

(3) RURAL AREA.—The term “rural area” means an area that is located outside of a metropolitan statistical area.

The concept of a Job Guarantee is straightforward: the central government offers everyone a job at a fixed wage – the Job Guarantee wage. This wage would act like a minimum wage, and so if one wanted to imagine that if the programme was already implemented, the wage offered would presumably be somewhat lower than existing minimum wages in order to keep relative wage structures intact.

The Job Guarantee requires the state to unconditionally offer a job to any person who desire to work, which is a more explicit statement of the rights embodied in work.

‘Job Guarantee’ (JG) has become the favoured term applied to a variety of approaches that seek to ensure what can be described as true full employment. While often used as a synonym for ‘Employer of Last Resort’ (ELR), these terms evoke quite different framing. Employer of Last Resort implies that there is an entity that stands by to provide jobs to those who otherwise have failed to secure them. The term Job Guarantee implies a right to a job, although it does not indicate how that right will be secured. However, if we are to include the right to a job as similar to other recognized rights (right to life, right to free speech, right to vote, right to marriage), this would seem to imply that it is government that is to provide the guarantee. Many proponents of the JG do emphasize the human rights angle, interpreting the UN Charter on Human Rights as explicitly guaranteeing the right to access to a job (See Harvey 1989, 1993, 1999; Burgess and Mitchell 1998).

Sawicky’s article, and the flowering of dozens of mutually incompatible proposals that all go under the name “job guarantee,” suggests to me that Matt Yglesias is probably right about how to ultimately treat this development. Rather than treating “job guarantee” as referring to a specific set of ideas coming from a specific set of scholars, what has happened (and what will continue to happen) is that “job guarantee” has become a catch-all slogan for any and all jobs programs. In this way, many thought leaders with radically different ideas can nonetheless be united in their goal for the creation of a “job guarantee.”

What this means, then, is that “job guarantee” is just the new “full employment.” The Left has been talking about full employment forever and making reference to that concept any time it is doing employment-promotion policy. “Full employment” never referred to a specific proposal, but rather an ambition or target to strive for. “Job guarantee” now fills the same role and also sounds a lot better than “full employment,” which means it is probably a positive development all things considered.

S. 50 provides a limited job guarantee provision whereby the government would stand ready as employer of last resort to provide jobs at prevailing wages when adult unemployment exceeds 3 percent. The section mandates wage standards for the job guarantee program, standards which add to the inflationary impact of the bill. Higher wages, on the other hand, may have other benefits as an income maintenance device and a way to draw more attention to improving pay and working conditions in low-level private sector jobs.