Freddy Gray

Biden’s racial ‘equity’ plan is bound to backfire

Distorting the market in service to progressivist race ideology ends up hurting everybody

Biden's racial 'equity' plan is bound to backfire
(Credit: Getty images)
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‘America is a nation that can be defined in a single word,’ said the proud Commander-in-Chief Joe Biden, standing outside the White House earlier this year. ‘Alsdfnalcaofjlksfa.’

We shouldn’t laugh. The poor man has a speech impediment. Still, that ‘Alsdfnalcaofjlksfa’ word will strike many Americans as an amusingly apt description of their country in 2022. It sums up Joe Biden’s whole administration: nonsense pretending to be clear leadership.

America is, as everyone knows, in an inflationary crisis. The cost of petrol has reached such highs that Biden has called on Congress to suspend gas (petrol) tax for three months. That will do nothing to address the energy supply shortage that is driving up the price of everything, but at least it hints at a willingness within the administration to tackle a big problem.

On other fronts, however, Biden and America’s ruling party, the Democrats, seem astonishingly distracted from the bigger concerns of voters. Last week, the Democratic majority in the House of Representatives passed a measure that adds ‘racial equity’ to the Federal Reserve’s core obligations. The bill would require the central bank’s Federal Open Market Committee to ‘exercise all duties and functions in a manner that fosters the elimination of disparities across racial and ethnic groups with respect to employment, income, wealth, and access to affordable credit.’

A noble goal, but ought that really be the business of the Federal Reserve? The Fed’s traditional role is to try to stabilise prices and enhance employment. It is now struggling to find a way to bring down inflation without crashing the whole global economy.

Shouldn’t that be its exclusive concern? Nope. For Biden Democrats, racial ‘equity’ – a nebulous concept that essentially means coercively redistributing wealth towards racial minorities – trumps all. On his first day in office, Biden signed an executive order to make racial equity a top priority for every single branch of the federal government. His administration has doggedly stuck to the pledge, even as everything else falls apart.

Just two weeks ago, the Biden Admin ordered Fannie Mae and Freddie Mac, the government-backed mortgage underwriters, to develop a housing 'equity' plan. This involves handing out money for down payments according to race, lowering interest rates for buyers with bad credit scores, and even handing out free money to black homeowners for home repairs or to substitute for ‘disruptions to income.’

One problem with equity as a governing concept is that it involves not just helping black people but often sidelining struggling whites. For instance, last year, the Biden administration attempted to prioritise Covid relief for women and non-whites, though judges in Texas and Tennessee found the policy violated the principle of equal treatment under the law.

Another problem is that these noble endeavours often end up making life harder for the minorities they are meant to support. Vice president Kamala Harris in March this year unveiled a plan to force ‘home appraisers’ to increase their valuations of black-owned properties.

Exhibiting a relationship with reality that is at best detached, Harris said this equity measure would improve ‘intergenerational wealth’ among minorities. Would it also not mean that black people end up poorer because they would be paying more in property taxes on their higher-valued homes? Nobody seemed to care. Equity is about gestures not results.

As part of its multi-trillion-dollar Build Back Better infrastructure agenda, the Biden administration has also suggested destroying interstate highways, not because the roads are bad infrastructure but because they were built by a racist society in the 1960s.

At the state level, equity drives can be equally bizarre. In California, to take just one example, regulators just approved $23 million (£19 million) in ‘social equity’ loans to help non-whites open more marijuana dispensaries – a move that some black people might rightly regard as racial stereotyping.

The specific justification of loose monetary policy being a tool of 'equity' has always been at best shaky. Yes, higher employment is more 'equitable'. But rapid inflation hurts people whose savings are mostly cash and people who rent instead of own. So the biggest victims of inflation tend to be the lower-middle class, which is disproportionately black and Hispanic – the very people the Biden administration supposedly wants to help. It should be obvious that the best way to lift them up is to help the whole country by tackling inflation at source rather than trying to meddle to ensure the ‘right’ groups win out.

Distorting the market in service to progressivist race ideology always ends up hurting everybody. It’s not just Democrats that fail to appreciate this point. A big initiative of George W. Bush’s first term was Increasing Minority Homeownership, which tried to find shortcuts for achieving 5.5 million additional minority homeowners.

The scheme backfired. By January 2013, 31 per cent of Hispanic homebuyers from 2004-2007 were in default, along with 28 per cent of black homebuyers from the same period (whites and Asians were about 12 and 15 per cent).

This issue fed into the larger housing crisis which, in turn, triggered the 2008 financial crash. Naturally, in the wake of that collapse, the politicians who pressured banks to loosen lending standards accused them of 'predatory lending' against vulnerable communities.

Rather than learn from earlier failures, the Biden administration seems determined to introduce ever more flawed policies into the system in the name of addressing racial disparity. What with crime rates rocketing, an illegal immigration crisis at the southern border, and inflation out of control, Americans of all races increasingly feel as if their country is coming undone. The government’s focus on barmy ‘equity’ measures does little to reassure them. Why can’t Team Biden see that? The answer is Alsdfnalcaofjlksfa.