Some Pennsylvania lawmakers are trying to get restitution for what they see as bad U.S. Federal Reserve policies during the recovery of the housing market.
The ask? Around $20 billion.
Pennsylvania’s Treasury would be required to lobby the federal government for those funds under a resolution that recently passed committee in the House.
The practice at the core of the resolution is known as quantitative easing or QE.
It was used by the Federal Reserve to buoy the foundering U.S. economy after the 2008 market crash; essentially, the central bank bought bonds to pump money into the financial system and lower interest rates in hopes it would help the economy recover.
There’s still intense debate on whether it worked.
Lebanon County Republican Frank Ryan, the resolution’s sponsor, thinks not. And that’s the thesis behind his bill; he said states deserve repayment for reduced returns on government bonds while QE was in effect.
“The real reason for bringing this up is, one, I’d like to get the money for the commonwealth,” he said. “But I’m really trying to bring up the fact that we’ve got some real dangerous financial issues facing us shortly, and if this thing goes haywire, we’ll never be able to pay those liabilities.”
Ryan estimated the commonwealth’s roughly $70 billion unfunded pension liability would be around $20 billion lower if QE hadn’t been used, give or take a few billion, depending on the assumed rate of return used in calculating the overhead.
Most committee Democrats opposed the bill. Minority chair Matthew Bradford said it reaches “beyond the scope of the House State Government Committee.”
Ryan conceded it might be a long shot, but said there’s no harm in trying.
No other states have introduced similar resolutions. State Treasury officials declined comment.