HR-5396-119
Placed on the Union Calendar, Calendar No. 616.
Sponsored by J. Hill (R-AR)
What it does
This bill would amend the Federal Reserve Act by removing "maximum employment" from the Federal Reserve's statutory mandate. Currently, the Fed is required to pursue three goals: maximum employment, stable prices, and moderate long-term interest rates. This bill would eliminate the employment goal, leaving the Fed with a single primary mandate focused on stable prices (controlling inflation).
Who benefits
Creditors and bondholders who benefit from lower inflation and higher real returns. Retirees and savers on fixed incomes whose purchasing power is eroded by inflation. Businesses with long-term contracts or fixed-price obligations that are harmed by price instability. Foreign holders of U.S. dollar-denominated assets who benefit from a stronger, more stable currency. Economists and policymakers who favor a single, clearly measurable central bank objective.
Who is hurt
Workers and job-seekers who may lose an institutional advocate for low unemployment within the Fed's decision-making framework. Labor unions and worker advocacy groups whose policy interests are currently embedded in the Fed's mandate. Borrowers — including homeowners with variable-rate mortgages and small businesses — who may face tighter monetary policy if the Fed no longer weighs employment conditions. Lower-income households, who tend to be more vulnerable to job loss during periods of tighter monetary policy. Communities with historically higher unemployment rates that have benefited when the Fed prioritizes employment alongside inflation.
Supporters argue
Supporters argue that the dual mandate creates an inherent tension that has historically led the Fed to tolerate inflation longer than it should, as seen during the 2021–2023 inflation surge when the Fed delayed rate increases partly out of concern for employment. They contend that a single price-stability mandate — the model used by the European Central Bank and many other central banks — produces clearer accountability, more predictable policy, and better long-run economic outcomes for all Americans, including workers, since sustained inflation disproportionately harms lower-income households.
Opponents argue
Opponents argue that removing the employment mandate would leave the Fed free to pursue aggressive inflation-fighting policies — such as sharp interest rate increases — without any statutory obligation to weigh the resulting job losses. They contend that the dual mandate has historically served as a counterweight during recessions, and that countries with single mandates, such as the Eurozone, have experienced persistently higher unemployment than the U.S. during downturns, suggesting the employment mandate provides measurable real-world protection for workers.
Constitutional context
Congress has broad authority to define the Federal Reserve's mandate under the Commerce Clause (Art. I, §8, cl. 3) and the Necessary and Proper Clause (Art. I, §8, cl. 18), as monetary policy and banking regulation are quintessentially interstate economic activities under Wickard v. Filburn (1942). No significant constitutional barrier exists to Congress narrowing a statutory mandate it previously created. Post-Loper Bright (2024), any Fed rulemaking that stretches beyond the revised statutory text would face independent judicial scrutiny rather than deference.
Checks and balances
Congress gains clearer authority to define the Fed's singular focus on price stability; the Fed's Board of Governors retains operational independence in how it pursues that goal, while remaining subject to congressional oversight, Senate confirmation of governors, and presidential appointment power.
Historical precedent
The Federal Reserve Reform Act of 1977 established the current dual mandate by adding "maximum employment" to the Fed's statutory goals; this bill would partially reverse that legislation for the first time in nearly 50 years.