Economists Call for Immediate State and Local Aid

November 20, 2008

As the national economy continues to spin downward, the need for Congress to take bold action in providing support for state and local governments continues to build. This week, 375 of the nation’s leading economists – including Nobel Laureates Joseph Stiglitz, Robert Solow, and George Akerlof – called on Congress to quickly put $300 to $400 billion into the economy or risk even worse unemployment and a deeper recession. According to a letter sent by the economists to Congressional leaders:

“The latest data clearly show that the economy is entering a serious recession, initiated by the collapse of homebuilding and intensified by the paralysis of credit markets. Without a fast and effective response by government, the economy could continue to spiral downward, leading to a large increase in unemployment and a sharp decline in GDP.”

Stiglitz and his fellow economists reject the notion that providing help to the unemployed and to states and localities whose budgets are being squeezed would raise interest rates and deter private investment. “It is far more likely that an effective stimulus package will promote investment,” they told Congress, “by improving prospects for higher sales and profits. Download the entire letter in support of immediate, bold federal assistance (40k PDF).