For Immediate Release: Wednesday, October 6, 2010
Contact: Phoebe Silag or Karen Conner, news@epi.org 202-775-8810
Yesterday, three prominent economists from across the ideological spectrum argued in favor of aggressive economic stimulus in response to the United States’ faltering recovery. Martin Feldstein, George F. Baker Professor of Economics at Harvard University and Chairman of the Council of Economic Advisors under President Ronald Reagan; Jan Hatzius, Chief U.S. Economist for Goldman Sachs; and Nobel Prize-winning economist Paul Krugman, Professor of Economics and International Affairs at Princeton University and New York Times columnist, discussed the nationwide unemployment crisis and fiscal and monetary policy at the conference America’s Fiscal Choices: Strengthening the Economy & Building for the Future. Each of the three economists spoke in favor of implementing economic stimulus programs that are large enough to be effective.
Feldstein argued that 2009’s economic stimulus package was too small.
“It was an $800 billion, roughly, package, but not in a single year,” Feldstein said. “So you had a whole which was, roughly, $800 billion dollars and they tried to fill it with a $300-billion, $400-billion annual fiscal injection, and that left a very big hole. And so we never got lift-off, we never got into a recovery.”
Hatzius argued that economic stimulus programs are often too small.
“That’s why, I think, in this type of situation, stimulus tends to be, basically, underprovided, relative to what’s necessary,” Hatzius said. “And I suspect that that’s what we’re going to find again.”
Finally, Krugman called repeatedly for the passage and implementation of another major stimulus plan.
“What we should be doing is a really big dose of stimulus on all of these fronts,” Krugman said. “We should be trying to get bank lending going, we should be trying to help homeowners—but, above all, we should have another large round of fiscal stimulus, and another large round of quantitative easing. Basically, the kitchen sink, throw everything at it.”
The conference was organized by the Center on Budget and Policy Priorities, The Century Foundation, Demos and the Economic Policy Institute. The economists spoke at the conference’s first session, “Economists Panel: Budget Policy, Short-Term Recovery & Long-Term Stimulus.”
Video of the conference will be available on Thursday, October 7th at http://www.epi.org.