The best evidence for how strapped state and local governments can become drags on growth comes from the 2008-2009 recession, when they became relentlessly austere “anti-stimulus machines,” observes Josh Bivens of the Economic Policy Institute.
If state and local spending had matched the trajectory it followed during the recovery from the recession of the early 1980s, “pre-recession unemployment rates could have been achieved by early 2013 rather than 2017,” Bivens calculates. “In short, this austerity delayed recovery by over four years.”
Closing the revenue gap with federal aid will save as many as 6 million jobs by the end of 2021, Bivens adds, placing the U.S. back on the path to full employment it enjoyed before the coronavirus pandemic.
Los Angeles Times
June 12, 2020
If Connecticut does not receive more stimulus money from the federal government, nearly 60,000 jobs in the state could be lost, hampering an economic recovery, an analysis by the Economic Policy Institute says.
Hartford Courant
June 12, 2020
“States actually can’t solve this on their own — the federal government can. And so, it should be stepping in and providing state governments with a ton of aid.” Heidi Shierholz, director of policy at the Economic Policy Institute (EPI) and former chief economist at the Department of Labor, told Yahoo Money. “They could do it very, very easily. And it’s being debated. It should be happening already. It’s pretty shameful that it’s not.”
Yahoo Money
June 12, 2020
At the Economic Policy Institute, Josh Bivens and David Cooper write:
- If policymakers do nothing at the federal level to address these shortfalls, the United States could end 2021 with 5.3 million fewer jobs, with losses in every state.
- Further, if Congress passes some level of aid that is insufficient—less than $1 trillion—they will needlessly guarantee a significant job gap by the end of 2021.
- If they pass $500 billion of aid over that time, the jobs gap will likely be roughly 2.6 million. If they pass $300 billion of aid, the jobs gap will likely be roughly 3.7 million.
- While empirical estimates of the shortfall should guide policymakers’ thinking, they can (and actually should) avoid putting a firm sticker price on state and local aid by tying this aid to economic conditions. If the economy recovers faster than the forecasts driving the $1 trillion estimated shortfall indicate will happen, then less aid would be needed. If instead recovery lagged, more would be needed.
- Finally, filling in the estimated shortfalls would merely return state and local governments to their pre-crisis fiscal status quo. But the unique features of the current economic shock will put greater demands on public services than existed before the crisis. To go beyond macroeconomic stabilization and promote the general welfare, even more federal aid to these governments is likely needed.
Daily Kos
June 12, 2020
The best evidence for how strapped state and local governments can become drags on growth comes from the 2008-2009 recession, when they became relentlessly austere “anti-stimulus machines,” observes Josh Bivens of the Economic Policy Institute.
If state and local spending had matched the trajectory it followed during the recovery from the recession of the early 1980s, “pre-recession unemployment rates could have been achieved by early 2013 rather than 2017,” Bivens calculates. “In short, this austerity delayed recovery by over four years.”
Closing the revenue gap with federal aid will save as many as 6 million jobs by the end of 2021, Bivens adds, placing the U.S. back on the path to full employment it enjoyed before the coronavirus pandemic.
Los Angeles Times
June 12, 2020
“If all the 32.5 million workers who are out of work as a result of the virus had shown up as unemployed, the unemployment rate would have been 19.7% in May instead of 13.3%,” said Economic Policy Institute Policy Director Heidi Shierholz.
Canton Daily Ledger
June 12, 2020
If Connecticut does not receive more stimulus money from the federal government, nearly 60,000 jobs in the state could be lost, hampering an economic recovery, an analysis by the Economic Policy Institute says.
Hartford Courant
June 12, 2020
“States actually can’t solve this on their own — the federal government can. And so, it should be stepping in and providing state governments with a ton of aid.” Heidi Shierholz, director of policy at the Economic Policy Institute (EPI) and former chief economist at the Department of Labor, told Yahoo Money. “They could do it very, very easily. And it’s being debated. It should be happening already. It’s pretty shameful that it’s not.”
Yahoo Money
June 12, 2020
At the Economic Policy Institute, Josh Bivens and David Cooper write:
- If policymakers do nothing at the federal level to address these shortfalls, the United States could end 2021 with 5.3 million fewer jobs, with losses in every state.
- Further, if Congress passes some level of aid that is insufficient—less than $1 trillion—they will needlessly guarantee a significant job gap by the end of 2021.
- If they pass $500 billion of aid over that time, the jobs gap will likely be roughly 2.6 million. If they pass $300 billion of aid, the jobs gap will likely be roughly 3.7 million.
- While empirical estimates of the shortfall should guide policymakers’ thinking, they can (and actually should) avoid putting a firm sticker price on state and local aid by tying this aid to economic conditions. If the economy recovers faster than the forecasts driving the $1 trillion estimated shortfall indicate will happen, then less aid would be needed. If instead recovery lagged, more would be needed.
- Finally, filling in the estimated shortfalls would merely return state and local governments to their pre-crisis fiscal status quo. But the unique features of the current economic shock will put greater demands on public services than existed before the crisis. To go beyond macroeconomic stabilization and promote the general welfare, even more federal aid to these governments is likely needed.
Daily Kos
June 12, 2020
The Economic Policy Institute, a left-leaning think tank that focuses on the needs of low- and middle-income workers, argues it’s a good idea to give workers who made below-average incomes before the crisis that $600 boost, and contends the subsidy should continue. In a blog post, economists from organization say putting extra money into the pockets of lower-income workers helped keep the economy going during the slowdown, and kept them from having to “run down their meager savings and go into debt just to survive during the lockdown period.”
Cleveland.com
June 11, 2020