The only surefire ways for policymakers to substantially increase aggregate demand in the short run are for the government to spend more and tax less. In my view, we should be moving forward on both fronts….
…concern about the deficit cannot be an excuse for leaving unemployed workers to suffer. We have tools that would bring unemployment down without worsening our long-run fiscal outlook, if we can only find the will and the wisdom to use them….
Much of her speech details the ways in which the Great Recession has differed from prior U.S. recessions, something we examined back in January in a post titled “Do You Believe in Magic?”
Romer is returning to UC Berkeley to assume her former post as a professor of economics.
She has been perhaps the clearest advocate in the administration for the benefits of fiscal stimulus and the need for additional policy action. But her departure does not necessarily signal a pull back by the White House from pursuing a bolder focus on new initiatives to boost jobs and the economy.
To the contrary, as President Obama has recently said the administration is working on “additional measures” as part of “a full-scale effort, a full-scale attack” to get jobless workers back to work and sustain a real economic recovery.
The question of who is chosen to fill the Council of Economic Advisers (CEA) post may well be one of the critical components determining just how “full-scale” those “additional measures” will be.
In that context, yet another UC Berkeley economics professor comes to mind. Laura Tyson, a senior fellow with the Center for American Progress, and a member of the Economic Recovery Advisory Board, served as the Chair of CEA from 1993 to 1995 in the Clinton administration.
But the primary reason Tyson comes to mind is her Op-Ed in last Sunday’s New York Times, titled “Why We Need a Second Stimulus”:
OUR national debate about fiscal policy has become skewed, with far too much focus on the deficit and far too little on unemployment. There is too much worry about the size of government, and too little appreciation for how stimulus spending has helped stabilize the economy and how more of the right kind of government spending could boost job creation and economic growth. By focusing on the wrong things, we are in serious danger of failing to do the right things to help the economy recover from its worst labor market crisis since the Great Depression.
The primary cause of the labor market crisis is a collapse in private demand — the same problem that bedeviled the economy in the 1930s.
In the wake of the financial shocks at the end of 2008, spending by American households and businesses plummeted, and companies responded by curbing production and shedding workers. By late 2009, in response to unprecedented fiscal and monetary stimulus, household and business spending began to recover. But by the second quarter of this year, economic growth had slowed to 1.6 percent, according to a government estimate issued Friday. Clearly, the pace of recovery is far slower than what is needed to restore the millions of jobs that have been lost.
[...]
Under these circumstances, the economic case for additional government spending and tax relief is compelling.
The author is the winner of the 2010 CREDO Mobile/Netroots Nation award for Blog Activist of the Year.
Acknowledging its concern with the obvious sluggishness of the economy, the Federal Reserve Board has responded by actually doing something, instead of just talking about maybe doing something. But the something they decided to do was kind of the bare minimum in the context of massive unemployment, dis-inflation and depressed demand.
At its Open Market Committee meeting Tuesday, the Fed announced it would begin purchasing long-term Treasury securities with the proceeds from maturing assets it has held, including mortgage-backed securities. By maintaining its current level of assets it will also maintain current liquidity levels in the economy.
That’s something, but it isn’t much. And it certainly is nowhere near what the Fed could and should be doing, as I explained in an earlier post.
On the heels of the latest scary jobs report, it’s clear that the economy actually needs a large-scale coordinated policy response from the administration, Congress and the Federal Reserve. The administration and Congress should be crafting the kind of large public jobs stimulus that the private sector needs to generate hiring. And the Fed should be expanding, not just maintaining, its balance sheet by purchasing more long-term Treasury securities to help boost demand.
Instead, we get partial measures. The best of them recently was the good and necessary $26 billion bill just passed and signed by the President to help keep more teachers in our classrooms and help states maintain more needed services. That same bill also addresses an urgent need by beginning to close the tax loopholes that allow corporations to ship jobs overseas. But the bill wound up being cut back to half of its original funding for education and the states. So it will help maintain jobs and services — but not all of them.
Similarly, then, the Fed has taken a kind of baby step, but it is symptomatic of a pervasive timidity on jobs and economic policy.
Previously, the Fed had planned to allow its balance sheet to contract slowly as those securities matured. Now, it has decided to maintain a large balance sheet, given economic weakness. Finally, it is adjusting the composition of its balance sheet away from MBS and toward long-term Treasuries.
The long and short of it is that the Fed has taken the minimum possible non-contractionary action. I am struggling to understand it. Perhaps the Fed is wary of doing too much at once. Perhaps it is interested in demonstrating that it is aware of the economic risks but not yet convinced that further action is warranted. For now, though, it seems as though the Fed has acknowledged risks but refused to do anything substantive about them.
What’s my reaction? The Fed’s current policy is grossly inadequate, logically bizarre, and slightly — but only slightly — encouraging.
Not long ago gradual Fed tightening was the default strategy; but as I said, at this point the Fed realized that continuing on that path would have unleashed both a firestorm of criticism and a severe negative reaction in the markets.
What we need to do now is keep up the pressure, so that at the next FOMC meeting the members are once again confronted by the reality that not changing course would be seen as dereliction of duty.
In a better world, the Fed would look at the state of the economy and do what was right, not the minimum necessary.
The author is the winner of the 2010 CREDO Mobile/Netroots Nation award for Blog Activist of the Year
In a Sunday New York Times article, Yale economist Robert Shiller, who’s previously called it correctly on the dot com and housing bubbles, asks “What would Roosevelt do?”
We need more stimulus, not less — but we need to focus much more on actually putting people to work.
Yet unless we take new measures, we face the prospect of protracted unemployment. In June, the unemployment rate stood at 9.5 percent and the rate of long-term unemployment, defined as joblessness for at least 27 weeks, was 4.4 percent — its highest level since 1948. Both Ben Bernanke, chairman of the Federal Reserve, and Christina Romer, chairwoman of the White House Council of Economic Advisers, recently said that high unemployment was likely to persist for years.
OK – so much for restating the obvious. Then Shiller lays it out:
So here’s a proposal: Why not use government policy to directly create jobs — labor-intensive service jobs in fields like education, public health and safety, urban infrastructure maintenance, youth programs, elder care, conservation, arts and letters, and scientific research?
He describes a number of specific ideas to productively re-employ unemployed workers, including this:
In a period of severe joblessness like this one, however, someone who is sitting unemployed who would rather be working at a modest salary as a teacher’s aide should be given a chance, at least until the economy improves. In other words, the unemployment rate itself should be a major factor in evaluating such programs.
Shiller concludes:
Big new programs to create jobs need not be expensive. Suppose the cost of hiring a single employee were as high as $30,000 a year, several times typical AmeriCorps living allowances. Hiring a million people would cost $30 billion a year. That’s only 4 percent of the entire federal stimulus program, and 0.2 percent of the national debt.
Why don’t we just do it?
Indeed, why don’t we? Our recent experience has shown that we can’t wait for the private sector to create jobs on the scale that’s needed. In fact, as we’ve written here, the private sector needs a public jobs stimulus. But even while more leading economists are now endorsing this idea, the issue — while urgent — is not yet front and center.
It needs more public engagement and discussion. There’s no one, single “Big Idea” for the kind of jobs we could and should be creating. There are lots of ideas — and I’ll bet you all have some really good ones, which I’d hope some of you would share in the comments!
The author is the winner of the 2010 CREDO Mobile/Netroots Nation award for Blog Activist of the Year.
The 2001 and 2003 Bush tax cuts, which were passed under reconciliation by Republicans so they only needed 51 votes in the Senate, benefited wealthier Americans the most. Those tax cuts for the wealthy had little stimulative effect on the economy, turned federal budget surpluses into deficits and exacerbated the income inequality between the top 2 percent and everybody else.
All the Bush tax cuts are now set to expire next year. While there is widespread support for extending those cuts directed at helping lower-income and middle-class Americans, the debate is on over the tax cuts for those at the top of the income scale.
Now, a leading economist and former Federal Reserve Board vice chairman, Alan S. Blinder, wants to end of the Bush tax cuts for the wealthy and direct the huge budget savings toward programs including extended unemployment insurance, fiscal aid to states and job-creation programs.
Blinder, an economics professor at Princeton, penned a recent Op-Ed on the subject in the Wall Street Journal.
Apparently unbothered by the consistency hobgoblin, some of the Republican deficit hawks also want to make the 2001-2003 Bush tax cuts permanent, rather than letting them expire on schedule at the end of this year. Yet their major argument is classic Keynesian thinking: Letting tax cuts expire is tantamount to raising taxes—which is the opposite of what you want to do when the economy is weak. A few days ago, Sen. Jon Kyl (R., Ariz.) even went so far as to declare it OK to raise the deficit to finance tax cuts, but not to pay unemployment benefits.
Blinder’s preference?
Let the upper-income tax cuts expire on schedule at year end. That would save the government an estimated $75 billion over the next two years. However, it would also diminish aggregate demand a bit. So, instead of using the $75 billion to reduce the deficit, spend it on unemployment benefits, food stamps and the like for two years. That would surely put more spending into the economy than the tax hike takes out, thus creating jobs.
How much more? Getting a numerical estimate requires the use of a quantitative model of the U.S. economy. In recent testimony before the House Budget Committee, Mark Zandi of Moody’s Analytics used his model to estimate that extending unemployment insurance benefits has almost five times as much “bang for the buck” as making the Bush tax cuts permanent.
Based on his estimates, the budgetary trade I just recommended would add almost $100 billion to aggregate demand over the next two years—without adding a dime to the deficit. That translates to about 500,000 more jobs each year.
Blinder reiterated those assessments Wednesday, and indeed went even further, saying he thought at the time that the Bush tax cuts for upper income Americans were like “piling on” — worsening the effects of income inequality. On a conference call with reporters, Blinder said of the tax cuts for the rich “it would have been better if they hadn’t been enacted.”
Letting the top income tax cuts expire, he said, would allow us to use the additional funds for things that would stimulate the economy more directly, such as unemployment insurance, food stamps and jobs programs, while also lowering deficits long-term.
“Not all budgetary dollars are created equal,” Blinder said. “Some have a bigger bang for the buck.” He estimates the stimulative effects on GDP of a dollar used for unemployment benefits or food stamps to be $1.60 to $1.70, while all the Bush tax cuts would account for about half that much — and far less for just the tax cuts for the wealthy.
Blinder and Mark Zandi of Moody Analytics also released a detailed study this week which estimated that without the combination of monetary and fiscal stimulus measures taken since late 2008, job losses would have exceeded 16 million, more than twice the 8 million lost in the recession.
Still, Blinder said the economy is currently weak enough to require additional fiscal and monetary stimulus. That’s the context for him urging the end of the Bush tax cuts for individuals making more than $200,000 and couples making more than $250,000 a year — and directing the first two years of new revenues to programs like unemployment insurance, food stamps and state aid.
I asked Professor Blinder if he thought the private sector needs a public jobs stimulus. “Absolutely,” he replied, saying he favors creating a temporary “WPA-type public jobs program,” one which he said would also “kick start the private sector hiring process.”
What do I mean? Specifically, the U.S. private sector currently needs substantial, publicly-funded direct job-creation programs in order to get private employers to hire again on the scale needed to significantly reduce unemployment and promote a robust economic recovery.
It’s an argument that I don’t think has been made, at least not adequately, to help advance the debate in favor of large-scale stimulus to create jobs.
Part of the problem is the almost religious belief that the private sector, and only the private sector, can be the engine of job creation. As James Kwak wrote recently, in a somewhat different context:
… the belief that the private sector is the answer to all our problems remains deeply rooted. One might even call it an ideology.
And the problem is exacerbated by policy makers who ostensibly grasp the need to do more to boost a weak and faltering economy, but undercut that message with utterances to the effect that ‘we’ve done enough’ and ‘government can only do so much’, as Treasury Secretary Tim Geithner did recently. Now, Mr. Geithner is a smart man, who we’d hope doesn’t believe in magic. And he’s right, of course, that private investment is needed. But the fact is, it’s not happening.
Private businesses don’t hire more workers unless they need to or perceive they need to. And what is it that creates that need? Principally, an increase in demand for goods and services — and labor. There are certainly other important factors as well, including the flow of credit and incentives driven by competition. But none of those elements are working in favor of rates of private sector job growth that are anywhere near what’s needed to bring down unemployment in any meaningful measure.
Under anything approaching normal economic conditions, we could reasonably expect the private sector to generate a sustained growth rate without substantial new public stimulus. But we don’t have anything approaching normal economic conditions. Nearly 15 million workers are officially unemployed; record levels of long-term unemployment; severely depressed demand; huge excesses of productive capacity; reduced competition for goods, services and labor. And, as even conservative economist John Makin of the American Enterprise Institute wrote recently, a banking system that’s dysfunctional in the face of a rising threat of deflation.
In fact, banks have virtually ceased to function as financial intermediaries since 2008, preferring to use the zero cost of money provided by the Fed to finance purchases of Treasury securities instead of supplying loans to households and small businesses. After a financial crisis, banks become much more risk averse, as is manifest in their willingness to lend only to the government instead of to households and businesses.
We’ve been stuck in this kind of economic debacle before, of course, during the Great Depression. And so we know the kinds of things that can be done to rapidly bring down unemployment and generate growth that then leads the private sector into a recovery, that in turn allows fiscal deficits to be reduced.
After lambasting Geithner for what he calls the Treasury Secretary’s “Hoover impersonation”, Harold Evans supplies a worthy analysis and then reminds us:
In the ’30s, Keynes recognized the risks so paralyzing Public Works Administration Chief Harold Ickes, who rightly worried that a quick public works program invited waste, inefficiency, and corruption. (Of the $3.3 billion authorized, Ickes had invested only $110 million in the first year.) With a hard winter coming in 1933-34, Keynes urged Ickes to balance those risks: “He must get across the crevasses before it is dark.”
Given some of Ickes’ money by an impatient FDR, Harry Hopkins pledged that his Civil Works Administration would put 2 million people to work within 10 days and 2 million more by end of two weeks afterward.
Impossible! He had no blueprints, no staff. So he did it. He hired private contractors who built more than 450 airfields, built or improved half a million miles of city streets and feeder roads, scores of miles of sewers, hundreds of parks and swimming pools. Hopkins subsequently took charge of the Works Progress Administration, a rival to Ickes agency, with a then-massive budget of $5 billion.
His energy and vision left an enduring legacy—650 miles of roads, 78,000 bridges including the mammoth bridges spanning the San Francisco Bay, the Florida Keys, and New York’s East and Harlem Rivers, a host of levees, floodways and dams to harness the Mississippi, the Hoover Dam, the massive Grand Coulee and Bonneville Dams, the electrified Penn railroad, some 40,000 new schools and 2,500 new hospitals. There is not a city in the United States that does not have a landmark of those years.
Altogether Hopkins created more than 8 million jobs; the equivalent today would be more than 20 million jobs.
Large-scale public investments that directly create jobs — and lots of them — are what is needed now to generate the increased demand for goods, services and labor that will stimulate private sector growth, investment and employment.
The private sector needs a public jobs stimulus.
I’ll be coming back to this point from different angles in upcoming posts. But for now we need to ask: without it, what will happen? Paul Krugman warns of permanently high unemployment. His post, which is brief and worth reading in its entirety, concludes:
The point is that while policy makers may think they’re being prudent and appropriately cautious in their responses to unemployment, there’s a good chance that they’re prudenting and cautiousing us into a long-term jobs catastrophe.
The author is the winner of the 2010 CREDO Mobile/Netroots Nation award for Blog Activist of the Year
Some help available for those on the edge of eviction. From the NY Times:
He could no longer pay even the rent on his cramped studio apartment — not on his $10-an-hour part-time job as a fry cook at a fast food restaurant.
Faced with eviction, he was staring last month at the imminent prospect of joining the teeming ranks of the homeless. His last hope was a new $1.5 billion federal program aimed at preventing that fate.
and
Much like the Great Depression, when millions of previously working people came to rely on a new social safety net for their sustenance, a swelling group of formerly middle-class Americans like Mr. Moore, 30, is seeking government aid for the first time. Without help, say economists, many are at risk of slipping permanently into poverty, even as economic conditions improve.
The question is whether the modern-day safety net has enough money and the right initiatives to aid those who need it most. The answer could shape whether a considerable slice of the American population will recover from the trauma of recent years, and how long that will take.
more
“Nationally, homelessness has now reached crisis proportions not seen since the Great Depression,” says Maria Foscarinis, executive director of the National Law Center on Homelessness and Poverty.
The severity of the situation prompted the Obama administration to create the Homelessness Prevention and Rapid Re-Housing program within the $787 billion economic stimulus package. The program rests on the assumption that intervention is the best course because once people become homeless, the odds and costs of regaining their lives escalate sharply.
One of the goals of this program is to help prevent even more people from losing their housing. The US has a higher level of homelessness right now than we had during the Great Depression. The funds are administered federally through the HUD program, but each state seems to have a different system for distributing funds. Every state has a housing authority, and their websites are the best way to find out how the program works in your state.
The constant, mind-numbing drone of deficit fears emanating from Republicans and the Wall Street media continues in the wake of Sen. Jim Bunning’s (R-KY) irrational week-long obstruction of an emergency jobless benefit extension.
But as Nobel laureate economist Joseph Stiglitz explained yesterday on CNNMoney.com’sStrategy Sessions a fixation now on the deficit threatens to undermine prospects for economic recovery.
Mike Lillis at the Washington Independent has an excellent piece today on the Republicans’ “deficit crusade”:
Sen. Jim Bunning’s (R-Ky.) recent one-man stand against legislation extending unemployment benefits offered a high-profile airing of a popular GOP message: Deficit spending, in almost any form, will cause more harm than good to a fragile economy.
Standing in the way of the Republicans’ reasoning, however, has been another formidable group: budget experts. Most are urging additional, though temporary, deficit spending as the surest way to tackle the jobs crisis and prevent the economy from slipping back into recession. It hasn’t helped the GOP’s argument that a good number of them are fiscal conservatives.
Lillis highlights a recent joint Op-Ed in Politico by conservative budget economist David M. Walker, president of the Peter G. Peterson Foundation, and Lawrence Mishel, president of the Economic Policy Institute, titled Address Jobs Now and Deficits Later where they write:
A focus on jobs now is consistent with addressing our deficit problems ahead.
As in every economic downturn, federal revenues have fallen steeply because individuals and corporations earn less in a recession. High unemployment also results in higher expenditures for safety net programs, like Medicaid, unemployment benefits and food stamps.
Not surprisingly then, a huge recession can yield a huge deficit. Efforts to put people back to work and help restore the economy, like the recovery package passed last February, can also increase short-term deficits.
Though a concern, most of the recent short-term rise in the deficit is understandable. Furthermore, public spending can help compensate for the fall in private spending, and help stem the pain of substantial job losses.
With more than a fifth of the work force expected to be unemployed or underemployed in 2010, there is an economic and a moral imperative to take action. Persistently high unemployment drives poverty up, makes it harder for families to find decent housing, increases family stress and, ultimately, harms children’s educational achievement. For young workers entering the workforce, the current jobs crisis reduces the amount they will earn over their lifetime.
That’s why we agree that job creation must be a short-term priority. Job creation plans must be targeted so we can get the greatest return on investment. They must be timely, creating jobs this year and next. And they must be big enough to substantially fill the enormous jobs hole we’re in. They must also be temporary — affecting the deficit only in the next couple of years, without exacerbating our large and growing structural deficits in later years.
In a time when cogent, effective policies are needed to address the suffering stemming from the economic downturn, the tactics of the deficit hawks distract the public and policy makers from the policies necessary to bring the economy back to full employment.
Of course you’d never know it listening to the repetitive, mindless fear-mongering about the deficit by Republicans and conservative pundits, but Americans are way ahead of them on the issue of jobs and the deficit. As we’ve reported here, a recent national Quinnipiac poll showed that Americans of all political preferences, ages and incomes overwhelmingly think reducing unemployment now is more important than reducing the deficit.
Whatever you may hear from conservative pundits pretending to be economists, or from paid lobbyists pretending to be economists, there truly is a consensus among serious economists that the stimulus provided by last year’s Recovery Act was essential to stabilizing the economy and preventing even more severe job losses. More importantly, the consensus among economists is that the stimulus was not large enough to provide positive traction on job creation and that more jobs stimulus is now needed. A lot more.
That this consensus is not yet an accepted fact of political and economic reality is the result of the totally fake deficit fear-mongering promulgated by those who want to maintain their supremacy over working people — employed, unemployed or underemployed — in this country.
Let me say it: there won’t be a real economic recovery without substantial, continuous job growth.
And there won’t be substantial job growth without an additional array of targeted job-creation programs — ones that finally are no longer too small to succeed.
So, let’s say it and say it again.
What economist Dean Baker calls “The Budget Deficit Crisis Crisis”:
The country faces a serious crisis in the form of a manufactured crisis over the budget deficit. This is a crisis because concerns over the size of the budget deficit are preventing the government from taking the steps needed to reduce the unemployment rate. This creates the absurd situation where we have millions of people who are unemployed, not because of their own lack of skills or unwillingness to work, but because people like Alan Greenspan and Ben Bernanke mismanaged the economy.
The basic story is very simple and one that we have known since Keynes. We need to create demand in the economy. The problem is that, as a society, we are not spending enough to keep the economy running at capacity.
The hole from the collapse of construction and the falloff in consumption is more than $1 trillion a year. The government is the only force that can make up this demand. However, this means running large deficits. To boost the economy, the government must spend much more than it taxes.
The stimulus approved by Congress last year was a step in the right direction this way, but it was much too small. After making adjustments for some technical tax fixes and pulling out spending for later years, the stimulus ended up being around $300 billion a year. Even this exaggerates the impact of the government sector, since close to half of the stimulus is being offset by cutbacks and tax increases at the state and local level.
The answer in this situation should be simple: more stimulus. But the deficit hawks have gone on the warpath insisting that we have to start worrying about bringing the deficit down. They have filled the airwaves, print media and cyberspace with solemn pronouncements about how the deficit threatens to impose an ungodly burden on our children.
This is of course complete nonsense. Larger deficits in the current economic environment will only increase output and employment. In other words, larger deficits will put many of our children’s parents back to work. Larger deficits will increase the likelihood that parents can keep their homes and provide their children with the health care, clothing, and other necessities for a decent upbringing. But the deficit hawks would rather see our children suffer so that we can have smaller deficits.
The current projections show that, even ten years out on our current course, the ratio of debt to GDP will be just over 90 percent. The ratio of debt to GDP was over 110 percent after World War II. Instead of impoverishing the children of that era, the three decades following World War II saw the most rapid increase in living standards in the country’s history.
The reality is that we have an unemployment crisis today, not a deficit crisis. The only crisis related to the deficit is that people with vast sums of money (i.e. the people who wrecked the economy) have been able to use that money to make the deficit into a crisis.
New York Times columnist and Nobel Laureate economist Paul Krugman on “Fiscal Scare Tactics”:
These days it’s hard to pick up a newspaper or turn on a news program without encountering stern warnings about the federal budget deficit. The deficit threatens economic recovery, we’re told; it puts American economic stability at risk; it will undermine our influence in the world. These claims generally aren’t stated as opinions, as views held by some analysts but disputed by others. Instead, they’re reported as if they were facts, plain and simple.
Yet they aren’t facts.
The point is that running big deficits in the face of the worst economic slump since the 1930s is actually the right thing to do. If anything, deficits should be bigger than they are because the government should be doing more than it is to create jobs.
The trouble, however, is that it’s apparently hard for many people to tell the difference between cynical posturing and serious economic argument. And that is having tragic consequences.
For the fact is that thanks to deficit hysteria, Washington now has its priorities all wrong: all the talk is about how to shave a few billion dollars off government spending, while there’s hardly any willingness to tackle mass unemployment. Policy is headed in the wrong direction — and millions of Americans will pay the price.
Mark Zandi, chief economist of Moody’s economy.com on the Ed Schultz show on MSNBC:
Robert Reich, former Secretary of Labor and Professor of Public Policy at UC Berkeley:
President Obama today offered a set of proposals for helping America’s troubled middle class. All are sensible and worthwhile. But none will bring jobs back. And Americans could be forgiven for wondering how the President plans to enact any of these ideas anyway, when he can no longer muster 60 votes in the Senate.
The bigger news is Obama is planning a three-year budget freeze on a big chunk of discretionary spending. Wall Street is delighted. But it means Main Street is in worse trouble than ever.
A spending freeze will make it even harder to get jobs back because government is the last spender around. Consumers have pulled back, investors won’t do much until they know consumers are out there, and exports are miniscule.
Today, though, there’s no sign on the horizon of a vigorous recovery. Jobs may be coming back a bit in the next months but the country has lost so many (not to mention all those who have entered the workforce over the last two years and still can’t land a job) that it will be many years before the middle class can relax. Furthermore, this recession isn’t like other recessions in recent memory.
Obama can no longer afford to come up with lists of nice things to do. At the least, he’s got to do two very big and important things: (1) Enact a second stimulus. It should mainly focus on bailing out state and local governments that are now cutting services and raising taxes, and squeezing the middle class. This would be the best way to reinvigorate the economy quickly. (2) Help distressed homeowners by allowing them to include their mortgage debt in personal bankruptcy — which will give them far more bargaining leverage with morgage lenders. (Wall Street hates this.)
And, lastly, Nobel Laureate economist and Columbia University Professor Joseph Stiglitz in an interview February 9:
