Former Federal Reserve Board Chairman Ben Bernanke is calling on Congress to provide a new aid package that provides “significantly” more money to state and local governments than the $150 billion allotted in the Coronavirus Aid, Relief and Economic Security Act, plus aid for the unemployed and the public health care system.
In an op-ed in today’s New York Times, Bernanke, who oversaw the central bank’s $4 trillion response to the Great Financial Crisis in 2007-2009, notes that today’s unemployment rate is much higher than the 10% peak reached during the GFC and state and local government budget shortfalls are much greater.
Those gaps “cannot be closed by austerity alone,” writes Bernanke, who is a member of New Jersey Gov. Phil Murphy’s Restart and Recovery Commission, where he’s helping to develop an effective reopening strategy that can support the state’s economy and address the “glaring inequities the pandemic has revealed.”
New Jersey is facing a revenue shortfall of billions of dollars because revenues are falling while spending for health care, unemployment payments and other expenditures is rising.
“Multiply New Jersey’s problems to reflect the experiences of 50 state governments and thousands of local governments and the result, without more help from Congress, could be a significantly worse and protracted recession,” writes Bernanke. Since February, state and local governments collectively have laid off nearly 1.5 million workers, according to Bernanke.