Former Federal Reserve Chairman Ben Bernanke is urging Congress to deliver hundreds of billions of dollars in additional aid to states whose budgets have been ravaged by the coronavirus pandemic, warning that a federal pivot to austerity combined with state budget and job cuts could otherwise prolong the downturn much as they did a decade ago.
“Congress must act decisively — and it must act in ways that don’t repeat mistakes of the recent past, during the Great Recession,” Bernanke, who’s now a distinguished fellow in residence at the Brookings Institution — and a member of New Jersey’s Restart and Recovery Commission — writes in a New York Times op-ed.
Bernanke says that the $150 billion provided to state and local governments in the CARES Act in March won’t be enough:
“States and localities are in desperate need of additional federal intervention before the bulk of the CARES Act funding expires this summer. Budget gaps like the one in New Jersey cannot be closed by austerity alone. 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. …
“This new aid package must be significantly larger and provide not only assistance for state and local governments but also continued support for the unemployed, investments in public health and aid as needed to stabilize aggregate demand and restore full employment.”