Topping even Jay Powell in the clarity sweepstakes and writing in the Op-Ed section of today's New York Times, former two-term Fed Chairman Ben Bernanke makes perhaps the strongest macroeconomic case I've yet seen for Federal fiscal policy intervention assisting the states and localities to replace their non-recoverable tax and fee revenue shortfalls. Drawing on his experience presiding at the Fed over the anemic recovery from the 2008 financial debacle, he argues that with compelling force that Congress can avoid that result by moving quickly to support the states.
A Jersey guy, Bernanke - appointed first in 2006 by George W. Bush and reappointed to a second term by Barack Obama in 2010 - couldn't be more clear about the lesson he and the country learned from that ten year experience: "I was the chairman of the Federal Reserve during the global financial crisis and the subsequent Great Recession. As part of the recovery effort, Congress responded with a stimulus package of nearly $800 billion.But that package was partly offset by cuts in spending and employment by state and local governments. Like today, with sharp declines in tax revenue as the economy slowed, states and localities were constrained by balanced-budget requirements to make matching cuts in employment and spending. This fiscal headwind contributed to the high unemployment of the Great Recession, which peaked at 10 percent in late 2009."
While Dr. Bernanke isn't endorsing my April, 2020 suggestion of mandating the Fed to make forgivable loans to the states and localities in return for those jurisdictions' promises to maintain at least pre-pandemic spending levels, he does an excellent job using New Jersey as his post-child for fiscal stress incurred in taking actions to successfully flatten the infection curve to make the case for swift action on legislation like the pending (and identical) Menendez-Cassidy (S-3752) and Sherrill-King (6954) SMART ACT bills or the HEROES Act already passed by the House (but apparently making no progress in the Senate)...although he doesn't mention any specific legislation by name or sponsor.
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