Economists’ Public Letter on Recovery Policy: State Aid, SNAP, UI

Dear National Lawmakers,

As you consider a new package of aid to support the nation during the ongoing COVID-19 pandemic, now is an appropriate time for the federal government to consider economic research carefully in order to provide well-targeted, significant relief to state governments and to individuals experiencing economic hardship. Support for state budgets, and for safety net programs, most notably funding for the Supplemental Nutrition Assistance Program (SNAP) and for Unemployment Insurance, are wise ways to do this.

Unlike the federal government, most states cannot issue debt to support operating expenses. Economic theory and history show that significant state and local government spending cuts can exacerbate recessions and weaken recoveries. Facing dramatically reduced tax revenues, states and localities will be forced to cut budgets for essential programs that support health, education, public safety, and public transportation, and that reduce poverty and hardship — unless federal support is provided.

Cutting state budgets is pro-cyclical, that is to say, it removes spending from the economy at a time when private sector demand is already reduced, making a robust recovery more difficult. Providing funds to states is a wise investment to hasten recovery.

SNAP and Unemployment Insurance provide food and funds to individuals and families in need. This funding, too, can contribute to a more rapid recovery, since low-income individuals are likely to spend new resources immediately, fostering economic activity. And, of course, these programs directly help individuals in need. State Unemployment Insurance funds have been dramatically depleted, while SNAP benefits have never been high enough to fully address food insecurity, and are especially inadequate in the current context.

Evidence indicates that the effects of COVID-19 fall hardest on Black and Latinx communities, and other people of color, as well as people with pre-existing health conditions, and people in poverty. These measures would provide some important relief.

A robust recovery package should address these issues with significant funds.

Signatories:

Henry Aaron

Bruce and Virginia MacLaury Senior Fellow

The Brookings Institution

Daron Acemoglu

Institute Professor, Dept. of Economics

MIT

Jacqueline Agesa

Professor

Marshall University

Randy Albelda

Professor of Economics

University of Massachusetts Boston

Elizabeth Oltmans Ananat

Associate Professor of Economics

Barnard College, Columbia University

Michael Ash

Professor of Economics & Public Policy

University of Massachusetts Amherst

Nahid Aslanbeigui

Professor of Economics

Monmouth University

Ron Baiman

Associate Professor of Economics

Benedictine University

Radhika Balakrishnan

Professor

Rutgers University

Nina Banks

Associate Professor of Economics

Bucknell University

Christopher B. Barrett

Stephen B. & Janice G. Ashley Professor of Applied Economics and Management

Cornell University

Jacob Bastian

Assistant Professor of Economics

Rutgers University

Swati Bhatt

Lecturer

Princeton University

Alan Blinder

Professor of Economics and Public Affairs

Princeton University

Barry A. Bluestone

Professor Emeritus of Public Policy and Urban Affairs

Northeastern University

Peter Bohmer

Faculty Emeritus in Economics and Political Economy

The Evergreen State College

Leah Boustan

Professor of Economics

Princeton University

Elissa Braunstein

Professor and Chair of the Department of Economics

Colorado State University

Nancy Brooks

Visiting Associate Professor

Cornell University

Clair Brown

Professor

UC Berkeley

Christopher Brown

Professor of Economics

Arkansas State University

John Philip Burkett

Professor of Economics

University of Rhode Island

Gary Burtless

Senior Fellow, Economic Studies

Brookings Institution

Oriol Carbonell-Nicolau

Professor

Rutgers University

Christopher Carpenter

E. Bronson Ingram Professor of Economics

Vanderbilt University

Howard Chernick

Professor of Economics Emeritus

Hunter College and the Graduate Center, City University of NY

Menzie D. Chinn

Professor of Public Affairs and Economics

University of Wisconsin, Madison

Kimberly E. Christensen

Economics Professor

Sarah Lawrence College

Nathaniel Cline

Associate Professor

University of Redlands

Dorothy Sue Cobble

Distinguished Professor of History and Labor Studies

Rutgers, State University of New Jersey

Richard D. Coe

Professor of Economics

New College of Florida

Sean P. Corcoran

Associate Professor of Public Policy and Education

Vanderbilt University

Janet Currie

Professor of Economics and Public Affairs

Princeton University

Sheldon Danziger

Distinguished University Professor of Public Policy Emeritus

University of Michigan

Willard Delavan

Associate Professor of Economics

Lebanon Valley College

J. Bradford DeLong

Professor

U.C. Berkeley

Peter Diamond

Institute Professor Emeritus

Massachusetts Institute of Technology

William Theodore Dickens

University Distinguished Professor

Northeastern

Ranjit S. Dighe

Professor

State University of New York at Oswego

Peter Doeringer

Professor of Economics Emeritus

Boston University

Laura Dresser

Associate Director, COWS, Assistant Clinical Professor, Social Work

UW Madison

Matthew Kraft

Associate Professor of Education and Economics

Brown University

Amitava Krishna Dutt

Professor

University of Notre Dame

Steven Fazzari

Bert A. and Jeanette L. Lynch Professor of Economics and Sociology

Washington University in St. Louis

Deborah M. Figart

Distinguished Professor of Economics

Stockton University

Robert Forrant

Distinguished University Professor of History

University of Massachusetts Lowell

Ellen Frank

Senior Lecturer

University of Massachusetts-Boston

Gerald Friedman

Professor of Economics

University of Massachusetts at Amherst

James Galbraith

Lloyd M . Bentsen Jr. Chair in Government/Business Relations

LBJ School of Public Affairs, The University of Texas at Austin

John Gallup

Associate Professor of Economics

Portland State University

Irwin Garfinkel

Professor

School of Social Work Columbia University

Teresa Ghilarducci

Professor

The New School

Lonnie Golden

Professor Economics and Labor-Human Resources

Penn State University (Abington)

John Golden

Associate Professor of Economics

Allegheny College

Michael Goodman

Professor of Public Policy

UMass Dartmouth

Neva Goodwin

Distinguished Fellow

Economics in Context Initiative, Boston University

Gene Grossman

Jacob Viner Professor of Economics and International Affairs

Princeton University

Darrick Hamilton

Executive Director of the Kirwan Institute for the Study of Race and Ethnicity

Ohio State University

Douglas Harris

Professor and Chair of Economics

Tulane University

Oliver Hart

Lewis P. and Linda L. Geyser University Professor

Harvard University

Carolyn Heinrich

Patricia and Rodes Hart Professor of Public Policy, Education and Economics

Vanderbilt University

Harry J. Holzer

LaFarge SJ Professor of Public Policy

Georgetown University

Saul H. Hymans

Professor of Economics & Statistics, Emeritus, Dept of Economics

University of Michigan, Ann Arbor, MI

Kenneth Jameson

Professor Emeritus

University of Utah

Paul Andrew Jargowsky

Professor and Director, Center for Urban Research and Education

Rutgers University – Camden

William G. Johnson

Professor Emeritus, Founder Center for Health Information & Policy

Arizona State University

Harry Katz

Jack Sheinkman Professor

ILR School, Cornell University

Lawrence Katz

Elisabeth Allison Professor of Economics

Harvard University

Haider A. Khan

Distinguished University Professor

University of Denver

Mary C. King

Professor of Economics Emerita

Portland State University

Marieka Klawitter

Professor of Public Policy and Governance

University of Washington

Michael Klein

William L. Clayton Professor of International Economic Affairs

Fletcher School, Tufts University

James Knickman

Retired. Formerly Robert Derzon Chair of Health and Public Affairs

New York University

Yolanda K. Kodrzycki

VP and Director, New England Public Policy Center (retired)

Federal Reserve Bank of Boston

Timothy Koechlin

Director, International Studies Program

Vassar College

Ebru Kongar

Professor of Economics

Dickinson College

Laurence Kotlikoff

Professor of Economics

Boston University

Kate Krause

Emerita Professor

University of New Mexico

Adriana Kugler

Professor of Public Policy and Economics

Georgetown University

Edith Kuiper

Associate Professor

State University of New York at New Paltz

Kevin Lang

Professor of Economics

Boston University

Ronald Lee

Professor of Demography and Economics, Emeritus

University of California, Berkeley

Paul Leigh

Health Economics Professor Emeritus

UC Davis

Victor D. Lippit

Professor of Economics Emeritus

University of California, Riverside

David B. Lipsky

Anne Evans Estabrook Professor of Dispute Resolution Emeritus

School of Industrial and Labor Relations, Cornell University

Mark Long

Professor of Public Policy and Governance

University of Washington

Catherine Lynde

Associate Professor, Retired

University of Massachusetts Boston

Arthur MacEwan

Professor Emeritus of Economics

University of Massachusetts Boston

Bernard Malamud

Emeritus Professor of Economics

University of Nevada, Las Vegas

Julie Matthaei

Professor Emeritus of Economics

Wellesley College

Daniel McFadden

Presidential Professor

USC Schaeffer Center for Health Economics and Policy

Brandon McKoy

President

New Jersey Policy Perspective

Alicia Sasser Modestino

Associate Professor of Economics and Public Policy

Northeastern University

Alan Monheit

Professor of Health Economics

Rutgers University School of Public Health

Katherine A. Moos

Assistant Professor of Economics

University of Massachusetts Amherst

Julie A. Nelson

Emeritus Professor of Economics

University of Massachusetts Boston

Robert Noland

Distinguished Professor

Rutgers University

Jennifer Olmsted

Professor of Economics and Director of the Social Entrepreneurship Semester

Drew University

Paul Osterman

Professor

Massachusetts Institute of Technology

Amanda Page-Hoongrajok

Assistant Professor

Saint Peter’s University

Prasannan Parthasarathi

Professor

Boston College

Karl Petrick

Associate Professor of Economics

Western New England University

Karen Pfeifer

Professor Emerita of Economics

Smith College

Lynda Pickbourn

Associate Professor of Economics

Hampshire College

Anne Morrison Piehl

James Cullen Professor of Economics

Rutgers University

Frank Popper

Professor

Rutgers (Emeritus) and Princeton Universities

Andrew Reschovsky

Professor Emeritus of Public Affairs and Applied Economics

University of Wisconsin-Madison

Richard Roberts

Professor of Economics

Monmouth University

Yana Rodgers

Professor

Rutgers University

Barkley Rosser

Professor of Economics and Kirby L. Cramer, Jr. Professor of Business Administration

James Madison University

Katheryn Russ

Associate Professor of Economics

University of California, Davis

Julia Sass Rubin

Associate Professor

Bloustein School of Planning and Public Policy, Rutgers University

Richard Schmalensee

Professor Emeritus of Economics & Management

Massachusetts Institute of Technology

Tobias Schulze-Cleven

Associate Professor of Labor Studies and Employment Relations

Rutgers University-New Brunswick

Robert J. Shiller

Sterling Professor of Economics

Yale University

Tim Smeeding

Lee Rainwater Professor of Public Affairs and Economics

University of Wisconsin- Madison

Robert M. Solow

Institute Professor Emeritus

MIT

Lynn Tang

Professor of Economics and International Business

The College of New Jersey

Robert Tannenwald

Vice President (Retired)

Federal Reserve Bank of Boston

David Terkla

Dean, College of Liberal Arts and Professor of Economics

University of Massachusetts Boston

Robert Triest

Professor and Chair, Department of Economics

Northeastern University

Meredeth Turshen

Professor Emerita

Rutgers University

Paul N. Van de Water

Senior Fellow

Center on Budget and Policy Priorities

Paula B. Voos

Professor, School of Management & Labor Relations

Rutgers University

Geoffrey L. Wallace

Associate Professor of Economics and Public Affairs

University of Wisconsin – Madison

George Waters

Professor

Illinois State University

Mark Watson

Howard Harrison and Gabrielle Snyder Beck Professor of Economics and Public Affairs

Princeton University

Eugene White

Distinguished Professor of Economics

Rutgers University

Noé M. Wiener

Lecturer in Economics

University of Massachusetts Amherst

Barbara Wolfe

Richard A Easterlin Professor of Economics and Public Affairs

University of Wisconsin-Madison

Owen Zidar

Professor of Economics and Public Affairs

Princeton University

Many macroeconomists share the view that assistance to the states is essential. From the fourth round survey of the IGM/Fivethirtyeight Covid-19 panel:

Fivethirtyeight discussion in this article. As the graphic highlights, austerity measures imposed upon states due to the collapse in revenue and the inability to borrow is a widely held concern.

Already, state and local employment has declined precipitously. Many of the employment reductions will become permanent if no aid from the federal government is forthcoming in the next rescue package.

On SNAP, see today’s NYT article on popular reliance on this program that the Administration has attempted to cut.

 

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