Former Fed Chairs Ben Bernanke and Janet Yellen signed a letter with 130 top economists imploring Congress to prevent 'prolonged suffering and stunted economic growth'
- A group of 130 top economists including Ben Bernanke and Janet Yellen signed a letter with 130 top economists calling for Congress to act and prevent "prolonged suffering and stunted economic growth."
- "If Congress fails to act, state and local governments face potentially disastrous budget shortfalls, and the Congressional Budget Office estimates the unemployment rate will likely be more than 11 percent at the end of the year," the letter read.
- Congress is set to debate relief spending next month, but Democrats and the GOP are far apart on what should be put into the legislation.
Former Federal Reserve Chairs Ben Bernanke and Janet Yellen signed a letter alongside 130 top economists calling on Congress to pass additional relief measures and prevent "prolonged suffering and stunted economic growth."
"Policymakers in Congress and the Federal Reserve responded to this crisis with unprecedented levels of economic support for those affected, but more needs to be done," the letter said. It was published on Tuesday by the Washington Center for Equitable Growth, a think-tank focused on inequality.
It went on: "If Congress fails to act, state and local governments face potentially disastrous budget shortfalls, and the Congressional Budget Office estimates the unemployment rate will likely be more than 11 percent at the end of the year."
The group of economists included two Nobel laureates and three former heads of the Council of Economic Advisers such as Jason Furman, who led it during the latter half of the Obama administration. Other prominent signatories were Emmanuel Saez, Robert Solow, Heather Boushey, Cecilia Rouse, and Alan Blinder.
The economists warned that the coronavirus pandemic and ensuing economic fallout would be "especially damaging" to communities of color, given Black, Latinx, and Native Americans were both dying and losing their jobs at greater rates compared to white Americans.
"Evidence from the Great Recession indicates that a prolonged economic downturn will seriously damage the economic opportunities and wealth accumulation of all Americans, but especially of families of color," the letter said.
They called for another robust federal response to continue expanded unemployment benefits in some form, as well as aid to cash-strapped states, and "investments in programs that preserve the employer-employee relationship."
"An adequate response must be large," the letter said, "commensurate with the nearly $16 trillion nominal output gap our economy faces over the next decade."
Congress is set to kick off debate for another stimulus package in late July, though Democrats and Republicans are deeply divided over its shape.
Democrats are urging to aid states and extend generous unemployment benefits, while Republicans call to shield businesses from coronavirus-related lawsuits and enact measures to encourage people to head back to work.
Lawmakers have authorized around $3.5 trillion in relief spending so far, including the $2 trillion Cares Act passed in March. But the web of assistance programs put in place four months ago is set to expire over the summer as the $600 federal boost in weekly unemployment benefits phases out on July 31 with no replacement in place.
Many states are finalizing their budgets at the end of June, raising the prospect of another wave of layoffs that have already topped 1.5 million government workers.
On Tuesday, Federal Reserve Chair Jerome Powell testified to the Senate Banking Committee that a prolonged recession would deepen the economic pain felt by jobless people and throw more businesses into bankruptcy.
"The longer the downturn lasts, the greater the potential for longer-term damage from permanent job loss and business closures," Powell told lawmakers.