Nobel laureate economist Joseph Stiglitz says the government should adopt a fiscal stimulus package as large as $1 trillion to revive the moribund economy.
“There is an emerging consensus among economists that a big — very big — stimulus is needed, at least $600 billion to $1 trillion over two years,” Stiglitz, a Columbia University professor, writes in a New York Times opinion piece.
In addition, he says President-elect Obama’s aim for 2.5 million new jobs by 2011 is inadequate.
“In the next two years, almost four million workers will enter the labor force — or would if there were jobs,” Stiglitz says.
“Combined with the loss of employment this year, that means we should be striving to create more than five million jobs.”
A big stimulus package can be cut in the future if the economy rebounds more quickly than expected, Stiglitz points out.
“But we need to plan for what looks to be a deep and long downturn,” he writes.
“By relying heavily on automatic stabilizers — expenditures like increased unemployment benefits and revenue sharing with states — we can dose out the medicine as needed.
The deeper and longer the downturn, the greater the spending.”
Obama may well agree with Stiglitz’s lofty goals. The president-elect’s economic adviser Lawrence Summers has said repeatedly that “speedy, substantial and sustained” fiscal stimulus is necessary.
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