It’s become abundantly clear that the responsibility for responding to the pandemic cannot lie only with local and state governments. Congress must act decisively — and it must act in ways that don’t repeat mistakes of the recent past, during the Great Recession, according to a commentary by former Federal Reserve Chairman Ben Bernanke today in the New York Times. Our state governments serve a dual role as providers of critical services — health care, public safety, education and mass transit — as well as large employers. Many states, including New Jersey, are responsible for tens of thousands of jobs and the paychecks that go with them. Since a raging outbreak in March, New Jersey has successfully flattened the curve of new COVID-19 cases and hospitalizations. But since the state had to virtually shut down in order to control the spread, that success has come with a staggering price tag: The state faces a revenue shortfall in the billions of dollars. Many other states face ominous budgetary outlooks, too, implying the need for draconian reductions in essential services to state residents and large potential job cuts, according to Bernanke. 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. The CARES Act allocated $150 billion to state and local governments. 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.
