Joe Stiglitz: Stimulus should have included state & local aid

Nobel economist Joseph Stiglitz interviewed in Paris on August 28, 2011 by John Aravosis and Chris Ryan of AMERICAblog.

Stiglitz mentioned that one of the big mistakes of the stimulus package was the lack of funding for states and localities:

STIGLITZ: "More of the money could have gone to help the states and localities. It was predictable that they would be facing financial problems. They would be cutting back, firing teachers. Can you imagine, in a period where the United States needs to strengthen our education system we are firing teachers? The government is supposed to stimulate the economy, and yet employees in the public sector are actually lower than they were before the crisis, so our government is contributing to the downturn in that sense.

"So first, we could have avoided these cutbacks by an appropriately designed stimulus package for state and local. That's what I said they ought to be doing. For some reason the Obama administration did not push this, Congress did not pass this, and we are now bearing the consequences.

"The second thing that we should have done is to recognize this was going to be a long and deep economic downturn, and knowing that it's a long deep economic downturn, in the first year of the economic downturn you make plans for the second and third year of the economic downturn.

"In the first year, you hire a lot of engineers and people that can help design good projects, high return projects, and that would have been a high return investment."