Today, Congressman Jerrold Nadler (NY-08) called on Congress and the incoming Obama Administration to devise a larger economic recovery package to ensure that the present economic crisis does not deteriorate into a full-fledged depression. Yesterday, The House Appropriations Committee unveiled a summary of its American Recovery and Reinvestment Bill, totaling $825 billion, including $275 billion in tax cuts and $550 billion in aid for states and localities, funding for infrastructure projects, and increased unemployment benefits. Many economists believe that, in light of the severity of the economic downturn, only a program that injects substantially more aggregate demand and creates considerably more jobs than this package does can prevent, rather than merely delay, descent into a depression.

Rep. Nadler issued the following statement:

“The economic recovery package outlined yesterday is an essential means of providing Americans the relief that they desperately need. But, as is currently proposed, it is too small. We are all in agreement that we need a large economic stimulus bill to halt job losses and inject enough aggregate demand into the economy to avert a depression. Every economic indicator points to the risk of a real depression if we do nothing. However, according to a report by Christina Romer (Chair-designate of President-elect Obama’s Council of Economic Advisers) and Jared Bernstein (Chief Economist and Economic Policy Adviser-designate to Vice President-elect Biden), even with this plan, we could still see unemployment rates of 7% by the end of 2010, when the recovery plan is expected to have its strongest effect, and average unemployment rates of 7.3% for three years. Nobel Laureate Paul Krugman wrote: ‘That’s a scary number, big enough to pose a real risk that the U.S. economy will get stuck in a Japan-type deflationary trap.’”

Rep. Nadler has been leading the effort among his House colleagues to expand the recovery plan. Spurred on by Nadler, the Progressive Caucus is sending a letter to the President-Elect requesting a meeting to discuss greatly increasing the size of the Recovery and Reinvestment Bill.

“In order to prevent a genuine, prolonged depression,” continued Rep. Nadler, “we must do more than simply slow the economic decline we are now faced with. With a recovery plan that provides sufficient funds for our businesses, homeowners, the unemployed, for States’ shriveling budgets and for industries which can put people to work right away, we can stem this crisis and turn the economy around. As former Treasury Secretary Lawrence Summers succinctly put it: ‘In this crisis, doing too little poses a greater threat than doing too much.’”