Dr. Krugman states in another column:
In normal times, it's good to worry about the budget deficit - and fiscal responsibility is a virtue we'll need to relearn as soon as this crisis is past. When depression economics prevails, however, this virtue becomes a vice. F.D.R.'s premature attempt to balance the budget in 1937 almost destroyed the New Deal.
President-Elect Obama has already mentioned that his proposed stimulus package will include money for state and local governments. We in New York do not want to undercut his efforts by instituting spending cuts. On the contrary, we should avoid any measure that may undermine the overall economy.
A New York New Deal should be bolder than merely avoiding cuts to existing services and programs. It should include new programs that are investments in the future. We drive on roads built; we cross rivers on bridges (like the Tri-Borough Robert F. Kennedy Bridge) constructed, and send our children to schools built by FDR's work programs. Similarly to the 1930s, New York needs infrastructure investments now, which will benefit New Yorkers for years to come. As an example, a 21st Century 'New Deal' would focus on energy improvements of public buildings.
I envision a program to install solar photovoltaic panels (which generate electricity) on public school buildings. Apart from the local construction jobs created, for the next several decades school districts around the state will generate part of their own electricity – reducing their operating costs. (As an aside, schools are ideal for solar electrical generation as schools are generally empty during the summers when peak electrical demand is the highest. Thus, they lighten the load placed on the electrical grid.)
In addition, many of our public buildings, especially schools, were build before heat lose was a consideration. A program to improve insulation in public buildings will reduce our expenditure on heating fuels and save the public sector money otherwise spent on heating oil, gas, and electricity.
To assure that New York's economy gets the greatest stimulus, you may want to take measures to assure that monies are spent in New York State, with firms doing business in New York and who hire New Yorkers.
What I want to stress is to avoid making short-term decisions that worsen the economy in the long run. I believe that our incoming President has a vision to tackle the country's economic woes. Cutting State spending during a recession weakens New York's economy and undermines national efforts to lift it. Your focus should not be limited to balancing New York's budget but should be to engineer an economic recovery in the State that will be remembered for decades to come.
Respectfully,
Joel Peskoff
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