December 19, 2008
RE: New Jersey Municipalities Are Acting to Bring Economic Stimulus Home
Every day, New Jersey municipal elected officials see and hear about the impact the economic crisis is having on our communities and our residents. As of October 2008, the number of American homes in foreclosure stood above 2.2 million. Record numbers of hard-working families remain at risk of losing their homes to foreclosure, and those who are not at risk are seeing their home values decline. Retirement savings aren’t safe either. Families have lost as much as $2 trillion — or about 20 percent overall — in their retirement plans in the past 15 months. In the last 10 months, our country has lost more than 1.2 million jobs, and the official unemployment rate jumped from 6.1 percent to 6.5 percent. Other indicators show even greater labor market weakness. Clearly, our families, our hometowns and our nation are in economic crisis. And, it is in America’s hometowns where we can find solutions. Municipalities can be the economic engines of our recovery.
Following a holiday recess, Congress will return to Washington on January 6th to begin work on a comprehensive economic stimulus package with the goal of having it ready for the President Obama’s consideration shortly after the inauguration on January 20, 2009. The legislation is being drafted now. However, the spending level and the specific elements to be included are still being debated. Since the final measure is still being developed, there’s time for us to convince Capitol Hill to include programs in the package that can make a difference in our hometowns.
Public infrastructure investment not only creates jobs but generates a healthy multiplier effect throughout the economy by creating demand for materials and services. The U.S. Department of Transportation estimates that for every $1 billion invested in federal highways, more than $6.2 billion in economic activity would be generated. Mark Zandi, chief economist at Moody’s Economy.com, estimates that every dollar of increased infrastructure spending would generate a $1.59 increase in GDP. By comparison, a combination of tax cuts and tax rebates is estimated to produce only 67 cents in demand for every dollar of lower taxes. Thus, by Zandi’s conservative estimates, $150 billion in infrastructure spending would generate a nearly $240 billion increase (or close to a 2 percent increase) in GDP in the first year. In addition to short–term infusions, infrastructure also has long-term effects brought out over a number of years. It increases America’s competitiveness by providing the necessary components for business development and job creation for years to come.
Given the President-elect’s commitment to help us, the League of Municipalities has asked New Jersey Mayors and Municipal Clerks to complete a “Municipal Stimulus Package Survey.” Once the League has compiled a list of vital projects ready to go, it will share the information with our U.S. Senators and Congressmen to assist them in efforts to help New Jersey with federal resources.
This global economic crisis, too, shall pass. And I am certain it will pass faster in our State if all who represent New Jersey citizens – in Washington, in Trenton and in our hometowns - all work together.
Very truly yours,
William G. Dressel, Jr.