As Congress debates a stimulus to the economy in the wake of the
housing bust, many economists are urging federal leaders to make aid to
state governments a core part of the package. While direct tax rebates
for individuals can help, it will not do much for the economy if states
are forced to cut back on critical spending on public works, health
care, and education at the same time. As Nobel prize-winning economist
Joseph Stiglitz, who was also chair of the President's Council of
Economic Advisors in the 1990s,
wrote this week in the
New York Times: