So Alan Blinder, Larry Katz, and I made a few phone calls and sent out a few emails...
DRAFT DRAFT DRAFT DRAFT DRAFT
February 18, 2010
The. Hon Nancy Pelosi
Speaker of the House of Representatives
United States Capitol
Washington, DC 20515
The Hon. John Boehner
Minority Leader of the House of Representatives
United States Capitol
Washington, DC 20515
The Hon. Harry Reid
Majority Leader of the Senate
United States Capitol
Washington, DC 20515
The Hon. Mitch McConnell
Minority Leader of the Senate
United States Capitol
Washington, DC 20515
Dear Speaker Pelosi, and Messrs. Boehner, Reid, and McConnell:
A great number of different policy actions--including the American Recovery and Reinvestment Act, the financial rescue, and the extraordinary monetary policy measures taken by the Federal Reserve--have in their sum played an important role in changing the trajectory of the economy from one of terrible decline to one of growth. But with the latest unemployment rate at 9.7 percent, it is clear that additional emergency policy measures to jump-start job creation are still warranted.
A well-designed temporary and incremental hiring tax credit is a cost-effective way to create jobs, and could work well in the current environment. At a time when GDP is beginning to rise and demand is starting to return, private firms are likely to respond to such a tax incentive by hiring sooner and more aggressively than they otherwise would have done. Such a credit could thus help put Americans back to work more quickly than otherwise. And by targeting firms that are growing, such a tax credit supports the businesses most likely to lead the recovery of employment.
There are many ways to design an effective hiring tax credit, but in general the beneficial effects will be greater the stronger the hiring incentives and the lower the administrative burdens placed on firms. It is critical that such a tax credit be put into place quickly and that it is publicized widely. Firms will begin to accelerate hiring only when know they can count on such tax relief.
We judge that a well-designed hiring tax credit is a well-targeted and economically sound strategy for aiding job creation at this phase of the recovery, and so we support a well-designed hiring tax credit.
In our personal capacities, we are sincerely yours,
Mark Zandi
Justin Wolfers
Laura Tyson
Mark Thoma
Peter Temin
Joseph Stiglitz
Betsey Stevenson
Isabel Sawhill
Dani Rodrik
Robert Reich
Richard Portes
Larry Katz
Barry Eichengreen
Peter Diamond
Brad DeLong
David Cutler
Robert Cumby
Tyler Cowen
Menzie Chinn
Alan Blinder
George Akerlof
