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University of Massachusetts professor of economics Gerald Epstein is one of the collaborators on a new long-term economic policy for the U.S. economy.

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While economic policies up until now have dealt with short-term relief for industries and workers ‘- namely tax cuts and bailouts ‘- Epstein is one of 20 progressive economists to work on a policy statement which aims for long term economic stability.

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The statement, called the Progressive Program for Economic Recovery and Financial Reconstruction, includes plans for greater regulation of financial markets, investment in education, healthcare and a green economy, as well as the establishment of funds and loans for key industries, federal aid to states and localities and increasing minimum wage as well as workers’ ability to unionize.

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‘The neo-liberal, laissez-faire policies of the Bush administration that have been followed in the U.S. for the past 25 years or so have led to enormous economic insecurity for most Americans and to a huge increase in economic inequality,’ said Epstein. ‘Any recovery program must be based on restoring more stability and more fairness to our economy.’

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Even as the economic depression in the United States has led to a worldwide domino effect, the policy statement promotes the coordination global recovery effort.

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‘It is not so much a question of the U.S. helping the rest of the world,’ said Epstein. ‘It is a question of the U.S. taking a lead role in cooperating and helping to coordinate a global response to the problem.

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‘Of course, the U.S. should keep its commitments to giving at least 0.7 percent of its GDP (gross domestic product) in foreign aid to help achieve the millennium development goals, but the most important thing is to make sure the world deals with these problems cooperatively rather than breaking up into dysfunctional and dangerous competition or even anarchy.’

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As for efforts to stimulate the national economy, Epstein believes the Obama administration’s $819 billion stimulus package needs to invest more money in green technology, education and health.

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‘I would have preferred it had more aid for states, towns and cities, more spending on employment guarantees rather than tax cuts,’ said Epstein. ‘Tax cuts are not the best way to go because they generate fewer jobs for every dollar spent and they focus on increasing consumption, when in fact, we need to provide much more in the way of investment.’

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The Obama stimulus package has allocated $275 billion in tax cuts, $217 billion in aid to states and local governments, $120 billion in relief, $74 billion on infrastructure, $59.5 billion in energy efficiency projects and $54.6 in human capital and, according to The Wall Street Journal.

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The policy statement calls for aid to states and industries key to the economy’s health, like the automobile industry, in the form of loan guarantees and direct loans.

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‘It is true the United States government has borrowed a lot of money, though it is not extremely high by historical standards or compared to other countries,’ said Epstein. ‘We borrow a lot from ourselves and from others around the world.

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‘If this money is wisely spent so that it adds to investment and productivity and helps improve the health and education of our citizens and the ability of our country to produce without destroying the planet, then our economy will prosper and we won’t have much problem paying back the debt.’

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The Progressive Program also states that government should be an employer of last resort, or an employer which workers go to when no other jobs are available.

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‘Starting immediately, people should be able to get government jobs at prevailing or living wages (whichever is higher) to engage in useful work for the community,’ says the policy statement.

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‘As part of this recovery, we must begin to make a transition to a green economy: one that is based on non-fossil fuels so that we do not contribute more to global warming,’ said Epstein.

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‘As Robert Pollin and his colleagues at the Political Economy Research Institute (PERI) have shown, these policies can also generate many good jobs and therefore contribute to fighting the ongoing crisis.’

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Short-term recovery programs in the Progressive Program include aid to states meant to keep families in their homes with a one-year moratorium on housing foreclosures and policies to improve income support and raise the minimum wage.

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The Progressive Program also calls for ‘congressional hearings to investigate the cause of the financial crisis and to study the best methods for reregulating finance.’

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Plans to improve the ability of workers to form unions are included in the policy statement, which Epstein said will give workers the ability to organize and voice their opinions on how the economy should work.

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Kimya Hedayat-Zadeh can be reached at [email protected].