WASHINGTON, DC – American businesses, workers, and state and local governments are facing the most challenging economic conditions in decades. A worsening recession, historic home foreclosure rates, continuing financial market turmoil, tightening credit conditions, corporate downsizing, and business failures have generated hardship and profound anxiety for millions of American workers.

More than two million Americans lost their jobs in 2008 and nearly half a million more are losing their jobs every month. Minutes of the Federal Open Market Committee’s most recent meeting, released January 6th, reveal that Fed policymakers fear that the economy could contract for all of 2009 and even into 2010.

A white paper, commissioned by the Forum, and to be released tomorrow morning, details two innovative programs designed to help stabilize and stimulate American communities struggling with steep budget shortfalls and falling tax revenues. Given the intense focus of the incoming Obama Administration and new Congress on economic stimulus and protecting American jobs, the white paper could not be more timely or relevant.

"Given the current economic crisis, policymakers are seeking to develop innovative and forward-looking programs that will help more communities and workers succeed in the global economy," said Rob Nichols, President and COO of the Forum. "This white paper offers immediate- and long-term solutions that will help American communities prosper when times are good, and adjust and adapt when challenges and struggles arise."

The Forum’s white paper proposes "structural stimulus." That is, new government programs that will not just temporarily boost income or demand, but rather will also address long-standing structural deficiencies in the U.S. economy that impede long-run economic growth.

The Communities Prosperity Initiative (CPI) offers a short- and long-term solution to the challenges facing our economy. The first is to create a government-backed insurance program to protect local tax bases and the community-enhancing public services such revenues provide. The other is to bundle targeted immigration, trade, and investment-related program to better link struggling communities to the global economy.

The goal of the CPI is not to insulate communities from dynamic change. That is neither feasible nor desirable. Rather, it is to allow the companies, workers, and families of struggling communities to better adjust to, engage with, and, ultimately, prosper from the dynamism and wealth-creating capacity of an ever-more globalized economy.

The white paper was authored by Grant D. Aldonas, the founder of Split Rock International and a senior advisor at the Center for Strategic and International Studies; Robert Z. Lawrence, the Albert L. Williams Professor of International Trade and Investment at Harvard’s Kennedy School of Government; and Matthew J. Slaughter, Associate Dean of the MBA Program and Professor of International Economics at the Tuck School of Business at Dartmouth. The paper expands on the authors’ report, Succeeding in the Global Economy: A New Policy Agenda for the American Worker. Commissioned by the Forum, the report illustrates the tremendous economic gains that free trade and globalization have generated for the United States and the world and offers a compelling agenda of policy ideas to help ensure that more Americans share in the benefits of globalization.

Last summer, the authors released a Forum-sponsored white paper that examined America’s out-dated, Depression-era Unemployment Insurance program. The report offered a set of innovative, new policy proposals to make these tools more expansive, effective, and equitable so that American workers have more options and flexibility as they compete in the global economy. This issue is also extremely relevant as Congress and the incoming Obama Administration look at ways to update Unemployment Insurance, COBRA, and other worker adjustment programs.

The Forum is a non-partisan financial and economic policy organization comprised of the CEOs of 17 global financial institutions.

*Note that views, opinions, and recommendations expressed in the report are those of its authors and do not necessarily represent the views of all Financial Services Forum members.