Conspicuously missing from the latest coronavirus relief bill that was approved by the U.S. Senate Tuesday, a $484 billion boost to small businesses and hospitals as well as to expand COVID-19 testing, was the much-needed help for state and local governments who, exactly like the federal government, are watching tax revenues suddenly fall off a cliff. But unlike the feds, governors and mayors don’t have the authority to print money. That makes their situation far more dire than what’s facing Washington, where deficit spending under the Trump administration is just another day at the office. House Democrats initially objected but eventually caved, promising instead that local aid will be included in the next stimulus bill.
Conspicuously missing from the latest coronavirus relief bill that was approved by the U.S. Senate Tuesday, a $484 billion boost to small businesses and hospitals as well as to expand COVID-19 testing, was the much-needed help for state and local governments who, exactly like the federal government, are watching tax revenues suddenly fall off a cliff. But unlike the feds, governors and mayors don’t have the authority to print money. That makes their situation far more dire than what’s facing Washington, where deficit spending under the Trump administration is just another day at the office. House Democrats initially objected but eventually caved, promising instead that local aid will be included in the next stimulus bill.
So why the delay? Why the brushoff? Maryland Gov. Larry Hogan, a Republican, who has been on the front line in the push for local aid, called on Congress two weeks ago to bail out states. “In the absence of unrestricted fiscal support of at least $500 billion from the Federal government, states will have to confront the prospect of significant reductions to critically important services all across this country, hampering public health, the economic recovery, and — in turn — our collective effort to get people back to work,” Hogan and New York Gov. Andrew Cuomo, a Democrat, pointed out in an April 11 joint statement as the National Governors Association’s chair and vice chair.
Here’s the explanation recently provided by Senate Majority Leader Mitch McConnell (R-Ky.): Let them eat cake. Those aren’t his exact words, but the actual ones aren’t much different. On Wednesday, first during an interview on a right-wing radio program and later in an official statement from his office, Sen. McConnell said he’d prefer the states file for bankruptcy. He doesn’t want to see federal dollars shore up costly state pension plans that he believes have been fiscally irresponsible. That would require a change in bankruptcy laws, of course, but McConnell appears undeterred. He said his side of the aisle was “going to push the pause button here, because I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated” dismissing the governors’ advocacy as another call for “free money.”
It’s pretty rich to listen to a consummate Washington insider lecture governors on deficit spending, considering how states must balance their budgets and Congress has been spending beyond its means since Bill Clinton was in the White House, with the deficit growing markedly under President Donald Trump. But what’s really troubling about that observation is that it’s counterproductive. The whole point of stimulus spending is to help Americans deal with the current hardship brought on by the coronavirus pandemic, not government pensions, and to allow the U.S. economy to rebound. What happens if states are denied aid? They’ll have to make dramatic reductions in their largest budget items — health care and education, representing about two-thirds of all state spending. No doubt pensions will take a hit, too.
This is classic partisan posturing, annoying in good times, unconscionable during an extraordinary health crisis. This isn’t a blue state versus red state issue. All states (and, please note, a majority have GOP governors) are standing on the fiscal brink. Federal aid won’t line union pockets or pad some university endowment, it’s going to keep teachers on the job, police on the beat, firefighters employed, transit systems running and help cover medical bills. Maybe the senator wants to hold onto this as leverage against House Democrats or governors who are reluctant to lift stay-at-home orders in his preferred time frame (whatever that is given Trump’s shifting views on that topic). That’s pretty awful, too, but at least it suggests McConnell plans to capitulate at some point.
The Trump campaign recently mocked House Speaker Nancy Pelosi for showing off her pandemic-ready collection of ice cream on late-night television as the latest coronavirus aid was held up for days. McConnell’s Marie Antoinette moment seems infinitely worse as he appears ready to put the screws to state and local governments (including their first responders) for far longer and with far less empathy than Speaker Pelosi displayed for the Paycheck Protection Program, which she supported. What an odd time for Republicans to get religion about the deficit. Is this how he plans to keep a GOP majority in his chamber? By forcing states to cut Medicaid or furlough teachers or police officers? Maybe someone needs to start collecting his own government pension as soon as possible.
