Federal coronavirus aid to states is needed to protect taxpayers

  • Ralph Martire

    Ralph Martire

 
By Ralph Martire
Guest columnist
Posted5/12/2020 1:00 AM

No matter how you perceive the president's handling of the COVID-19 pandemic, one thing is undeniable: the Trump Administration has turned sending mixed signals into an art form. From the relative severity of the virus, to how best to treat it or when it will be safe to reopen the economy, Trump and his team have made numerous proclamations which are at odds with each other, scientific facts or both. So it's no surprise that it's difficult to pin down exactly where his administration stands on providing federal funds to help states deal with the yawning revenue shortfalls they face due to the pandemic.

About one week ago, President Donald Trump favored a federal relief package that included financial assistance to help the states cover their anticipated revenue problems. This was both sensible and responsive to actual needs existing at the state level, as identified by the bipartisan National Governors Association. In a recent letter which the NGA -- currently chaired by Larry Hogan, the Republican governor of Maryland -- sent to Congress, that Association requested $500 billion in direct federal aid, to cover "replacement of lost revenue" caused by the pandemic.

                                                                                                                                                                                                                       
 

As sensible, needed and clear as Trump's initial position was, a couple of days later his Treasury Secretary, Steven Mnuchin, muddied the waters. During a FOX News interview, Mnuchin maintained Trump's Administration would only consider including money for state governments in the next federal relief package if doing so had bipartisan support. Apparently Mnuchin never got the memo -- or I should say letter -- from the National Governors Association.

Then to really confuse things, Trump himself began questioning whether the feds should provide states with financial assistance. Specifically, Trump tweeted: "Why should the people and taxpayers of America be bailing out poorly run states (like Illinois) and cities, in all cases Democrat run and managed, when most of the other states are not looking for bailout help?"

Well Mr. President, if you really have to ask, here's your answer.

For starters, it's not just "Democrat" run states that are seeking financial assistance from the feds. All 50 states are. Please read the letter from the National Governors Association for important context on why and how much. If you want the "Cliff Notes" version, suffice it to say federal funding is crucial to filling an anticipated $500 billion budgetary gap the states are facing. Without significant federal aid, states -- which have to balance their budgets -- will be forced to cut core services. They also won't have the means to maintain essential infrastructure and public transportation and will not build the capacity required to stay on the front lines helping people suffering from COVID-19.

Now let's address why the taxpayers of America should be "bailing out" states, irrespective of how well or poorly run they may be. To begin with, the $500 billion revenue shortfall states face is being caused by COVID-19, not prior fiscal management -- good, bad or indifferent. And that pandemic-induced revenue crunch imperils the capacity of all 50 states to provide the core services of education, health care, human services and public safety, which comprise over 90 percent of state government service expenditures nationwide. Without a significant influx of federal money, states will be forced to cut those core services. Period.

When those services get cut, who is harmed? Well, it isn't the politicians who committed whatever fiscal sins in the past. Instead, it's children who receive an inadequate education or homebound senior citizens reliant on social services for basic life needs or single working parents who have "essential" jobs but lose child-care coverage. In other words, millions of Americans -- think of them as the selfsame taxpayers whose interests you as president profess to be concerned about -- will be hurt. This is one of those rare instances where the need is clear, the cause is not partisan and the costs of failure are not acceptable. Neither are mixed messages.

Ralph Martire, rmartire@ctbaonline.org, is executive director of the Center for Tax and Budget Accountability, a bipartisan fiscal policy think tank and the Arthur Rubloff Professor of Public Policy at Roosevelt University.

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