Republican Opposition to State Aid Puts Municipal Jobs at Risk Amid Coronavirus Pandemic

Strategic Insights -

As the novel coronavirus pandemic continues to wreak havoc on economies across the United States, a divide has emerged between Democrats and Republicans over the role of federal aid to state governments. While Democrats are pushing for an emergency infusion of funds to help state governments respond to the crisis, Republicans are opposing it, arguing that it would amount to a "blue state bailout." However, state and local governments are warning that drastic cuts to public services are on the horizon if no federal help is coming, and the virus is having an economic impact regardless of a state's political stripes.

Key Takeaways:

  • Up to 1 million municipal jobs are at risk as state governments prepare to make withering cuts to critical services absent further federal aid, according to The Washington Post.
  • The federal government has already allotted $150 billion in state and local aid as part of the $2.2 trillion Cares Act, but much of the money was mandated for only coronavirus-related expenditures and cannot be used to reduce budget shortfalls.
  • Republicans, led by Senate Majority Leader Mitch McConnell, are arguing that states should be allowed to go bankrupt rather than receiving federal aid, despite evidence that the downturn could be significantly worse if state governments are forced to cut public services and fire workers.
  • A bipartisan letter from the National Governors Association has called for $500 billion in additional aid, and governors are pleading with Washington for immediate help.
  • States and local governments cut spending and shed jobs even after the last recession was over, and the experience is creating a shared sense of urgency among state leaders crossing party lines.
  • The virus is having an economic impact regardless of a state's political stripes, and the downturn could be significantly worse if state governments are forced to cut public services and fire workers.

Statistics:

  • 272,000 education workers lost their jobs during the Great Recession, according to data cited by CNBC economics reporter Steve Liesman.
  • States and local government expenditures subtracted from overall gross domestic product until 2013, according to the data from Haver Analytics and the Bureau of Economic Analysis.
  • $275 billion in additional federal funding was directed to states to shore up Medicaid and other programs during the 2009 stimulus law.
  • $150 billion in state and local aid was allotted as part of the $2.2 trillion Cares Act.
  • 80 million Americans received stimulus checks last week.

Sources:

  • "Why Biden-Backed Relief Bill Includes $1 Billion For Historically Black Colleges And Universities" by Daniella Diaz, CNN
  • "Democrats propose $1.2 trillion coronavirus aid bill with unlimited small business loans, direct payments to families" by Pete Kasperowicz, The Hill
  • "The U.S. government is giving out stimulus checks to more than 80 million Americans" by Josh Sanburn, Time Magazine
  • "The $2.2 trillion Cares Act: A Guide to the Stimulus Law" by Megan Squire, NBC News
  • "States are bracing for massive cuts in response to the pandemic" by Emily Holden, Politico
  • "New York, California, and other states are preparing to cut public services as federal aid lingers" by Emily Holden, Politico