House Speaker Nancy Pelosi slammed Senate Minority Leader Mitch McConnell for touting the benefits of the stimulus law for his home state of Kentucky. The $1.9 trillion coronavirus relief law cleared Congress in March without any Republican support.
“Vote no and take the dough,” Pelosi wrote on Twitter.
At a press conference on Tuesday, McConnell swung between noting his opposition to the federal rescue package and crediting it with providing substantial financial relief for Kentucky.
“Not a single member of my party voted for it. So you’re going to get a lot more money,” McConnell said. “I didn’t vote for it, but you’re going to get a lot more money. Cities and counties in Kentucky will get close to $700-$800 million.”
The Kentucky Republican said the state was projected to get $4 billion as a result of the stimulus law. “So my advice to members of the legislature and other local officials: Spend it wisely because hopefully this windfall doesn’t come along again,” McConnell said.
Republicans were staunchly opposed to Biden’s stimulus law, which contained $1,400 direct payments, a renewal of federal unemployment benefits, and aid to state and local governments. They argued it was too large and costly after lawmakers had approved a $900 billion federal rescue package late in 2020. Not a single Republican in Congress voted for it.
However, at least a dozen congressional Republicans have since touted parts of the law, such as small business aid, even though they didn’t support the law’s passage. Biden rebuked the GOP earlier this year for “bragging” about the law, saying, “some people have no shame.”
Also on Tuesday, McConnell pledged a bruising political brawl over Democratic efforts to bypass Republicans to implement their infrastructure spending plans. “This is not going to be done on a bipartisan basis,” he said. “This is going to be a hell of a fight over what this country ought to look like in the future and it’s going to unfold here in the next few weeks.”
Maryland will continue to pay federal unemployment benefits for at least ten more days after a judge ruled against Governor Larry Hogan on Saturday.
The benefits were set to end this weekend, but Circuit Judge Lawrence Fletcher-Hill issued a temporary restraining order requiring Maryland to continue administering the benefits, The Baltimore Sun first reported. The temporary restraining order followed two lawsuits brought by unemployed Marylanders against Governor Hogan and Maryland Labor Secretary Tiffany Robinson.
The restraining order is set to expire in ten days, which will give the courts enough time to schedule a hearing on the merits of the lawsuits. Fletcher-Hill’s ruling means tens of thousands of unemployed workers in Maryland will continue to receive the benefits, which include a $300 weekly benefit paid by the federal government.
The coronavirus pandemic-related unemployment benefits also cover self-employed workers. As of mid-June, 178,000 people in Maryland were recipients of unemployment benefits.
Hogan is one of more than 20 Republican governors who have moved to cut federal unemployment benefits early. The governors argue that the federal unemployment benefits on top of state unemployment benefits have slowed down the jobs recovery, with fewer people seeking work because of the extra money. The governors often point to anecdotal evidence of local businesses, especially restaurants, being unable to fill open positions. The federal unemployment payments are set to expire in September.
Hogan said the ruling by Fletcher-Hill would be “immediately appealed.”
“We’re going to file an appeal today. I haven’t read the details of the ruling but I have no idea how [Fletcher-Hill] could come up with that,” Hogan said at an Independence Day march in Annapolis, according to The Baltimore Sun.
Judge Fletcher-Hill wrote in a 14-page ruling that the plaintiffs of the lawsuit would be “irreparably harmed” if the unemployment benefits ended, and that they might be able to prove that Maryland is required to maximize the use of federal assistance programs under state law.
“As one who has enjoyed the privilege of continuous, secure employment, the Court is particularly struck by the plight of those who have had to struggle with irregular or no employment,” Judge Fletcher-Hill wrote in his opinion.
But according to Hogan, the extra $300 in federal unemployment benefits are keeping people from getting back to work.
“Thousands of businesses have no ability to get people back to work. We’ve got more jobs available than ever before in the history of the state,” Hogan said, according to The Baltimore Sun. “People that really need the help are still going to get unemployment benefits. It’s the extended bonus $300 that’s keeping people home.”
“Maybe 50-50,” the Kentucky Republican said in a Monday interview with conservative radio host Hugh Hewitt. “Look, both sides would like to get an infrastructure bill.”
McConnell reiterated the by now familiar “red lines” for Senate Republicans: no modifications to the 2017 Republican tax law that would result in tax increases, and that any package should be paid for.
He suggested repurposing stimulus aid to states provided under President Joe Biden’s $1.9 trillion coronavirus relief law to cover the cost. That’s already been shot down by the White House in previous negotiations with Senate Republicans.
“States and localities are literally awash in extra money. A lot of that is still in the pipeline,” McConnell said. “Why don’t we repurpose that, earmark it for infrastructure, which both localities would prefer to spend it on anyway?”
The bipartisan group encompasses 10 lawmakers from both parties and includes Republican Sens. Mitt Romney of Utah, Rob Portman of Ohio, Bill Cassidy of Louisiana, Lisa Murkowski of Alaska, and Susan Collins of Maine.
On the Democratic side, it includes Sens. Joe Manchin of West Virginia, Kyrsten Sinema of Arizona, Jeanne Shaheen of New Hampshire, Mark Warner of Virginia, and Jon Tester of Montana.
The framework is unlikely to contain the aggressive climate measures that many Democrats favor, which is a nonstarter among a growing group of Democratic senators. House Speaker Nancy Pelosi also appears to be against dropping climate initiatives if it means passing a watered-down bill with the GOP.
“I have no intention of abandoning the rest of my vision,” Pelosi told CNN’s “State of the Union” on Sunday, adding the proposed measures “could have been talked about 50 years ago.”
President Joe Biden wants to pump billions of federal stimulus into state and local governments as part of his $1.9 trillion package. But state tax revenues for 2020 were surprisingly healthy.
A JP Morgan survey called 2020 “virtually flat” with 2019 with regard to tax revenues for 47 states that reported their earnings, with revenues only falling by 0.12% on average. And while states expected to be hit hard financially when the pandemic began, the previous stimulus, including $600 weekly unemployment benefits, on top of the already allocated state benefits, allowed Americans to continue spending.
The results of the survey seem to support the conservative argument that states don’t need some or all of the funding in Biden’s relief package given that their revenues look fairly unscathed by the pandemic.
The White House has pushed back on such criticism, saying it’s not in line with reality.
“I think our objective is to focus on not JP Morgan reports, but what state, local governments and others are telling us they need to ensure that the people in their districts, the resources in their districts, the people who are making government function in their districts have the funding and resources they need,” White House Press Secretary Jen Psaki said during a February 1 press conference.
But while states haven’t yet appeared to take significant hits in tax revenue, experts suggest that the worst is yet to come.
The argument for state aid
Biden’s $1.9 trillion stimulus plan includes $350 billion in emergency funding for state, local, and territorial governments “to ensure that they are in a position to keep front line public workers on the job and paid, while also effectively distributing the vaccine, scaling testing, reopening schools, and maintaining other vital services,” according to a White House fact sheet.
This would be in addition to $150 billion of similar aid from last March’s CARES Act, Democratic state treasurers said in a letter that more aid is needed for long-term economic recovery.
“Congress has the power – and the responsibility – to step in and fill the gap during this emergency,” the treasurers wrote.
Some states badly need the aid already. According to the Urban-Brookings Tax Policy Center, states such as Alaska, Hawaii, and Nevada suffered the greatest revenue losses at 42.5%, 17%, and 11.8%, respectively, because of the lack of tourism during the pandemic. But some other states saw a gain in revenue, like Idaho, up 10.4%, and Utah, up 8%.
And growing evidence suggests a big hit to tax revenues is coming, because of the ripple effect that mass working from home has had on commercial real estate.
Unnamed government finance officials told The New York Times that cities heavily reliant on property taxes could face revenue losses of as much as 10% in 2021 due to empty facilities during COVID-19. The Urban Institute found in 2017 that although property taxes account for roughly 1% of state tax revenues, they can add up to 30% or more of the taxes that cities take in to fund local services, so further aid through Biden’s plan will be necessary to prevent mass municipal layoffs.
The argument against state aid
Since Biden introduced his stimulus package, Republican lawmakers have taken issue with its costly price tag, and 10 Republican Senators even came up with their own $618 billion stimulus plan. That proposal was notable for completely cutting out aid to state and local governments.
“I think the biggest gap between the president’s proposal and the Republican proposal relates to [$350 billion] or so going to states and localities,” Sen. Mitt Romney of Utah told reporters. “That kind of number just makes no sense at all.”
“Unfortunately, the White House seems wedded to a figure that really can’t be justified …” Sen. Susan Collins of Maine, who led the GOP stimulus plan, told reporters on February 23. “So what we’re looking at now is whether there are changes that we could make.”
As Insider’s Joseph Zeballos-Roig reported, moderate senators on the Democratic side think some of the state aid in Biden’s plan could be used for needs other than pandemic relief, such as broadband and healthcare.
House Democrats passed the long-awaited $900 billion stimulus plan, sending it to the Republican-controlled Senate for a vote on Monday evening.
The 5,593-page bill was passed overwhelmingly 359 to 53.
Speaker Nancy Pelosi said earlier on Monday morning that she supported the package, but wanted additional aid spending once President-elect Joe Biden takes office in January.
“I look forward to a strong bipartisan vote today on this legislation,” Pelosi said. “Respecting it for what it does, not judging it for what it does not. But recognizing that more needs to be done.”
Passage in the House sends it to the Senate, where Majority Leader Mitch McConnell will put it on the floor for a vote. It’s expected to pass. Congressional leaders are operating on a swift timetable, seeking to merge the relief package with a $1.4 trillion government funding bill and pass them before midnight Monday, the new deadline for federal funding to lapse.
Lawmakers had little time to review the massive piece of legislation once it was introduced early Monday afternoon.
The rescue package would direct hundreds of billions of dollars into many sectors of the economy. Unemployed Americans will see an extra $300 from the federal government tacked onto their unemployment checks until mid-March. It also includes $600 stimulus checks will be sent to millions of Americans. Treasury Secretary Steven Mnuchin said many Americans will start receiving those payments early next week.
The package also contains $284 billion in small business aid and $45 billion in federal funds for transportation. Meanwhile, the government funding bill would cover federal agencies through September 2021, and it also includes a bevy of tax breaks for businesses next year.
The legislation, though, is a significant step down from the amount of spending Democrats once sought. The chamber approved a sweeping $3.4 trillion stimulus package in May called the HEROES Act, but Republicans dismissed it outright.
Then, in October, House Democrats passed a $2.2 trillion relief bill to kickstart stalled negotiations with Republicans. It ultimately went nowhere. But Pelosi drew criticism from some Democrats for rejecting the Trump administration’s $1.8 trillion stimulus offer. Her defenders argue Senate Republicans would never have supported a plan with a large price tag.
After Biden’s election, Democrats embraced a $908 billion relief plan unveiled by a bipartisan group of moderate senators. It was later whittled down to a $748 billion piece of legislation, which Democrats increased to its current level of $900 billion by backing the addition of stimulus payments.
But they set aside one of their key priorities in the final rescue legislation, aid to states and municipalities struggling with large budget shortfalls. In exchange, Republicans dropped their demand for a liability shield to insulate businesses from virus-related lawsuits. Both parties will likely seek to address both of those measures early next year.