President Biden is taking a victory lap after signing his $1.9 trillion 'COVID' spending bill. "Help is here," he wrote in a tweet promoting his plan.
But Americans who are initially glad to hear that more 'COVID' relief is supposedly on its way may be surprised when they learn that the latest legislation funnels $350 billion in unneeded taxpayer money to flush the coffers of state and local governments.
State Bailout Money Was Never Necessary
In the president's telling, this is much-needed aid that will allow municipal governments facing massive COVID-related revenue pitfalls to pay their front-line emergency responders and essential personnel. But the facts reveal a different story.
While it's plausible on its face to think that COVID would have led to a revenue drop for state and local governments, this never materialized in most places. According to JP Morgan, state revenue was "virtually flat" in 2020 nationwide while 21 states actually saw slight revenue upticks.
Cato Institute economist Chris Edwards noted that while there was a significant downturn in state revenue in the second quarter of 2020, overall it was balanced out by an uptick in the third quarter. "There is no need for more federal aid to the states," he concluded.